The industry's oldest problem is widely misunderstood.
The blockchain trilemma is a complex problem that has intrigued blockchain experts for years. The trilemma refers to the tradeoffs between the three critical components of blockchain technology: security, decentralization, and scalability . In simple terms, it means that if you focus on improving one of these parameters, you will lose advantage over the others.
But what are these parameters?
Security is the degree of resistance to external malicious interference. Decentralization is the degree of control each blockchain node has over the blockchain, while scalability is the measure of how much load a blockchain can handle without losing efficiency. A highly decentralized blockchain will allow each node to have equal power, but low decentralization will give roles and ranks to different nodes, creating a hierarchy.
What is the trilemma?
The trilemma states that if you improve one of these parameters, you will harm the other two. Think of it as a compromise between the different facets of a blockchain's components. There is a finite amount of resources available between all the different children and you cannot meet them all.
Focus on security:
For example, increasing security also increases the barrier to entry into the blockchain world, making certain features less accessible and hindering decentralization.
Furthermore, with greater security, blockchain also spends more time and resources on analyzing each transaction, which is not good for its scalability and overall efficiency.
Focusing on scalability:
On the other hand, increased scalability invites more people into the system, increasing load and transactions. As more transactions occur, better security measures are needed, as existing security systems may become deficient.
The complexity of the network also increases, requiring special roles such as validators and block proposers, which is not very decentralized.
Focus on decentralization
Likewise, a highly decentralized blockchain will simplify the chain structure, discouraging complex infrastructures like dapps and DAOs. In this system, you cannot prevent external attacks without some kind of protective force. If there are no additional security functions, the security of the blockchain will be compromised.
And as much as we would like all processes in the chain to be equal, this would make the entire chain much more inefficient and make it unsuitable for complex functions and utilities. It's not scalable at all.
We don't want something similar to monolithic blockchains, do we?
So how to solve the trilemma?
Solving the trilemma could unlock an extra layer of efficiency that allows each part of the blockchain to function to its full potential without interfering with other systems. And when all parts of the chain are working at peak efficiency, developers can create even better DeFi solutions! As such, we MUST find a way to get rid of the blockchain trilemma.
Unfortunately, there is no direct way to get rid of this problem. There are some methods that can solve the blockchain trilemma:
The first method involves a mutual sacrifice of efficiency on the part of each sector. In this method, a blockchain is created where all sectors are sufficiently functional, but not at their theoretical maximum. So, instead of trying to maximize each parameter as much as possible, you maximize it until there is no more optimization that can be done without harming other parameters. Better to be 70–70–70 than 100–40–50.
The second method is to maximize two of the parameters and let the third one turn to dust. Yes, 100–100–0 in that system. Then add a layer 2 solution to the missing parameter. For example, Ethereum has good security and decentralization, but can struggle with scalability. This is where the SEI project comes in.
Find out more about SEI
Sei is a revolutionary first-tier (Layer 1) trading-optimized blockchain designed to augment the way digital assets are traded.
Why do I know?
Sei is like a super-fast highway for trading apps. It was built from the ground up to make your trading experience smooth and efficient. Every part of Sei is designed to make crypto applications easy to use and fast.
The problem that Sei addresses:
Current blockchains struggle with the “Exchange Trilemma” – balancing decentralization, scalability, and capital efficiency. Sei offers a solution.
Sei’s Unique Features:
Sei is super fast! Processing transactions in just 300ms and providing advanced Twin-Turbo technology, it offers an unparalleled infrastructure for cryptocurrency applications. From preventing unfair advantages in trading to efficiently handling orders, Sei promises a top-notch experience for every application that uses its platform.
Because now?
As Web3 grows, so does the importance of cryptocurrency trading and applications. With regulatory pressures, the future is decentralized - and Sei is leading this change.
