Anyone who has ever had to produce work for a client will be familiar with the three standard requests that make your eyes roll: “I want it cheap, fast & good”. The normal response is “You can have two”.

A similar problem exists in blockchain, in this case the trilemma consists of:

Security, Scalability, Decentralisation.

The Trilemma

These three elements have represented one of the key problems preventing mass adoption of blockchain technology. Legacy systems of transaction such as Visa and Paypal can handle up to 24,000 & 193 transactions, respectively, per second and it is these kinds of levels that blockchain protocols must hit to be seen as a suitable replacement for these systems.

The problem is that in trying to achieve this level of scalability blockchains often sacrifice security or decentralisation. Take Ripple for example, Ripple can handle up to 1,500 transactions per second — an impressive figure. The downside to this is that Ripple have, in an attempt to strengthen their blockchain as much as possible, sacrificed decentralisation to achieve this. Ripple relies on “trusted” operators within its network, which flies in the face of the “trustless” ideals of blockchain. This combined with its orientation towards solving problems for financial institutions has often seen it looked at as the black sheep of the crypto family. So Ripple have forgone decentralisation in an effort to scale and be adopted, great for Ripple, not so good for solving the trilemma.

When looking at scaling there are normally two main constraints, hardware/infrastructure (bandwidth, processing power etc) & protocol rules (block size, frequency blocks are added to chains etc).

To solve the hardware problem one could propose simply utilising storage nodes with greater processing power etc; whilst this would solve this issue it would mean less and less people were able to afford the processing power and storage required to work on the blockchain, which would push the nodes into an increasingly centralised group who can afford it. Taking control away from the average user and no doubt into the hands of existing wealthy groups and institutions — which grates against the core reasons for blockchain technology.

For protocol rules, greater block size is often suggested (that way more data can be processed without increasing block generation rate) but any change to block size or generation rate has a processing power/bandwidth knock on effect that would produce the same centralisation effect as described above.

Based on this, striving for greater scalability poses a huge risk to decentralisation but also carries huge security concerns as well. Increasing the size of each block means each will take longer to propagate and process, this increase in time means increased latency in block propagation, which increases the chance of a node producing a block before learning of a new one. This process is mainly how forking occurs (a split that results in two chains being formed that is resolved by whichever chain becomes the longest first.) This obviously makes the risk of 51% attacks all the greater, a situation where whoever controls certain majority of the hash power controls the chain.

So blockchain’s quest for the scalability required to replace legacy systems poses a great threat to the security and decentralisation of the network, hence why solving The Trilemma is critical.

But how to solve it? This is our solution:

We changed the approach to Proof-of-Work and made it much more energy efficient (yes, energy-efficient Proof-of-Work) and compatible with sharding, thus enabling the network to remain fast and decentralised, as specialist, expensive hardware is not required for nodes and sharding allows for scaling the blockchain.

This energy efficient Proof-of-Work will work in combination with a validation process that means block validation is conducted through votes from validation token holders (incentivised to keep the system healthy in long term), ensuring security is maintained and proper incentive model is preserved.

Furthermore, the computational power used by the block producer is multiplied in proportion with the number of votes from validator nodes; the high-level intuition behind this is that the block is exponentially more likely to be a part of the canonical chain with the increase in number of validators pointing to it as the correct one. Added to this the block producers operating in shards are chosen pseudo-randomly based on the unpredictable nonce acquired while performing Proof-of-Work.

Through this combination of sharding, voting and energy efficient modification of Proof-of-Work one can create a blockchain that is truly decentralised, scalable and still secure.

And we are.

Welcome to Neutro. We solved The Trilemma.