Giving Up Decentralization: Scalability Trilemma

Jul 2, 2022

The scalability trilemma states that blockchains must choose to optimize two of the three properties:

  • Scalability –transactions per second (throughput) and transaction finality (latency)
  • Security – the cost to mount of a 51% attack, cost to validate state
  • Decentralization – the cost and ability to run a node or participate in the network

Many of the web3 call themselves decentralized de jure – the network must be decentralized due to the rules of the underlying technology: built on blockchain, permission-less for anyone to join or transact on.

De facto, these networks often sacrifice decentralization in favor of security and scalability. At-home validators give way for dedicated hardware, organizations and companies form to provide infrastructure layers, and wealth gets concentrated.

It's not necessarily the wrong trade-off. There will always be applications that need to live on a different side of the triangle.