What Is Blockchain Network Congestion?
What is network congestion?
Network congestion occurs when the number of transactions submitted to a network exceeds its ability to process. This phenomenon can be caused by a variety of factors, including external influences such as market volatility, as well as internal network characteristics such as block size and block time.
Before we dive into this question, it is important to understand the process by which blocks are added to the blockchain.
How does blockchain technology work?
A blockchain consists of a series of blocks, each of which contains transaction data created by users. Whenever a new block is added to the chain, its record is permanent and unchangeable.
These blocks are propagated between nodes in a decentralized network, each of which stores a copy of the blockchain. The formation of blockchains relies on the principles of cryptography and game theory, making them the core pillars of certain cryptocurrencies.
To understand why blockchain networks experience congestion, we need to explore several key concepts that affect the network’s ability to process transactions: memory pools, candidate blocks, determinism, and the longest chain rule.
What is a “memory pool”?
A memory pool refers to a collection of unconfirmed transactions that will be included in the next block.
When a transaction is broadcast on the network, it is not immediately added to the blockchain, but first enters the memory pool and becomes a transaction waiting to be processed. Once the transaction is confirmed, it will be removed from the memory pool.
What is a “candidate block”?
Candidate blocks, also known as proposed blocks, are blocks that miners or validators propose to be added to the blockchain. These blocks contain unconfirmed transactions that have been broadcast to the network but have not yet been included in the blockchain.
For a candidate block to become a confirmed block, it must be mined or verified according to the consensus mechanism of the blockchain. For example, under some consensus mechanisms, miners need to solve complex mathematical puzzles. The first miner to solve the puzzle can add the candidate block to the blockchain and receive a reward.
In another consensus mechanism, validators propose candidate blocks by random selection, and other validators verify their validity. When a block receives enough proof, it will move from a candidate block to a confirmed block.
What is the “determinism” of a blockchain?
Determinism means that once a transaction or operation is completed, it cannot be changed or reversed. This means that once a transaction is recorded on the blockchain, it will exist forever and cannot be modified or deleted.
On some blockchains, transactions are first broadcast to the network and enter the memory pool. Miners select and verify transactions from this pool to be included in the block to be added. Although the transactions in this block are considered confirmed, other miners can theoretically still mine competing blocks.
The certainty of a transaction increases with the number of confirmed blocks. Transactions are generally considered “final” when more blocks are attached to the block containing these transactions. Due to the short block time of some blockchains, multiple confirmations are recommended to achieve a similar level of confidence in finality.
What is the “longest chain” rule?
As mentioned earlier, multiple miners may generate new valid blocks in a similar period of time, which may cause the blockchain to fork.
The “longest chain” rule refers to the fact that in a blockchain, the version that has been put into the most computational work is considered the valid version, usually represented by the longest chain containing the most blocks. This means that “valid” blocks on shorter chains (often called orphans or stale blocks) will be discarded and the transactions they contain will be returned to the memory pool.
The longest chain principle also applies when some blockchain networks use proof of work. As the network moves to other consensus mechanisms, the network may adopt a newer fork selection algorithm that measures the “weight” of the chain, which is usually weighted by the sum of the validators’ votes and the assets staked.
What causes blockchain network congestion?
Network congestion occurs when the number of transactions submitted to the network exceeds its processing capacity.
Here are a few possible reasons for blockchain network congestion:
Increased demand
As more users submit transactions to the blockchain, the number of unconfirmed transactions in the memory pool may exceed the number that can be accommodated in a single block. In particular, blockchains with inherent limits on block size and block time are more susceptible to this.
Sharp price swings can also lead to a surge in transaction volume, triggering a rapid increase in transaction activity or a large-scale adoption cycle.
Small block size
Each blockchain has a specified block size, which is the maximum capacity of a single block. The block size limits the number of transactions that can be included.
For example, some blockchains were originally designed with a block size limit of 1 megabyte (MB). As technology advances, upgrades may be made to increase transaction throughput, but if the number of transactions exceeds the new limit, it will still cause network congestion.
Slow block time
Block time refers to the frequency with which new blocks are added to the blockchain. For example, some blockchains add a new block every approximately 10 minutes. If the number of transactions increases rapidly during this time, it will cause a backlog of transactions.
What are the consequences of network congestion?
Congestion in a blockchain network can lead to a variety of negative consequences that hinder the smooth operation of the network.
Increased transaction fees
Depending on the reward mechanism, miners usually prioritize transactions with higher fees. Therefore, when the network is congested, users usually need to pay higher transaction fees to incentivize miners to prioritize their transactions. This may make the transaction fees for using the blockchain higher than usual, especially when processing small transactions.
Delayed transaction confirmation time
Network congestion can increase the time required for transaction confirmation and finalization. In extreme cases, transactions may take hours, days or even longer to confirm, which may frustrate users.
Poor user experience
High fees and slow confirmation times may result in a poor transaction experience, thereby reducing the application scope and usability of the blockchain.
Market fluctuations
Network congestion can exacerbate market uncertainty and amplify volatility. If a large number of users are trying to sell a certain crypto asset, and network congestion causes transactions to be processed slowly, it could trigger panic among users, prompting them to rush to dump their assets.
In addition, other consequences such as security risks and network centralization risks may arise. Delays in confirmation times may increase the risk of double-spend problems, while higher fees may lead to a centralization of computing power.
Network congestion example
Some blockchain networks have experienced significant congestion.
A certain blockchain network is congested
At one point, the network’s prices skyrocketed, leading to the famous network congestion event. At that time, demand and trading activity increased dramatically, resulting in transaction confirmation delays and soaring handling fees, with average trading fees once exceeding 50 units.
Recently, the transaction activity related to a certain token has surged, making the network extremely congested. The number of pending transactions and handling fees have increased significantly. Unconfirmed transactions once reached 400,000. The memory pool is facing a bottleneck, and transaction fees have increased within a few weeks. 300%.
In another famous incident, the popularity of a certain project caused a massive slowdown in network speeds. In addition, the rise of decentralized finance has caused network congestion and increased gas costs. Congestion is likely to occur on any blockchain network, but congestion is more pronounced on some networks than on others due to their higher usage and importance and broader impact.
Solutions to alleviate network congestion
Solving the problem of blockchain network congestion is relatively complex, and there are many methods, each with its own advantages and disadvantages.
Increase block size
By increasing the block size, each block can process more transactions, effectively increasing the throughput of the network. However, larger blocks also mean longer propagation times, an increased risk of temporary forks, and require more storage space, potentially leading to greater centralization.
Reduce block time
Shortening the block time can speed up the speed at which the network processes transactions, but it will also increase the number of orphan blocks, which may compromise the security of the network.
Layer 2 solution
Off-chain solutions process transactions outside of the main blockchain and record their final status on-chain. For example, some networks’ Lightning Network and Plasma are off-chain solutions. These solutions improve scalability, but are complex to implement and may introduce additional security issues.
Sharding
Sharding technology works by dividing the blockchain into multiple smaller parts, allowing each part to process transactions and smart contracts independently. This method can significantly improve the processing power of the network. However, similar to Layer 2 solutions, sharding also increases the complexity of the system and may introduce additional security risks.
Additionally, other potential approaches to address network congestion include fee adjustment and scaling solutions such as optimistic aggregation and zero-knowledge aggregation. It is generally believed that certain consensus mechanisms are faster than traditional proof-of-work mechanisms.
Conclusion
Blockchain technology is expected to be more widely used in the future, so network congestion problems will become increasingly significant. The network’s ability to efficiently handle large volumes of transactions is critical to its widespread adoption and usability, especially for blockchain systems designed to support real-time daily transactions. Although blockchain network congestion poses many challenges, the community is actively developing solutions to alleviate these issues. This is why research on enhancing the scalability of blockchain has always occupied an important position in the industry.
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