Cardano Congestion and Layer 1 Improvement

Cardano Congestion

With the addition of smart contracts, Cardano’s blockchain has developed considerably over time. The developers behind the blockchain advocated for a “slow and steady” transition strategy, which helped with a smooth and successful rollout. While it might not be the most popular infrastructure, the Cardono ecosystem depicts a wide range of real-world application cases.

Unfortunately, the Cardano has been facing some congestion issues that can delay transactions. While this is a positive sign that the blockchain is seeing increasing demand, it can also be quite bothersome for users. So why is it happening? First, we need to understand how the Cardano blockchain actually works.

Cardano’s Architecture

The Cardano blockchain is made up of two levels. The first is the account value ledger, and the second is the rationale for value transfers from one account to another.

The Cardano Settlement Layer (CSL) serves as the account ledger or balance ledger. This is a concept that was developed as a way to improve on the bitcoin blockchain. To produce new blocks and confirm transactions, it leverages a proof-of-stake consensus mechanism.

The Cardano Computation Layer (CCL) is where data about how values are moved is stored. Users of the CCL can implement customized rules for analyzing transactions because the computation layer is not tied to the balance ledger. The launch of SundaeSwap, Cardano’s first Automated Market Maker (AMM) Decentralized Exchange Protocol(DEX), was a big milestone in the blockchain’s long roadmap. SundaeSwap is a token staking and decentralized exchange (DEX) platform. It allowed its users and investors to swap tokens and raise liquidity without limitations. However, a few minutes after the launch, users started complaining about failed transactions on the platform as a result of network congestion. So what’s exactly going on?

What is Congestion?

Congestion on a blockchain happens when the demand for blockchain transactions surpasses the capacity of the blockchain. There is usually a limit to the number of transactions that may be recorded in each block. When the number of transactions reaches this threshold, the transaction initiators have two alternatives. The first alternative is to pay extra for the transaction fee. The transaction’s priority will be raised as a result of this fee. Because the danger of front-running increases the cost of waiting, blockchain users have an incentive to pay a fee. Nevertheless, paying this fee does not ensure that the transaction will be included in the following block and thus approved.

By paying even more significant fees, transaction initiators could boost their transaction priority even further. It is important to note that the total value of connected fees has no effect on the transaction limit per block. As a result, even if everyone who needs to initiate a transaction decides to pay the exorbitant costs, the congestion will persist.

The second alternative involves allowing additional time for the transaction to process without paying any extra fees. Even though the prospect of waiting incentivizes an individual user to pay extra in the hopes of speeding up the transaction, the user may choose to forego the fee in order to prevent other users from paying even larger fees.

Congestion should not be mistaken for a Denial of Service attack (DoS). A Denial-of-Service (DoS) attack is one that attempts to bring a system or network to a halt, rendering it unreachable to its intended users. DoS attacks work by bombarding the target network with traffic or sending a barrage of information that causes it to crash. The DoS attack deprives genuine users like members, account holders, or workers of the resources or services they expected in both cases.

How Cardano Plans to Avoid a Repeat of the Congestion

Stability Cardano is designed to be extremely stable and secure despite network outages as a proof-of-stake blockchain. Cardano is meant to provide a rock-solid environment for processing millions of transactions worldwide, in a decentralized and highly scalable way, thanks to the Ouroboros consensus algorithm, built-in Haskell which utilizes formal techniques, as well as peer-reviewed research studies.

Adaptability Cardano is designed to be adaptable. It is meant to enhance throughput while allowing for increased demand response. As the network expands, protocol parameters are fine-tuned to account for pricing swings, as well as to improve scalability and throughput. Cardano blocks are used about 25% of the time on average throughout a given epoch, indicating that the network is not overburdened and that there is sufficient spare capacity to execute even more transactions.

The Cardano network’s average blockchain load is currently hovering at 93.19 percent, meaning that 93.19 percent of its blocks are full. In comparison, on New Year’s Eve, the measure was only 32.49 percent. The number of ADA wallets on the market is also approaching 3 million.

Increased Network Capacity To eliminate the possibility of any future network congestions, a subsequent parameter upgrade has been recommended in order to boost Cardano network capacity in accordance with the overall goal. This upgrade will expand the network block size by 8KB, bringing it to 80KB from 72KB. Furthermore, an upgrade proposal has been launched to raise Plutus script (Cardano’s native Smart Contract platform) memory units per transaction on the Cardano mainnet from 12.5 to 14 million, a 1.5 million increase.

These steps have been carefully adjusted to guarantee optimal network use while reducing transaction latency. Users will experience longer block adoption times if the number of blocks is raised dramatically and all at once. That’s because throughput (The volume of data transferred) and timeliness (duration for block adoption) are at odds: boosting throughput means greater network performance, but it might come at the expense of higher delay when the system is overburdened.

The entire ‘budget’ for Timelines is set at 5 seconds (95 percent of the stake) for a block to spread across the network, with Plutus scripts having a budget of about 50 milliseconds. This is done to avoid monopolization by allowing the block to add both scripts and simple transactions.

The adjustments to block size and memory units went into effect on the 4th of February 2022, as part of a plan to expand and improve the throughput of the Cardano network. These improvements will give more resources for Plutus scripts, improving DApp user experience while also enhancing overall network capacity. This change was part of a proposed sequence of network improvements. In the year 2022, Cardano will be slowly enhanced in a series of controlled steps, deliberately and painstakingly scaling Cardano for future expansion as demand grows.

A larger block size supports a larger number of transactions per block. During situations of network congestion, there will be reduced waiting time for transactions to be accepted by a block, which is a positive. There is, however, a cost. It takes longer for larger blocks to propagate throughout the network. Nodes will also require additional time to validate transactions as a result of this.

Pipelining Another consensus layer innovation that allows for quicker block propagation on the network is called Pipelining, or more specifically, diffusion pipelining. It allows for even more headroom, allowing Cardano’s efficiency and competitiveness to improve even more.

Diffusion pipelining was created with the goal of achieving quicker block propagation while preventing ‘destructive’ alterations to the chain. It is a solution that doesn’t change any of the protocols, primitives, or interactions that are already in use in Cardano because nodes rely on them. Instead of modifying the way things are now done, a new mini-protocol whose goal is to pre-notify subscribing entities when a new desired block is discovered, before complete validation was developed.

Scaling Scaling (increasing the system’s throughput measured in transactions per second) has also been known to alleviate network congestion. However, the Cardano protocol has a completely different scaling mechanism compared to a protocol like Ethereum. There is a wide range of different solutions to Scaling on Ethereum like Channels, Plasma — Ethereum’s Native Sidechain, and Rollups.

Rollups seem to be the most preferable scaling method according to popular opinion. This led to the development of Hydra for Cardano.

Likely Issues that could Arise from Cardano Congestion Solutions

One of the fundamental assumptions for network security is that new blocks must be broadcast to 95% of nodes within 5 seconds of being created. Increases in the parameters begin to deplete the budget. It’s impossible to have an exponential rise in block size. Furthermore, even without smart contracts, experts perceive transaction amounts to be excessive.

Critics even argue that the upgrades will be ineffective because the present increase in block size is minimal in contrast to Ethereum. (Ethereum sizes range from 72 to 80 kbs). Comparing the architecture of Ethereum and Cardano is like comparing apples to oranges.

Although increasing the block size might improve network speed, such adjustments should be done with caution. The settings will be progressively tweaked and the outcomes will be monitored during high saturation times to guarantee that the increase does not impact block adoption time. This is not a one-time update, but rather an iterative process that offers clear findings and assists in achieving the most efficient outcomes possible.

Disclaimer: This post is for educational purposes only, the authors do not endorse or promote any products discussed herein.

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