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A Summary of

Models for scaling trustless computation

by
Kyle Samani
Multicoin Capital
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All major smart contract platforms are making a unique set of trade-offs, fundamentally representing different views of the meaning of trustless computation. The challenge is balancing the scalability trilemma.

Scalability Trilemma

  • Safety
  • Scalability
  • Decentralization of Block Production
  • Time to Finality (a possible fourth dimension?)

Trade-off 1: Permissionless Proof-of-Work

  • Users had to trust a 3rd party to administer system, lead to censor transactions
  • Solution: Proof-of-Work (PoW)/Proof-of-Stake (PoS) schemes
  • Downside of PoW systems is that scaling does not happen without centralizing block production
  • PoS schemes do not all centralize block production equally

Trade-off 2: Centralizing Block Production

  • PoW schemes naturally centralize, Delegated proof-of-stake (DPoS) was invented
  • Bet on:
    • Certain applications that require high throughput and low latency on neutral database
    • Not all distributed systems need to be that distributed

Trade-off 3: A Universe of Many Chains

  • Different applications should share unique validator sets
  • Compromises less value based on scalability trilemma
  • Downside: can create a system that in aggregate is unstable
  • Solution: sharding, verifiable off-chain computation, open source, copying, and politics
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