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The Ethereum ecosystem, essential developers, scholars, and other stakeholders have consistently acknowledged scalability as arguably the most crucial technical dilemma that must be addressed for blockchain applications to achieve widespread use. Blockchain scalability poses challenges mainly because a conventional blockchain structure necessitates that every node within the network processes every transaction, which constrains the transaction processing ability of the overall system to that of a single node.
There are two primary approaches to enhancing blockchain scalability. The first (“sharding”) entails developing better-structured base-layer blockchain protocols that still uphold most of the desirable decentralization and security attributes of a blockchain as observed in the straightforward designs currently available but only require a minimal fraction of nodes to witness and process each transaction, enabling a significantly larger volume of transactions to be handled concurrently. The second approach focuses on creating “layer 2” protocols that execute most transactions off-chain and only interface with the underlying blockchain to enter and exit from the layer-2 framework, as well as to respond in the event of system attacks.
We regard these two methodologies as complementary and believe in advocating a multi-faceted approach toward Ethereum scalability that embraces both strategies and considers them as interdependent.
Technical literature on Ethereum scalability innovations
Sharding:
Examples of existing layer-2 solutions:
As the Ethereum blockchain reaches 1 million transactions each day, and both Ethereum and other blockchain projects frequently hit their maximum transaction limits, the necessity for scaling advancements is becoming increasingly evident and pressing. To address this, in addition to current and forthcoming efforts focused on scalability internally, we are initiating two experimental funding programs aimed at empowering more independent teams to collaborate with the Ethereum Research team’s base-layer scalability research and development initiatives as well as to construct autonomous layer-2 projects that can integrate with and enhance Ethereum’s scalability.
Independent groups of developers, companies, and academic units are encouraged to apply; we understand that distinct types of applicants may require various formats and processes, and we are prepared to be adaptable to meet the unique needs of each team.
Sharding client subsidy program
In recent months, progress on sharding has accelerated rapidly. A specification for an initial prototype is nearing completion, accompanied by a roadmap that will allow for its gradual integration into Ethereum, initially as a “loosely coupled” sidechain anchored into the Ethereum base chain through a “validator manager contract,” ultimately leading to closer integration with the Ethereum base chain over time. A reference implementation is being developed in Python on top of Py-EVM, and a testnet in Python is not far off.
In this next phase, we invite you to participate. We aspire for the Ethereum sharding testnet, and subsequently the sharding mainnet, to be a multi-client environment from the outset, with the Ethereum Foundation not endorsing any singular privileged production client. The research team funded by the Ethereum Foundation will persist in developing an implementation in Python and potentially other languages, but this is primarily intended as a reference and proof of concept. While we aim to remain heavily focused on research and specifications, we do not wish to ultimately “win” in the competition for which client attracts the most actual users once the network is operational.
Rather, the Ethereum Foundation will be providing subsidies to independent groups within the community that aim to assist in building an implementation and taking part in the sharding testnets and mainnet. These funds are NOT meant to serve as significant profit sources for receiving entities; instead, they are intended to help cover some of the costs involved, with the understanding that those who engage in the program will gain a unique opportunity to contribute to Ethereum 2.0 development while working closely with core Ethereum researchers, and be part of the creation of one of the first clients to be available upon the sharding mainnet’s launch.
This will manifest as a specialized initiative, which will operate alongside a more general grant program that the Foundation will implement soon. Subsidy amounts of 50,000upto50,000 up to 1,000,000 will be available, with potentially more for particularly successful endeavors; the amount of subsidy will consider the team’s quality, the proposed implementation’s scope, and the project’s progression over time. Participants will work closely with the core research team and will play a crucial role in finalizing the specification developed throughout the implementation and testing phases.
Layer-2 scalability solution subsidy program
Numerous independent proposals have emerged recently regarding how blockchains like Ethereum can be scaled through second-layer protocols. We acknowledge and appreciate that developers and researchers are enthusiastic about exploring and executing technologies in this area, and that many teams desire the autonomy to conceptualize and develop their own designs that…
“`incorporates their own concepts. We aim to provide a chance for such groups to unleash their imagination and develop their scalable blockchain proposals, all while remaining within the Ethereum ecosystem.
In this regard, we are launching a funding initiative for projects that are establishing scalability and latency-reducing “layer 2” solutions that operate on top of Ethereum, leveraging the security of the Ethereum blockchain as a foundational layer and ensuring interoperability with the broader Ethereum community and platform.
Similar to the sharding client program, this will take shape as a specialized grant initiative, with funding amounts of 50,000to50,000 to 1,000,000 will be accessible depending on the project’s scope, scale, and quality. Support may be available even if the initiative has a separate business model or funding from other potential sources within the Ethereum community, although we will prioritize projects that otherwise struggle to sustain themselves, and it is essential that the funded work is fully open-source and serves a common benefit for the Ethereum ecosystem.
Funding objectives include endeavors aimed at creating high-quality implementations of established layer-2 scaling methods (e.g., state channels, Plasma), in addition to researching and innovating new strategies.
Final remarks
Both programs are in the nascent stages, and grant decisions will be made initially at the discretion of Ethereum core leadership. Details, encompassing the terms, conditions, and timelines for payments, may evolve based on our preliminary experiences with program participants, and we anticipate the program will solidify and expand throughout the year.
Note that while payments from these collaboration initiatives are substantially higher than those from our prior grant programs, these funds come with significantly increased expectations regarding focus and quality. We are targeting proficient teams with either direct experience in Ethereum or the blockchain domain, or expertise in the broader areas of mechanism design, distributed systems, or cryptography, alongside software engineering. The initiatives are also specifically oriented towards sharding clients and layer-2 scaling solutions; this is NOT a general-purpose grant initiative. That is still under development, and details will be shared as soon as they are available.
Application process
The initial step is to send an email to apply@ethereumresearch.org, including the following details:
- Official title of the project, applicant, and core developers
- Additional information about the team, including any prior activities in the Ethereum or blockchain field or distributed systems, mechanism design, or cryptography
- Proposed idea and its impact on scalability
- Projected timeline for development milestones and completion, requested grant amount, and estimated overall budget