On Sharding Open Blockchains with Smart Contracts

Current blockchain systems suffer from a number of inherent drawbacks in its scalability, latency, and processing throughput. By enabling parallel confirmations of transactions, sharding has been proposed to mitigate these drawbacks, which usually requires frequent communication among miners through a separate consensus protocol.

In this paper, we propose, analyze, and implement a new distributed and dynamic sharding system to substantially improve the throughput of blockchain systems based on smart contracts, while requiring minimum cross-shard communication. Our key observation is that transactions sent by users who only participate in a single smart contract can be validated and confirmed independently without causing double spending. Therefore, the natural formation of a shard is to surround one smart contract to start with. The complication lies in the different sizes of shards being formed, in which a small shard with few transactions tends to generate a large number of empty blocks resulting in a waste of mining power, while a large shard adversely affects parallel confirmations. To overcome this problem, we propose an inter-shard merging algorithm with incentives to encourage small shards to merge with one another and form a larger shard, an intra-shard transaction selection mechanism to encourage miners to select different subsets of transactions for validation, as well as a parameter unification method to further improve these two algorithms to reduce the communication cost and improve system reliability.

We analyze our proposed algorithms using the game theoretic approach, and prove that they converge to a Nash Equilibrium. We also present a security analysis on our sharding design, and prove that it resists adversaries who occupy at most 33% of the computation power. We have implemented our designs on go-Ethereum 1.8.0 and evaluated their performance using both real-world blockchain transactions and large-scale simulations. Our results show that throughput has been improved by 7.2×, and the number of empty blocks has been reduced by 90%.