What is Blockchain Scaling? – Complete Guide for 2025

Blockchain technology has been a game changer for traditional financial systems and opened up new verticals for decentralization. Despite its prominence, this technological innovation has not come without its challenges, the biggest among them being scalability.

As the demand for blockchain networks grows, the limitations of speed, capacity, and cost are becoming ever more apparent. To overcome this, developers are building solutions to improve blockchain scalability without sacrificing security or decentralization. In this guide, we’ll explore these solutions and explain how they could help increase crypto adoption.

Dive in with us as we answer the key questions, including what is blockchain scaling, what its biggest challenges are, and what solutions are on the horizon for decentralized systems.

Why Blockchain Scaling Matters

Following the 2008 financial crisis, the first blockchain network, Bitcoin, was launched. This was the first in a wave of blockchains, all of them united by the core idea of decentralization and security. However, by focusing on these points, blockchain scalability was compromised.

Simply put, the greater the demand and volume of transactions, the harder it becomes to validate each transaction securely and in a decentralized way. In Bitcoin’s early days, this wasn’t seen as an issue, since the number of users was minuscule compared to the millions that vie for the same block space today.

Limited scalability is ingrained in the architecture of blockchains and is based on how they maintain consensus and trustlessness. Every transaction must be verified and recorded by a distributed network of nodes, and when volume increases, so does the strain on the network’s capacity. This also impacts bandwidth and synchronization, leading to congestion, higher fees, and potential centralization.

For example, Bitcoin can only process around 7 transactions per second (TPS), while Ethereum handles roughly 30 TPS in normal conditions. This is significantly lower than a centralized payment processor like Visa, which claims to be able to handle up to 24,000 TPS. It is worth noting that Visa’s numbers are self-reported; however, even if they were grossly exaggerated, they still easily outperform BTC and ETH.

This limited throughput of blockchains leads to inefficiencies in the network, especially in times of high volume. Each block in the chain can only process a fixed number of transactions, and when demand spikes, users compete to get their transactions processed first. This leads to a bidding war where whoever pays higher fees gets priority treatment.

For example, in 2021, during a crypto boom, the most popular NFTs operated on Ethereum. As a result of the demand for collectibles, purchases of NFTs like Bored Ape Yacht Club generated gas fees that translated to over $3,500.

Due to limitations in blockchain scaling, these networks struggled to support the rapid adoption of such marketplaces, which typically require fast and low-cost transactions. As part of its scaling roadmap, Ethereum founder Vitalik Buterin has made the “Surge” (reaching 100,000 TPS) a priority.

In the meantime, blockchain networks like Solana have emerged to address these challenges, offering higher TPS by adopting optimized layer-1 scaling solutions. For example, Solana currently has confirmation times of over 65,000 TPS by using a Proof-of-History (PoH) along with a Proof-of-Stake (PoS) model. Despite this, Solana still faces scalability issues and has experienced multiple network outages.

Simply increasing Bitcoin, Ethereum, or any network’s transactions per second isn’t enough either; these transactions also need to be completed in a reasonable time. The completion of a blockchain transaction is called finality: a state after which these transactions have been permanently and immutably written into the blockchain. For Ethereum, this takes up to 5 minutes, while Bitcoin transactions take roughly 10 minutes.

The Blockchain Scaling Trilemma

Introduced by Ethereum’s Vitalik Buterin in a 2017 blog post, the Blockchain Scaling Trilemma is at the heart of issues faced by blockchain networks. The trilemma focuses on the challenges of simultaneously achieving decentralization, security, and scalability.

Most blockchains can optimize for two of these; however, maximizing one typically comes at the detriment of the other. This dilemma has forced developers to make strategic choices based on their network goals and use cases.

While Bitcoin and Ethereum have prioritized decentralization and security, newer blockchains like Solana, Avalanche, and BNB Chain have focused on achieving higher blockchain scalability. Let’s look at each of these factors in more detail.

Decentralization

Decentralization is the heartbeat of blockchain technology and ensures that no single entity is in charge. Decentralized networks like Bitcoin and Ethereum allow anyone to run a node, verify transactions, and participate in consensus protocols. This makes them harder to censor and is a key reason why they are the most valuable cryptocurrencies.

However, decentralization can also limit transaction speed and throughput as nodes must agree on each transaction. Bitcoin’s TPS remains low because nodes must work together to verify the transactions, resulting in a final speed of just seven TPS. In contrast, Solana’s architecture prioritizes throughput with a capacity of up to 65,000 TPS.

The problem is that validators on Solana must have access to high-end CPUs (Central Processing Units), large amounts of RAM, and fast internet connections. This results in fewer independent validators who can afford to participate, leading to greater centralization compared to Bitcoin or Ethereum.

Security

Security is a fundamental necessity of all blockchains. Bitcoin’s Proof-of-Work (PoW) model is considered extremely secure because attacking the network would require enormous computational resources and mass targeting. Despite transitioning to PoS, Ethereum also maintains strong security by offering economic incentives to validators.

However, boosting blockchain scalability can sometimes weaken security, as networks that sacrifice decentralization may become easier targets for coordinated attacks if fewer nodes control validation.

Scalability

Blockchain scalability, our main topic here, is the blockchain’s ability to handle an increased volume of transactions quickly and cost-effectively. Centralized systems have no problems with scalability, achieving thousands of transactions per second with relative ease, but at the cost of complete centralization.

Visa pre-approves participants, allowing for rapid validation and settlement of incoming transactions, and can reportedly process up to 24,000 TPS. While Visa remains secure, pouring millions into safety and threat protection, centralized systems have historically been a bait for attackers and exploits.

Although there are some solutions, no traditional blockchain network can currently match the raw throughput of centralized systems while maintaining security, something that has been a limiting factor for their wide adoption in comparison to fiat channels.

How Do Blockchains Scale?

The trilemma shows that scaling can impact decentralization and security. To address these challenges, developers have explored a wide range of blockchain scaling solutions. The three main blockchain scaling technologies are layer-1 scaling, layer-2 scaling, and protocol-level improvements.

• Layer-1 (On-Chain) Scaling: Layer-1 scaling refers to updates made directly to the base blockchain protocol. These changes involve increasing block size, reducing block time, sharding, or introducing new consensus models that enable faster validation.

•  Layer-2 (Off-Chain) Scaling: Layer-2 solutions are built on top of an existing blockchain and process transactions off-chain before settling them back on the base layer. This significantly reduces congestion and fees on the main chain.

• Protocol-Level Scaling (Consensus Mechanism): The consensus mechanism used by a blockchain can significantly impact its scalability. The most popular models are Proof of Work and Proof of Stake. PoW is the original mechanism used by Bitcoin and requires miners to use powerful computers to solve complex mathematical puzzles. PoS systems, on the other hand, have higher throughput and are more energy efficient. They use validators that “stake” or lock up tokens to the network to process transactions and authenticate them.

Layer-1 Blockchain Scaling Solutions

Layer-1 scaling aims to increase throughput, reduce latency, and improve efficiency without relying on external networks. As blockchain networks like Bitcoin and Ethereum became congested due to demand, developers have optimized the base protocol layer. Here are the main areas they targeted:

Block Size and Block Time

The most straightforward layer-1 scaling strategies focus on increasing block size and reducing block time. Block size is the amount of data that can be included in a single block on the blockchain. Larger blocks can hold multiple transactions, which means higher throughput. However, by increasing storage space, it is harder for users to run nodes, potentially harming decentralization. We explore this idea more in our blockchain file storage article.

In 2017, Bitcoin Cash (BCH) emerged as a fork (split in the network) of the Bitcoin blockchain to increase transaction capacity. It expanded the block size from 1 MB to 8 MB and later up to a dynamic 32 MB. By doing this, BCH could process more transactions per block, improving transaction throughput from Bitcoin’s 7 TPS to over 100.

Block time is the average time it takes to produce a new block on the network. Quicker block times allow for faster and cheaper transactions that can be confirmed more easily. Litecoin, which is often referred to as the “silver to Bitcoin’s gold,” reduced block time from 10 minutes to 2.5 minutes. The token surged from $4 in March 2017 to $314 eight months later, thanks to its scaling potential and improvements.

SegWit and Data Optimization

Launched in 2017, Segregated Witness (SegWit) is another layer-1 upgrade that has made a huge impact over the years. SegWit separates signature data (witness data) from transaction data, effectively increasing the number of transactions that can fit into each block without changing the block size limit directly.

Although the Bitcoin transaction capacity remains at 1MB, SegWit theoretically enables the size of up to 4 MB. In practice, however, blocks are still between 1.5 MB and 2 MB on average, which, while not the theoretical limit, is still an immense improvement.

SegWit also fixed the long-standing “transaction malleability” bug, which paved the way for more advanced scaling solutions like the Lightning Network on the Bitcoin blockchain. In 2018, transactions using SegWit doubled in two days after key entities of the Bitcoin ecosystem enabled support for it.

Sharding and Parallel Execution

More advanced layer-1 scaling comes in the form of sharding, a process that splits the blockchain into smaller pieces (shards), each responsible for processing a portion of the network’s transactions or smart contracts.

Instead of every node processing every transaction, nodes only validate transactions within their assigned shard, allowing the network to process many operations in parallel. Ethereum has included sharding in its long-term scaling roadmap to support up to 100,000 transactions per second.

Layer-2 Solutions for Scaling

Rather than changing the blockchain protocol itself, layer-2 scaling solutions aim to improve blockchain scalability by processing transactions off-chain and settling only the final results on the layer-1 chain. This reduces congestion and gas fees while increasing throughput.

Scaling blockchains with sidechains, rollups, and payment channels are examples of layer-2 solutions; let’s dive deeper into each below.

Sidechains

Sidechains are independent chains that run in conjunction with a main chain and are connected via a two-way bridge. They have separate consensus mechanisms and block parameters, which means they can be faster and cheaper than the main chain. However, they often come with trade-offs in security since they don’t inherit the full trust model of the base layer.

An example of this is Polygon PoS, which operates as a sidechain to Ethereum. Polygon offers TPS upwards of 7,200 and sub-cent transaction fees of roughly $0.007, making it ideal for DeFi, NFT marketplaces, and gaming platforms. However, Polygon’s validator set is independent from Ethereum’s, meaning users rely on Polygon for network security.

This makes it less secure than the Ethereum mainnet, despite having an independent security council. This centralization benefits transaction speeds and fees, but compromises overall security.

Payment Channels

Another layer-2 strategy involves payment channels, which allow two or more participants to hold multiple off-chain transactions without broadcasting each one to the blockchain. Only the opening and closing transactions are recorded on-chain.

This approach is ideal for high-frequency, low-value payments, such as microtransactions. The most notable implementation is the Lightning Network on Bitcoin, which aims to enable instant and atomic payments down to 0.00000001 BTC. While Bitcoin processes only about 7 TPS on-chain, Lightning can theoretically scale to millions of TPS.

Scaling and the Consensus Mechanism

Consensus mechanisms power the blockchain network by keeping it secure, scalable, and decentralized. They determine who gets to add new blocks and how those blocks are validated. Some models are optimized for speed but may involve trade-offs in decentralization.

A challenge they face is the classic Byzantine Generals Problem, which is how to get a network of untrusting participants to agree on a single truth, even if some participants are unreliable or faulty. Each consensus mechanism solves this differently. Let’s go through the options.

Scaling in Proof of Work (PoW)

Miners in PoW are rewarded for solving complex cryptographic puzzles to validate transactions and produce new blocks. While this makes networks highly secure and censorship-resistant, it’s computationally intensive, with limited scalability.

For instance, crypto transactions per second using this mechanism are typically lower compared to PoS. PoW chains are also highly energy inefficient; Bitcoin’s network, for example, consumes more electricity than many countries.

Attempts to improve blockchain scalability under PoW include reducing block times (as Litecoin does with its 2.5-minute blocks) or increasing block size (as in Bitcoin Cash), but these layer-1 tweaks only marginally improve performance and risk centralizing the network by making full nodes harder to run.

Scaling in Proof of Stake (PoS)

PoS removes the need for energy-intensive mining and allows for faster block production while lowering latency and increasing throughput. Miners are replaced with validators, who are rewarded with a share of fees for honest behavior and penalized or “slashed” for malicious activity.

Known as the “Merge”, Ethereum’s move from PoW to PoS in 2022 was the beginning of a transaction that also reduced its energy consumption by over 99%. While its TPS remains limited by the current block structure, PoS enables Ethereum to support future upgrades like sharding, which it hopes will take its TPS to over 100,000.

Here are some other PoS blockchains that have shown some strong performance:

• Solana uses a PoS with a PoH (Proof of History) model and has the capacity of up to 65,000 TPS; however, it averages a TPS closer to 4,000.
• Avalanche reaches 4,500 TPS with rapid finality using a unique leaderless PoS consensus.
• Cardano, while slower at around 257 TPS, uses formal verification and a layered design to enable long-term scalability.

Alternative Consensus Models

In response to the limitations of PoW and PoS, newer consensus models have emerged specifically to improve scalability and finality. These include Delegated Proof of Stake (DPoS), PoH, and Directed Acyclic Graphs (DAGs), among others. Each takes a different approach to optimizing consensus for high-speed environments.

• Delegated Proof of Stake (DPoS): DPoS is used by blockchain networks like EOS and relies on a small, rotating group of elected validators to confirm transactions. This allows EOS to process up to 4,000 TPS, however, it is often criticized for its centralization, leading to its native token falling by over 97% from its peak of $22.89.
• Proof of History (PoH): Implemented by Solana, PoH timestamps transactions before consensus, reducing coordination overhead and enabling significantly faster parallel processing.
• Directed Acyclic Graph (DAG): DAG-based protocols, such as IOTA and Fantom, ditch linear blockchain structures with transactions that are processed asynchronously. As they are not in blocks, this theoretically allows millions of TPS.

These alternative mechanisms show that by rethinking how agreements are reached, blockchains can unlock much greater throughput while exploring new decentralization models.

Scaling Solutions on the Horizon

As blockchain solutions become more mainstream, top networks will continue to find new and experimental scaling technologies to solve the trilemma. Here are some popular and upcoming scaling solutions.

Ethereum – Rollups and Danksharding

Ethereum is looking to scale its blockchain network through layer-2 rollups. Rollups bundle (roll up) thousands of off-chain transactions into a single batch and submit proofs to the network, drastically reducing gas fees and congestion.

The two main types of rollups are Optimistic (Optimism, Arbitrum) and Zero-Knowledge Rollups (zkSync, Starknet). For example, Arbitrum can reach transaction throughput in the hundreds to low thousands, with gas fees reduced by 90% or more compared to Ethereum’s current capacity.

Ethereum’s future roadmap includes proto-danksharding (EIP-4844), which aims to improve data availability by making rollups even cheaper and faster, potentially enabling its 100,000+ TPS goals.

Solana – Monolithic Scaling with PoH

Solana focuses on monolithic scaling, keeping consensus, execution, and data availability in one layer. However, this comes at the cost of hardware demands and occasional network outages, which the ecosystem is actively addressing.

Avalanche – Subnets

Avalanche’s blockchain network scales through its Subnet architecture, where independent blockchains run in parallel under the Avalanche consensus. Subnets allow specific use cases like gaming or institutional finance to run on their own optimized chains. The network can process over 4,500 TPS, and subnets can be customized for speed, compliance, or performance, making Avalanche highly adaptable.

Blockchain Scaling Matters More Than Ever

As of 2025, the blockchain ecosystem includes over 25,000 cryptocurrencies, with millions of active wallets and billions of dollars in on-chain activity daily. Leading networks like Ethereum and Solana process hundreds of millions of transactions per month, and that number continues to rise.

The use case for blockchain continues to grow, from powering the next wave of digital economies to handling millions of users in games. This makes the need for scaling more vital than ever if blockchain technology is truly to reach mainstream adoption. Without this, blockchains will continue to risk congestion, rising fees, and poor performance, which could all impact the future growth of the technology.

References

1. Ethereum gas fees surge following demand for Bored Ape (Mashable)
2. Ethereum roadmap targets 100,000 TPS (Forbes)
3. What is the scaling trilemma? (Vitalik Buterin)
4. The number of transactions using SegWit doubles (Forbes)
5. What is Sharding? (Ethereum)
6. Lightning Network increases scaling on Bitcoin (Lightning Network)
7. Bitcoin consumes more energy than small countries (NY Times)
8. How the Merge reduces Ethereum’s carbon footprint (BBC)
9. What is danksharding? (Ethereum)
10. History of Solana outages (Helius)
11. Ethereum’s confirmation time (London Link)
12. How long do Bitcoin transactions take? (Bitbo)
13. Litecoin makes first Lightning Network transaction (Blockstream)

FAQs

What is blockchain scaling?

Blockchain scaling is the process of increasing a blockchain’s capacity to handle more transactions per second without compromising security or decentralization. It involves technical improvements at both the protocol (layer-1) and network (layer-2) levels to support growing user demand.

Why is blockchain scalability important?

Blockchain scalability is crucial for ensuring that blockchains can support mass adoption, real-time applications, and low transaction fees. Without it, networks become congested, slow, and expensive to use during high-traffic periods.

What is the blockchain scaling trilemma?

The blockchain scaling trilemma is a concept introduced by Vitalik Buterin that suggests it’s difficult to simultaneously achieve decentralization, security, and scalability in a blockchain network. Improving one of these aspects often requires trade-offs in the others, making it a complex design challenge.

What is Bitcoin scaling?

Bitcoin scaling involves solutions like SegWit and the Lightning Network that aim to improve Bitcoin’s low transaction throughput, which is limited to around 7 TPS. These upgrades help reduce fees and increase transaction speed without altering the core Bitcoin protocol.

Which blockchain has the best scalability?

Blockchains like Solana and Avalanche are currently among the most scalable, offering thousands of transactions per second with fast finality. However, blockchain scalability often comes with trade-offs in decentralization or hardware requirements, so what is “best” depends on specific use cases and goals.

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