Congestion, Scaling and the Market for Shards in Blockchains

Sharded blockchains have been introduced as a possible solution to scalability issues. In general, the platform decides how to allocate new transactions to the available shards. This is done according to the shards’ capacity, their level of occupancy and possible other criteria. In this article, we take an exploration into an alternative perspective, allowing the users to choose which shard to store a transaction into. It follows that such choice would generate a market for shards, where users select among available shards considering their performance and transaction fees. In the article, we characterise shards’ selection as a Nash Equilibrium of the relevant game. The main finding shows that, when free to choose, users would in general select different shards, therefore scaling the blockchain without main congestions. This is except for when there is a dominating shard, that is one which all users prefer regardless of how many users have chosen it. In the article, we discuss possible measures to prevent such dominance.