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What is Sharding in crypto: Explained in detail

What is Sharding in crypto: Explained in detail
Author: Rakshita Jain

The technology that lays the foundation of crypto is at a developing stage. It means new techniques and upgrades keep coming up with time and need. One such technique introduced to make blockchains scalable is “Sharding”.


Sharding refers to splitting blockchain network nodes into multiple groups, so each group has its unique data. It distributes data into multiple smaller databases so that no single database gets overloaded with all the network information. 

What is a Shard in crypto?

The single unit of the split parts of databases in the sharding is called a “Shard”. A cluster of network nodes creates a Shard which is easier to manage than the whole blockchain. As a word, a Shard means “a small part of a whole”.

What is the importance of Sharding?

The rising popularity of crypto is leading to a surge in network traffic, due to which the workload of various blockchains is continuously increasing. Since every node of a blockchain network has to store all its blockchain data, it sometimes gets overloaded with data and backlogs of pending transactions. As a result, the network participants face challenges like network congestion, high transaction fees, and slow transactions at the time of new transactions where the network fails to become scalable or handle more transactions and data flow.

It is where the concept of Sharding comes to the rescue. It divides the network into small parts with their roles and responsibilities. This way, the nodes no longer have to handle the data load of the whole network. It eventually boosts the capacity of that blockchain network.

How does the Sharding work?

Generally, in blockchain, each node in the network handles all the transaction data and processes. If most nodes do not agree on any transaction details, the transaction does not process. This way, the blockchain maintains the security of its transactions. However, this process slows down the transactions because the nodes have to verify new transactions while managing the backlogs and older data. 

Sharding divides the workload of transactions and data storage among different shards so that all nodes do not have to handle all the workload. 
One popular way to do so is horizontal partitioning which involves the network nodes getting divided into rows called Shards. Then each shard gets allotted its set of responsibilities. For example, one shard may handle the responsibility of data storage of some particular transaction types. So that shard will only work on those transaction types and not all its blockchain transactions and can process those transactions faster.

But this does not mean that the shards can not share data. The data is still exchangeable between the shards of a network to maintain the decentralized framework. Once the shards verify the transaction details, those details get bundled up in the blocks and connect to the blockchain.

What are the advantages of Sharding?

Some impressive advantages of blockchain sharding are:

  • Since the sharding makes the database in a blockchain manageable, easy, and quick through shards, the blockchain becomes scalable for crypto trading and other purposes.

  • Sharding makes the transaction process faster because shards have to handle fewer transactions. So they are readily available to process a transaction.

  • A sharded blockchain consumes less energy in crypto mining or processing a transaction, and hence, it significantly reduces the transaction cost.

  • Even if any shard becomes unavailable for any reason, the whole network still stays partially available. However, in a non-sharded network, the whole network becomes halted if any of its nodes becomes unavailable for any reason.

What are the disadvantages of Sharding?

Here are some disadvantages associated with Sharding:

  • Blockchain security becomes a bit doubtful in the Sharded network because taking over a single shard becomes easier than taking over the whole network.

  • Sharding splits a single blockchain into smaller shards. Then the communication between the shards becomes a bit complicated if not handled properly by the developers.

Will Ethereum 2.0 have Sharding?

Yes, the final phase of Ethereum 2.0 will involve sharding. Ethereum 2.0 sharding will happen in 2023 after the Merge of the Ethereum main net with the beacon chain. It is the most favourable solution for Ethereum to solve its scalability issue. The reason to schedule sharding in the last stage is to give a favourable proof-of-stake(PoS) consensus to Shards that perform better in PoS than PoW. 

Which cryptocurrencies use sharding?

Some types of crypto coins and tokens that use sharding are - Zilliqa (ZIL), Polkadot (DOT), Harmony One (ONE), Holo (HOT) coin, etc.

Many cryptocurrencies struggle to develop further due to their scalability issue. Sharding can be the possible answer to their problems. It distributes the roles and responsibilities of a blockchain into shards of that blockchain. Ethereum 2.0 and its sharding are creating much hype for its investors and developers. If it gets successful, Ethereum 2.0 may come out as a game-changing upgrade till now.

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