On Wednesday, February 23 2022, Hiro Hyperchains were announced. Hiro Hyperchains are a new, open-source development coming to the Stacks (STX) blockchain in summer 2022. STX brought smart contracts to Bitcoin a little over a year ago. Hyperchains are the first proposed scaling solution for the STX blockchain. As the transaction volume on the STX blockchain has increased, users are finding the usability has decreased. Specifically, high transaction fees and high latency (transaction time) have hurt STX functionality.
This is a common issue blockchains face. It is known as the Blockchain Scalability Trilemma.
What is the Blockchain Scalability Trilemma?
The blockchain or scalability trilemma refers to three requirements for a well-functioning blockchain. These requirements are:
- Decentralization
- Security
- Scalability
Decentralization
Decentralization is the most important part of blockchain technology. It refers to how control is shifted from a single entity to smaller groups or individuals across a network. Decentralization matters because it enables open and permission-less transactions. It removed middle men from transactions, eliminating control points. While decentralization matters, it can decrease throughput. This becomes as a problem as the network grows.
Security
Security refers to a networks ability to resist hacking or hijacking by dishonest participants. This can refer to double spending of coins which requires 51% control on the network for proof-of-work algorithms. Decentralization is a part of security. The more nodes a protocol has the more secure it is, providing no single person or group controls a majority of the nodes.
Scalability
Scalability refers to a networks ability to maintain high performance as the network grows. Can a network support high transactional throughput as it grows? Ethereum supports 15 transactions per second. VISA supports >50,000 transactions per second. Ethereum was the first network to experience issues with the Blockchain trilemma. Ethereum developers are testing many different solutions including sidechains, sharding and rollups.
Hiro HyperChains may be the answer to the Blockchain Trilemma on STX
STX is a smart contract chain built on top of the Bitcoin network. STX works through a “proof of transfer” mechanism where STX blocks are tied to Bitcoin blocks. Bitcoin lends its decentralization and security to the STX blockchain. However, STX still has issues with scalability. Heavy transaction loads leads to high transaction costs and high transaction time. This happens around major NFT and new dAPP launches. The Hiro Hyperchain means to solve this.
How will Hiro Hyperchains work?
A Hyperchain is a subnet or layer 2 scaling solution built on top of STX. As a subnet it has its own consensus rules and network limits but it is able to bring changes from the Hyperchain onto the STX network. Each Hyperchain will run a Clarity Virtual Machine. Clarity is the smart contract language of STX. Clarity VMs allow Hyperchains to process and validate transactions exactly the same as the STX mainnet chain.
Hyperchains are a new scalability layer with greater flexibility and speed on top of the STX network. Hyperchains will trade decentralization for performance. BUT this trade is specific to the Hyperchain, the STX network is unaffected. This allows users to deposit assets onto a Hyperchain when they need high speed and volume. and withdraw assets to the main STX chain when completed.
A STX user will deposit assets onto a Hyperchain. The Hyperchain miner’s job is threefold:
- Acknowledge deposits
- Track Hyperchain transactions
- Approve withdrawals
Once a user has transacted, say purchased a NFT or performed an asset exchange on a DEX, they can remove their asset from the Hyperchain back to the more decentralized STX blockchain.
Increasing speed and volume will necessarily lead to increased centralization. However this centralization will be in the Hyperchain layer on top of the STX network and will not affect the STX network as a whole. Hiro envisions multiple Hyperchains with different consensus rules to exist simultaneously. This means different transaction speeds and different levels of decentralization depending on a user’s needs.
What’s the Timeline for Development of HIRO Hyperchains?
There are four important milestones for development. These are:
- March 2022: Testable Build
- April 2022: Testnet Dev Testing
- May 2022: Multi-Party trust and deposits, withdrawals and mints
- June 2022: Case Study – NFT/DEX launch
Potential Downsides of Using Hyperchains
The roadmap laid out by Hiro for Hyperchain development looks promising and Hiro has a track record of execution. That being said, at the end of the day users are trading decentralization for transaction speed. This means that there is a greater POTENTIAL for hacks and exploits compared to the regular old STX network. A lot of kinks will be ironed out during testing on the testnet, however as with all new technology, there is never a guarantee that every bug will be found.
Final Thoughts
Ethereum developers have been building scaling solutions for years. Stacks is years newer and orders of magnitude smaller than Ethereum. This should allow for quick development and deployment of new scaling solutions like the Hiro Hyperchains. STX, like all smart contract platforms, needs a solution to the blockchain trilemma. Hiro’s Hyperchain program is a promising start.
