What is Blockchain Network Congestion?
#Blockchain network congestion occurs when more transactions are processed than a blockchain network can handle.
This causes unconfirmed transactions to accumulate in the networkâs memory pool, or mempool. Think of transactions as cars, blockchain networks as highways, and mempools as the on-ramps on the highway. The more transactions on the blockchain highway, the more the mempool ramps fill up.
Factors like block size and block generation time determine how much room there is on the blockchain highway for transactions. Sudden increases in transaction volumes, such as the launch of a popular new token or#NFTcollectible, can clog the blockchain highway. For example, in May 2022, Yuga Labs unveiled its âOthersideâ#metaverseinitiative with its highly anticipated digital land sale. While the land sale raised around $285 million for the company, it also led to some of the largest gas fees ever witnessed on the#Ethereumnetwork. Users attempting to mine NFT land caused the Ethereum network to become congested, totaling more than $176 million in transaction fees.
What Causes Blockchain Network Congestion?
Congestion can occur for a number of reasons. Increased throughput is the most common cause of congestion.
For example, as more users join and transact on a blockchain network, the overall transaction load on the network increases. Especially during periods of market volatility, spikes in activity can strain networks and lead to congestion.
Scalability limitations have plagued many blockchain networks. Constraints such as block size and block generation time limit the amount of transactions the network can handle. #Bitcoinâs 1MB block size limits transactions to a maximum of seven transactions per second. This has caused network congestion, such as when Bitcoin Ordinals was launched.
A blockchainâs network latency and bandwidth also affect how many transactions it can process. Delays in propagating transactions between nodes and limited network bandwidth lead to slower transaction confirmations. Congestion increases as more transactions compete for limited resources. As a general rule, we can conclude that the more decentralized a blockchain is, the harder it will be to scale and the more prone it will be to network congestion.
Effects of Blockchain Network Congestion
When blockchain networks become congested, this leads to various negative effects.
The most direct impact is the increased wait times for transactions to be pulled from the mempool and packaged into blocks. Severe congestion can cause delays of hours or even days. As a result, users increase transaction fees to incentivize miners to prioritize their transactions. This often results in fees increasing exponentially during congestion. For example,#Bitcointransaction fees increased by 560% during the#Ordinalsboom.
Network congestion can directly impact the availability of a blockchain network. Users can experience downtime and denial of service, which has happened to blockchain networks many times, such as #Solana. There are also security risks. Transactions that sit in mempools for long periods of time can increase vulnerability to double-spending attacks.
Has Bitcoin Network Been Congested?
Bitcoin has experienced network congestion several times during times of high demand.
In 2017, during the height of the bull run, transaction volumes flooded the network, exceeding capacity and causing fees to rise to an average of $50. At the height of congestion, over 200,000 transactions were stuck, some taking days to confirm. More recently, the rise of Bitcoin Ordinals and#BRC20tokens has caused transaction fees to increase and the network to become overloaded.
Did Ethereum Experience Network Congestion?
Ethereum has also faced congestion issues many times in the past. During the last bull run, congestion occurred due to high volumes for liquidity mining and yield farming applications in#DeFiprotocols like #Unsiwap. Highly anticipated NFT launches can also cause increased network activity and overload the#Ethereumblockchain. Ethereum is working on solutions like sharding and has a comprehensive scaling roadmap to solve network congestion in the long term.
Solutions to Blockchain Network Congestion
Solving the blockchain scalability problem is the holy grail of #crypto. Networks are taking various paths to solve this problem.
#Layer2 protocols like the Lightning Network and blockchain networks like #Arbitrum, #Polygon, #Optimism, and#Baseallow transactions to be processed at another layer while still benefiting from the security of the main chain. Another solution is sharding, which divides the network into smaller sections that can process transactions in parallel. Another parameter that can be adjusted is increasing the block size and decreasing the block generation time. However, there is a trade-off between scalability and decentralization. Additionally, improving network bandwidth, latency, propagation algorithms, and node optimizations like Bitcoinâs SegWit can increase efficiency and capacity.
Regardless, congestion directly translates to higher transaction fees and unpredictable delays. This impacts user experience and hinders daily blockchain usage. Ultimately, solving the blockchain congestion problem is part of the goal of achieving mainstream blockchain and crypto adoption.
