Sharding

Various estimates suggest the lightning network can scale up to 1 million transactions per second across the entire network. To generate the maximum yield, our network must be centrally positioned in the lightning network to capture the maximum traffic and routing fee. With this, it is fair to assume that our network would need to scale up as demand for the network throughput increases.

In the current network design, all transactions (on-chain and off-chain) must go through network consensus, which significantly limits the network throughput. One way to address this issue is for the network to operate in shards, where each shard is a sub-network of n ≥ 4 (single fault tolerant) Pegasys nodes controlling a lightning node. Each shard can independently reach a consensus and route transactions at the cost of decreased capital efficiency, increased fragmentation and overall linear decrease in the TVL safely controllable by the network stake. A suitable shard size can be found for an optimal balance between the different tradeoffs.