Background: Current situation of the industry

Blockchain technology has grown rapidly over the past decade, transforming industries and reshaping the way we approach data, security, and decentralization. However, despite its potential, blockchain still faces several fundamental challenges that limit its mass adoption. Scalability, speed, decentralization, and interoperability are core issues that need to be addressed if blockchain is to reach its full potential, especially as decentralized applications (dApps) continue to evolve and demand more from underlying infrastructures.

Scalability has been a persistent challenge for blockchain networks. As transaction volumes increase, most existing blockchains struggle to maintain high throughput, often leading to congestion, higher transaction fees, and slower processing times. Traditional blockchains like Bitcoin and Ethereum are bottlenecked by their sequential transaction validation process, making them ill-suited for high-demand applications. This issue becomes even more pronounced as dApps require fast and efficient transactions to scale effectively.

In parallel, there is an inherent trade-off between speed and decentralization in many blockchain systems. Consensus mechanisms like Proof of Work (PoW) and Proof of Stake (PoS) secure networks but often fail to achieve the necessary performance for mass adoption. To boost throughput, blockchain solutions may compromise decentralization, risking centralization of power and control. Achieving high-speed processing while maintaining the core principles of blockchain—security, transparency, and decentralization—has been a major challenge.

Data storage further complicates scalability. As blockchain networks grow, so does the amount of data stored on-chain. This leads to inefficiencies, higher latency, and slower data retrieval, making it difficult for decentralized applications to function smoothly at scale. The inability to efficiently manage large-scale data on decentralized platforms has become a bottleneck for developers building complex applications.

Additionally, interoperability remains a critical issue. The blockchain space is highly fragmented, with many different chains operating independently. This lack of cross-chain communication limits the movement of assets and data between ecosystems, preventing decentralized applications from reaching their full potential. Developers are often restricted to working within a single blockchain, reducing the scope and impact of their projects.