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Bybit Learn
Mar 17, 2022

Network Congestion

Network congestion on a blockchain occurs when the number of transactions exceeds the network’s capacity. This results in slow transaction processing and high transaction fees.

Network congestion is a scenario which occurs when the number of transactions on the blockchain network exceeds its capacity. Every blockchain has a maximum number of transactions that it can handle per second, or TPS.

Why Does Network Congestion Occur in Blockchains?

Each blockchain network has a specific TPS (transaction per second) rate, which refers to the number of transactions that its nodes can process every second. Network congestion — sometimes also known as blockchain congestion — takes place when the network is overloaded.

As a result, the amount of time that one node takes to process a transaction increases significantly. Typically, the primary cause of this overload is an increase in the number of people using the blockchain. Bitcoin and Ethereum network congestion motivates developers to develop more efficient blockchains and technologies, such as sharding.

Solana recently experienced congestion problems that affected its TPS and usability. The company quickly announced it would start offering a payment service that will enable direct use of cryptocurrencies whose value is backed by the U.S. dollar.

What Are the Effects of Network Congestion?

Like a traffic jam, network congestion gives rise to many challenges. Recognizing them will help you decide when it’s the right time to initiate a transaction on Ethereum, or any other blockchain network. Here are the immediate effects of congestion on a blockchain network.

High Transaction Fees

The concept of supply and demand applies to both business and the crypto world. The higher the demand for nodes to process transactions, the greater the transaction fees. In some instances, blockchain users have had to pay up to $200 for a single transaction because of congestion on the Bitcoin network.

Low TPS (Transactions Per Second)

As mentioned earlier, TPS refers to the number of transactions that a blockchain handles per second. The Ethereum blockchain, for example, has a rate of around 15 TPS. Advanced blockchains such as Polygon and Solana can process thousands of transactions per second without compromising the security and privacy of users.

When a blockchain network is congested, its TPS is compromised. You may have to wait for hours for your transaction to be completed, or pay extra fees for your transaction to be prioritized.

Reduced Scalability

Scalability is a major concern for both the Bitcoin and Ethereum blockchain networks. Compared to other new-generation blockchains, their scalability is low. That means the networks can only accommodate a specific number of users and transactions at a time.

Whom Does Network Congestion Impact — and How?

The people who are most affected by a blockchain’s network congestion are its users. They have no option but to wait longer for their transactions to be processed. Also, they have to pay a high transaction fee — even if the transactions are processed at a snail’s pace.

Possible Solutions to Network Congestion

Luckily, there are several feasible solutions to network congestion. Here’s a brief overview of three primary solutions with the highest possibilities of resolving this problem effectively.

1. Shard Chains

Shard chains are subdivisions of a main blockchain network, such as Ethereum 1.0. The shard chains operate independently; they can process transactions on their own and only rely on the beacon network to validate the transactions. In effect, they reduce the load on the main blockchain.

2. Lighting Network

The Lighting Network is a new-generation Layer 2 payment protocol added to a blockchain to increase transaction speed. Independent channels of the two parties involved in a transaction join to form a robust network of lighting nodes with the capacity to process transactions securely and faster between themselves.

3. EIP (Ethereum Improvement Proposals)

Ethereum Improvement Proposals (EIPs) are suggestions from users for new features and processes that have the potential to enhance the performance and efficiency of the Ethereum blockchain. Any blockchain user can submit proposals to GitHub for discussion and approval by the network's community members.