Throughput in Blockchain: Evaluating Network Performance

Throughput is the number of actions that can be performed in a certain amount of time.

What is throughput?

Throughput is a measure of how many actions are performed in a certain amount of time. When applied to blockchain, transaction throughput refers to the speed at which transactions are processed by the blockchain, which is usually expressed in transactions per second (TPS), but can also be expressed in minutes (TPM) or hours (TPH).

The consensus mechanism used by the blockchain platform determines the transaction throughput of the decentralized protocol. For example, a blockchain with a proof-of-work (PoW) mechanism like bitcoin has lower throughput than a network with a proof-of-stake (PoS) mechanism like Cardano.

Blockchain block size, traffic and transaction complexity also affect throughput. It should be noted that traffic is the load on the network at a certain point in time. Accordingly, high load means lower speed, and vice versa.

In some cases, slower blockchains such as Bitcoin can execute transactions faster than, say, Ethereum because of transaction complexity. While Bitcoin transactions are solely related to asset transfers, Ethereum can be used to process complex transactions such as non-transaction token mining (NFT), DEX trading, etc., which require more processing power and thus more load on the network.

Developers are using various methods to increase blockchain throughput, such as rollups, sidechains, state channels, new consensus mechanisms and increasing block size.
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