SKALE Network (SKL): Elastic Ethereum Sidechains for Scaling

What Is the SKALE Crypto Protocol?

The SKALE Network is a Layer-2 scaling solution for the Ethereum network that enables developers to bypass congestion on the Ethereum mainnet by migrating development off of the main chain and onto adjacent, SKALE-administered sidechains. SKALE enables decentralized application (dApp) deployment in a reliable, high-throughput, cost-effective environment through the use of independent, dApp-specific SKALE blockchains. Developers pay for creating these blockchains in SKL, the native utility token of the SKALE Network. The SKL token is also used for SKALE staking and platform governance. 

The SKALE infrastructure creates high-throughput, low-latency, “Elastic Sidechain Networks” that are interoperable with Ethereum, and vastly increase the amount of transactions that can be efficiently transacted through the Ethereum network. With this mechanism, SKALE results in performance improvements that enable Ethereum-built dApps to compete with Web2 applications in terms of cost and throughput. SKALE Network sidechains also improve Ethereum mainnet scalability as a whole by alleviating congestion. Before delving into the specifics of the SKALE Network, it’s essential to understand how scalable sidechains function in the blockchain ecosystem. 

What Are Sidechains in the SKALE Network?

Sidechains operate as independent blockchains that integrate with their parent network or main chain. Sidechains utilize a two-way communications peg between the two networks to maintain smart contract communication, thus making them interoperable. For example, a developer working on an Ethereum sidechain would retain access to the Ethereum mainnet and vice versa. The most common sidechain functionality, as evidenced by SKALE, involves batching network transactions and executing them on the sidechain, before returning them to the main chain — in this instance, Ethereum — for final confirmation en masse. This improves the speed and scalability of the main network by an exponential factor. 

Sidechains provide a number of advantages when appended to main chains:

• Testing: Sidechains enable developers to test out new and potentially unstable software without the risk of affecting the main chain. For instance, if a project deploys a new dApp iteration on the sidechain first and it crashes, the damage doesn’t impact the front-facing application in use on the main chain.

• Throughput: Developers can deploy dApps on sidechains to reduce congestion on the main chain. For example, in times of network congestion, Ethereum gas fees increase, making transactions costly and time-consuming. Sidechains move network activity off the main chain, which reduces gas fees and improves throughout.

• Security: As independent blockchains, sidechains are responsible for their security. In the event of a hack, only the sidechain is vulnerable; there is no effect on the parent chain.

SKALE Nodes and Elastic Sidechains

Like other public blockchains, the SKALE Network utilizes a network of decentralized nodes to furnish the transactional activity on the network. SKALE’s nodal network is subdivided into Node Cores and subnodes. Each SKALE Node Core oversees node computation and storage resources, monitors uptime and latency, and provides node owners with an interface to withdraw, deposit, stake, or claim SKALE tokens.

Within these nodes, the SKALE crypto protocol deploys containerized subnode architecture. These virtualized subnodes are dynamic in size, which facilitates network elasticity. SKALE subnodes are also involved in consensus, run the Ethereum Virtual Machine (EVM), and facilitate interchain communications.

The SKALE Network uses what it calls an elastic capacity mechanism that virtually subdivides network nodes. Virtualized subnodes allow each SKALE Node to run multiple sidechains simultaneously. When a user wants to create an Elastic Sidechain, the SKALE Manager facilitates access to the SKALE smart contract ecosystem from the Ethereum mainnet. Here’s how it works:

1. Users select their chain’s size, consensus protocol, virtual machine, parent blockchain, and additional security measures.

2. To help users determine their budget and resource requirements, the SKALE Manager will automatically assign 16 virtualized subnodes with each subnode using 1/128 (small), 1/16 (medium), or 1/1 (large) of each Core Node’s resources. Users can amend these settings to suit their needs.

3. Once the configuration is acceptable, users submit payment to the SKALE Manager for the duration of time they wish to rent the network resources required to maintain their Elastic Sidechain.

4. After the SKALE Manager processes the request, the Elastic Sidechain is created, and its respective endpoint is returned to the user.

5. If there are insufficient resources on the network at the time of the request, it will be canceled, and the user notified.

As of May 2021, all resources on the SKALE Network are of equal value, and the cost of utilizing these resources depends on the size and lifetime of each Elastic Sidechain. The SKALE protocol allows developers to quickly provision highly configurable blockchains without compromising security, storage, or computation power through this architecture and pricing model.

The SKALE Token: SKL Crypto Rewards

The SKALE Network delivers services over a framework that integrates economic incentives and governance mechanisms using the SKL token. The SKL token facilitates four main functions on the SKALE Network:

• Security and Staking: SKL token holders or delegators stake their tokens to validators. These validators operate the SKALE Network by verifying blocks, executing smart contracts, and securing the network. As validators, they receive SKL crypto rewards for their efforts.

• Payment: Developers use SLK tokens to pay for Elastic Sidechain subscriptions.

• Rewards: Both delegators and validators receive SKL crypto premiums derived from the subscription fees paid by developers and the inflation of tokens into the network.

• Governance and Voting: The SKL token facilitates on-chain voting, which controls all economic parameters on the SKALE Network.

SKL is an ERC-777 token, which means it maintains backward compatibility with ERC-20 platforms and doesn’t require delegators to send their tokens to smart contracts. Instead, delegators provide a secure key to the staking provider while storing their tokens in a wallet of their choice. This slight change in governance protocol further enhances SKALE Network security by introducing non-custodial delegating.

SKALE: Ethereum on Demand

SKALE delivers a decentralized, configurable network of dynamic blockchains that enable high throughput, low cost, and low latency transactions. The platform offers Ethereum to developers on-demand using Elastic Sidechain Networks, replaces main chain gas costs with fixed subscription fees, and offers extensive configurability.

The EVM compatible Elastic Sidechains enable provisioning and deployment of provably secure byzantine fault-tolerance blockchains that maintain access to the mainnet. The dynamically adjusting, interoperable SKALE Network is an immediate solution to many of the challenges faced by developers in the Ethereum ecosystem.