Performance Analysis of Blockchain and Smart Contracts

Blockchain, or distributed ledger, provides a way to build various decentralized systems without relying on any single trusted party. It is especially attractive for smart contracts that different parties do not need to trust each other to have a contract, and the distributed ledger can guarantee correct execution of the contract. Several factors, such as low throughput and high latency, have already affected the performance of blockchain and smart contract system significantly. They also impede innovation and development of blockchain. For example, most existing distributed ledger and smart contract systems process smart contracts in a serial manner, i.e., all users have to run a contract before its result can be accepted by the system. Although this approach is easy to implement and manage, it is not scalable and greatly limits the system's capability of handling a large number of smart contracts. In order to address this problem, we propose a scalable smart contract execution scheme that can run multiple smart contracts in parallel to improve the throughput of the system. We also design a novel scheme to reduce the latency of blockchain creation by dividing the block mining period into two steps. Then, a mathematical model is introduced to discuss more about the scalability of blockchain and smart contracts. We utilize the concept of Nash equilibrium and game theory to prove that the system will scale up autonomously under some conditions. Finally, we discuss a hardware-based scheme to improve the performance of blockchain and smart contracts.