Dynamic Sharding

The process of dynamically scaling to more shards in Quai Network.

Automatic Network Expansion

Imagine a highway system that automatically builds new lanes when traffic gets heavy. That’s essentially what Quai Network does with dynamic sharding - it automatically adds processing capacity when demand increases.

What is Dynamic Sharding? The protocol automatically creates new execution shards (processing channels) when the network becomes congested, expanding capacity without human intervention or network upgrades.

How It Works:

1. Network monitors demand: Protocol tracks congestion indicators in real-time
2. Automatic expansion: When thresholds are met, new region and zone chains are created
3. Seamless integration: New chains immediately join the existing consensus system
4. Balanced growth: All regions gain additional zones to maintain network harmony

The Key Advantage: Unlike other blockchain networks that require hard forks or compromise security when scaling, Quai adds capacity automatically while maintaining full decentralization and security.

How the Network Knows When to Expand

The protocol monitors two key congestion indicators to determine when new capacity is needed:

1. Uncle Block Rate

What are Uncle Blocks? Think of uncle blocks as “traffic jams” in mining. When multiple miners find valid blocks simultaneously, only one becomes part of the main chain - the others become “uncles.”

Why This Matters:

• High uncle rate = Network congestion (too many miners competing for limited space)
• Reduced efficiency = Wasted mining energy and slower transaction finality
• Clear signal = Time to add more capacity

How Quai Responds: When uncle blocks consistently exceed a threshold ratio, the protocol automatically:

1. Creates new region and zone chains
2. Integrates them into the global consensus
3. Distributes mining power across more chains
4. Reduces congestion and restores efficiency

Result: High hash efficiency maintained, fast finality preserved

2. Gas Limit Utilization

What is Gas Limit? Each block has a maximum computational capacity (gas limit). When blocks consistently hit this limit, it means demand exceeds supply.

The Fee Problem in Other Networks:

• Ethereum example: When blocks are full, fees can reach $50+ per transaction
• Bidding wars: Users compete by paying higher fees for limited block space
• User experience: Transactions become expensive and unpredictable

Quai’s Solution: When blocks consistently reach their gas limit, the protocol automatically adds new execution shards, ensuring:

• Fees stay under $0.01: Increased capacity eliminates fee competition
• No bidding wars: Always enough block space to meet demand
• Predictable costs: Users know transaction fees will remain affordable

Result: Unlimited scalability without compromising affordability

The Only Tradeoff: Settlement Time

How Network Expansion Works:

• 3×3 start: 3 regions, 3 zones each = 9 total zones
• First expansion: 4×4 layout = 16 total zones
• Growth pattern: 5×5, 6×6, 7×7… unlimited expansion

What’s the Tradeoff? The only cost of adding capacity is increased time to global settlement - but this doesn’t affect transaction safety or usability.

Settlement vs Finality: Why This Matters

Critical Distinction:

• Finality: When your transaction is permanent and safe (seconds in Quai)
• Settlement: When funds can be spent cross-chain (minutes to hours)

Real-World Impact:

• ✅ Your transaction is safe immediately after finality
• ✅ Recipients can trust payment without waiting for settlement
• ⏳ Cross-chain spending requires settlement completion

Example Timeline:

1. 10 seconds: Transaction finalized (safe and permanent)
2. 3,300 seconds: Global settlement (can spend funds in other regions)

Why This Design Works: Most transactions happen within the same region where settlement is fast. Cross-chain operations are less frequent and users can plan accordingly.

Settlement Time Calculation

The Formula: Average time to Global (prime) settlement can be measured by the following equation, where:

• TSₚ = Average time to Global (prime) settlement (in seconds)
• nz = Number of zones per region
• nr = Number of regions in the system
• tz = Zone block time (in seconds) = 5

$$TS_{p} = n_{z}^2 * n_{r}^2 * t_{z}$$

What This Means:

• Settlement time increases with the square of both regions and zones per region
• 5 seconds: Zone block time (where most transactions occur)
• Total time: Scales predictably with network size

Number of Regions	Number of Zones per Region	Total Zones	Time to Global Settlement†
3	3	9	405s
4	4	16	1,280s
5	5	25	3,125s
6	6	36	6,480s
7	7	49	12,005s
8	8	64	20,480s

Important Notes:

• Settlement times are averages - actual times vary due to the random nature of mining
• ~50% of transactions settle faster than the average time
• All transactions are final and secure well before settlement completes

Understanding the Distribution: The diagram below shows how cross-chain transaction times are distributed. While the average global settlement is 3,300 seconds, half of transactions complete faster than this.