Transactions per second (TPS) is a key metric of the speed and scalability of payment and distributed ledger (DLT) networks. High TPS enables networks to support demanding real-world transactional loads without congestion.
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Transactions per second (TPS) refers to the number of transactions a network can process each second. It is the most common measurement used to benchmark the performance and scalability of payment and DLT networks.
However, TPS is not the only way to measure transaction throughput. Other metrics include:
- Transactions per minute (TPM) - Used when transactions are complex and take longer than a second to process.
- Peak throughput - The maximum TPS achieved under ideal conditions. Gives insight into potential capacity.
- Sustained throughput - The average TPS maintained over time under real-world conditions. Measures actual performance.
- Latency - The time for a transaction to be processed and confirmed. Faster latency allows higher TPS.
- Concurrency - The number of transactions processed in parallel. Higher concurrency can increase TPS.
- Scalability - How throughput changes with increased load. Linear scalability means doubling nodes doubles TPS.
TPS can be measured by benchmarks and tests that simulate transaction loads. Common benchmarks for blockchains involve transferring assets between accounts or executing smart contract functions. The transactions sizes, complexity, and submission rates are parameterized to evaluate different scenarios.
When comparing TPS across networks, it is important to understand the assumptions and conditions of each test. Results can vary significantly based on factors like network size, geography, hardware, latency, consensus mechanism, transaction types, and concurrency. As with any benchmark, real-world performance may differ.
TPS Limits of Early Blockchains
Early blockchain networks like Bitcoin and Ethereum had limitations in transactions per second due to their consensus mechanisms and network configurations.
Bitcoin uses a proof-of-work consensus based on mining, which allows a maximum of around 7 TPS. This is far below the volume of transactions handled by mainstream payments networks.
Ethereum improved on Bitcoin's performance through shorter block times, achieving around 15 TPS. However, as usage increased, the Ethereum network became congested and transaction fees spiked.
These limitations of early blockchains stem from tradeoffs that favored decentralization and security over scalability. However, poor TPS presents challenges for adoption, especially for decentralized finance applications with high transaction volumes.
Radix is a layer 1 decentralized network designed to achieve extremely high transaction speeds. It utilizes a sharded consensus protocol called Cerberus to enable linearly scalable transaction throughput. Tests of Radix under various conditions have achieved over 1.4 million TPS, significantly faster than other blockchain networks like Ethereum or Solana. Radix aims to support DeFi applications with transaction loads comparable to mainstream payment processors like Visa or PayPal.