Which method do blockchain networks use to address scalability issues?

Blockchain networks face scalability challenges, particularly as the number of users and transactions increases. To effectively address these issues, many utilize methods that enhance the capacity and speed of transactions without compromising network security or decentralization. Implementing Layer 2 protocols and sharding are prominent solutions in this context.

Layer 2 protocols function by creating secondary frameworks or layers atop the primary blockchain. These protocols allow numerous transactions to be processed off the main blockchain, thus reducing congestion and increasing throughput without affecting the underlying blockchain's integrity. Examples of Layer 2 solutions include the Lightning Network for Bitcoin and various rollup technologies for Ethereum.

Sharding, on the other hand, involves partitioning the blockchain into smaller, manageable pieces called shards. Each shard can process its transactions and smart contracts independently, which significantly enhances the overall processing capacity of the network. By distributing the workload across multiple shards, the network can handle a far larger volume of transactions compared to processing them all on a single chain.

Both these methods are designed specifically to scale blockchain performance while maintaining decentralization, security, and efficiency, making them effective strategies against scalability issues.