Scalability in crypto refers to a blockchain network's ability to handle an increasing number of transactions efficiently as demand grows. A scalable blockchain can process more transactions per second (TPS) without significantly increasing fees, slowing down, or compromising security.

Key Aspects of Scalability

1. Transaction Throughput – The number of transactions a network can process per second.

2. Latency – The time it takes for a transaction to be confirmed.

3. Network Congestion – How well the system handles high user activity without slowing down.

4. Fees – The cost of processing transactions; ideally, fees remain low even with high traffic.

Scalability Solutions

1. Layer 1 Scaling (On-Chain Improvements)

Sharding (Splitting blockchain into smaller parts to process transactions in parallel).

Consensus Mechanism Upgrades (e.g., switching from Proof-of-Work to Proof-of-Stake).

Block Size Increase (Larger blocks allow more transactions per block).

2. Layer 2 Scaling (Off-Chain Solutions)

Rollups (Bundling multiple transactions into one to reduce blockchain load).

State Channels (Off-chain transactions between parties, settled later on-chain).

Sidechains (Independent blockchains connected to the main blockchain).