Lima Upgrade on Tezos: 1M TPS Promised

On December 19, the Tezos community completed a historic vote. It decided to launch the Lima update, which should take the Tezos blockchain to a new level.

The Lima upgrade aims to improve network scalability, transaction speed, and security. The developers hope to achieve a throughput of 1 million TPS (transaction processing speed per second) in 2023. If this indicator is achieved, Visa and Mastercard payment operators will look like clumsy turtles compared to Tezos. Keep in mind that Visa processes about 65,000 transactions per second, and Mastercard has a TPS of 50,000.

For comparison, here's another blockchain sprinter: Solana claims it can overclock the network to 700,000 TPS, but it has yet to be tested.

The Lima upgrade features on Tezos

On the Tezos blockchain, miners are called bakers, and the consensus algorithm is one of the PoS types called Liquid Proof-of-Stake. Validators in the network can be node owners and ordinary network users with more than 8,000 XTZ on their accounts. Therefore, all interested holders can "bake" new coins.

The upgrade is more about bakers than the blockchain as a whole:

1. Transactions will be divided by value, and only after that will blocks be generated from them. This will speed up the validation process.
2. Optimized validation process, known as "pipelining," which speeds up the confirmation of transactions. It is achieved by separating validation from the application's operational aspects.
3. The Lima upgrade made the matched keys available. Validators can now change their key without changing the public address if security reasons require it. Tezos bakers will use the private key for signing and other consensus procedures.
4. Lima prohibits the production, storage, and transfer of empty blocks, which makes smart contracts more resistant to hacks.

The update to Tezos is the latest step towards the launch of the Smart Rollups Layer 2 scaling, scheduled for February 2023.
Smart Rollups should bring the network’s TPS to 1 million.
As for the practical application of such a high throughput, the developers have yet to give explanations. The Tezos network is not the most popular place to create smart contracts, even though the platform positions itself as an "Ethereum killer." The fourth one already, by the way.

As for the XTZ coin, it has already dropped 93.42% below the all-time high of $12.19 and is traded at $0.8. The announced upgrade did not affect the investors’ interest.