Throughput Meaning

Throughput refers to a number of transactions a blockchain network can process within a given time, usually measured in transactions per second (TPS)

Table of contents:

What Is the Throughput in Crypto?

In crypto, throughput means the number of transactions a blockchain network can process in a definite time. Throughput is measured in:

• Transactions per second (TPS)
• Transactions per minute (TPM)
• Transactions per hour (TPH)

Among these, TPS is the most commonly used metric in the industry.

Each blockchain has two key throughput characteristics:

• Average TPS – the typical number of transactions processed per second under regular network conditions.
• Maximum TPS – the highest transaction capacity a blockchain can handle during peak activity.

For example, Bitcoin’s average TPS is around 5, while its maximum TPS reaches 7.
Throughput is influenced by several factors, one of the most important being block confirmation time. This refers to how long it takes for a transaction to be validated and permanently recorded on the blockchain. The shorter the confirmation time, the faster the crypto processing speed.

Why Throughput Matters in Crypto

With the constantly increasing number of crypto users reaching 659 million in 2024, high throughput acquires greater importance. If a blockchain network cannot process transactions efficiently, several problems arise:

• Transaction delays – slower confirmation times that reduce blockchain efficiency.
• Higher transaction fees – when networks are congested, higher fees may be used to prioritize transactions.
• Scalability issues – low-throughput blockchains struggle to handle enterprise-level applications or global adoption.

For businesses relying on crypto processing, such as exchanges, payment gateways, and DeFi platforms, high throughput is essential to ensure fast transactions.

Factors Affecting Throughput in Crypto

Several factors determine a blockchain’s transaction-processing speed:

Consensus mechanism

The method a blockchain uses to validate transactions significantly impacts throughput.

• Proof-of-work (PoW) networks have lower throughput due to the computational complexity of mining.
• Proof-of-stake (PoS) networks are generally faster, as they rely on validator stakes rather than complex mathematical computations.

Block size

The block size determines how many transactions can be stored in a single block. Larger blocks process more transactions and therefore increase throughput.

Network traffic and congestion

When many transactions are waiting in the transaction queue, processing speed decreases. This congestion often happens during market surges when trading activity spikes.

Number of nodes

A larger network of distributed nodes can improve processing efficiency. However, poorly optimized networks with too many slow nodes may affect throughput negatively.

How to Improve Throughput in Crypto

Blockchain developers continuously work on improving throughput. Here are some key strategies:

1. Sharding. Sharding divides a blockchain into smaller, independent units called shards, each capable of processing transactions separately. It helps reduce the workload on the main chain, significantly increasing scalability and throughput. Ethereum 2.0 implements sharding to improve efficiency.

2. Layer 2 solutions. Layer 2 solutions offload transactions from the main blockchain while maintaining security and decentralization. The examples include:

• Lightning Network (Bitcoin) – processes transactions off-chain and settles them on-chain later.
• Plasma (Ethereum) – uses child chains to handle transactions separately before finalizing them on the main chain.

Layer 2 solutions reduce congestion, make transaction fees lower, and increase processing speed.

3. Proof-of-Stake (PoS) consensus. PoS replaces the energy-intensive PoW system. It allows validators to be chosen based on their stake in the network rather than computational power. It significantly reduces the time needed to validate transactions, which leads to higher throughput.

4. Block size adjustments. By increasing block size, blockchain networks can process more transactions per block. However, at the same time, larger blocks require higher computational power, so networks are to balance scalability and security.

5. Expanding node infrastructure. A well-distributed network with efficient nodes ensures faster validation and processing. Increasing node participation improves network reliability and speeds up transaction finalization.