The stablecoin landscape, which has grown to rival traditional payment giants like Visa and Mastercard in terms of transaction volume, is poised to experience a significant increase in speed. While traditional finance systems can process up to 65,000 transactions per second, the current decentralized blockchain ecosystem is characterized by varying levels of latency. However, Alchemy, often referred to as the 'AWS of crypto,' has made a breakthrough that is expected to drastically improve the connections between major components of the Web3 architecture.
The company, which facilitates data exchange between numerous decentralized applications, claims to have achieved a 66% reduction in delays across crypto's transaction rails, including a substantial portion of the infrastructure supporting stablecoins. Stablecoins have evolved from being a means to park funds while trading cryptos or participating in DeFi applications to handling a substantial volume of payments, comparable to those of major card networks.
According to Alchemy CTO Guillaume Poncin, 'We power the vast majority of stablecoin issuers, such as Paxos and Circle, and facilitate a significant fraction of activity that relies on USDT for various purposes, including money movement, DeFi, trading, and payments.' Founded in 2017 by Stanford University computer scientists, Alchemy initially developed tools to simplify the process of running blockchain nodes at an enterprise level. The company, which collaborates with prominent players like Coinbase, Stripe, JPMorgan, and Anchorage, later introduced programmable links between programs, known as APIs, enabling data indexing, smart contract automation, and wallet optimizations.
Alchemy's new Cortex Engine architecture has reduced average response times from 300-400 milliseconds to less than 50 milliseconds, enabling instant settlement experiences that rival traditional payment rails, Poncin explained. 'Everyone loves it when things get faster,' Poncin said in an interview.
'I think it's easier for people to understand how things are faster, but we also significantly improved the throughput and scale, which is crucial when we reach the NASDAQ scale of transactions.' To put this into perspective, response times below 200 milliseconds are generally imperceptible to users. Previously, the typical response time for transaction confirmations or screen refreshes in wallet apps was around half a second, but it is now 100 milliseconds, Poncin noted.
In terms of throughput, Alchemy has entered the realm of hundreds of thousands of requests per second, comparable to large-scale applications. This represents a 1000x increase in the throughput of a single node on any blockchain, he added. Users can expect to notice significant improvements, Poncin said, recounting an instance where the company rolled out the upgrade to some users without notification, prompting feedback like, 'I opened the app this morning, and everything is twice as fast. What did you guys do?'