Shards are smaller, independent chains that can execute within the Quai network, and each shard processes its own subset of transactions. Sharding enhances scalability by allowing parallel processing, significantly increasing transaction throughput.
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Quai Network utilizes sharding to improve the performance of a decentralized database in largely the same way that sharding is used to improve centralized databases. In a single-threaded blockchain, all nodes must maintain the state of the entire network, and all transactions must pass through the same single execution thread. Quai Network, as a multithreaded blockchain, allows for nodes to choose to only maintain shards of the Network rather than the entire state. Lower node resource requirements reduces the barrier to participation in the network. Further, each shard within Quai acts as a unique execution thread, which enables data partitioning, allowing the optimization of network performance through the introduction of shard-specific subnets.
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Quai Network utilizes a sharded address space to allow nodes and wallets to quickly identify which Quai blockchain an address resides on. Each shard is given a binary identifier.

To learn more about how sharding works on Quai, please view the following page.