We present SmartShards: a new sharding algorithm for improving Byzantine tolerance and churn resistance in blockchains. Our algorithm places a peer in multiple shards to create an overlap. This simplifies cross-shard communication and shard membership management. We describe SmartShards, prove it correct and evaluate its performance. We propose several SmartShards extensions: defense against a slowly adaptive adversary, combining transactions into blocks, fortification against the join/leave attack.