Conflux PoS Finality Chain — High Level Overview
Author: JhonyAs the only regulatory compliant, public, and permissionless blockchain in China, Conflux provides a unique advantage for projects building and expanding into Asia. Conflux aims to connect decentralised economies to strengthen the overall DeFi ecosystem globally.
Conflux is a permissionless hybrid Layer 1 public blockchain connecting decentralized economies across borders and protocols. Fast, scalable, and solidity compatible, with zero congestion and low fees, Conflux is transforming how the world transacts and leading the transformation to a sustainable, borderless economy.
On 9th March 2022, Conflux announced the addition of a Proof of Stake (PoS) Finality Chain that expands on the network’s existing Proof of Work (PoW) chain. This major update formed part of the network’s Hydra hard fork, a long-awaited updated that brought more flexibility to developers building on Conflux while also enhancing security against potential attacks.
Proof of Stake (PoS) — A Quick Recap
Proof of Stake (PoS) is a consensus mechanism in blockchain networks that relies on participants’ cryptocurrency holdings, or “stakes,” to validate transactions and create new blocks. Unlike Proof of Work (PoW), which depends on computational power, PoS allocates block creation chances based on the amount of cryptocurrency staked by validators.
Validators lock up a portion of their cryptocurrency as a stake to participate in the consensus process. The more they stake, the higher their chances of being selected to create a new block. Selected validators verify transactions, add blocks to the blockchain, and receive rewards in the form of transaction fees and, sometimes, newly minted coins.
PoS offers advantages like increased energy efficiency and potential security improvements, as attacking the network would require acquiring a majority of the staked coins. However, it also faces concerns like the “nothing at stake” problem, where validators might attempt to validate multiple conflicting chains without consequences. To tackle this issue, PoS implementations have introduced measures like slashing conditions that penalise malicious validators.
PoS has gained popularity as an alternative to PoW, with projects like Ethereum, Cardano, and Polkadot adopting or transitioning to PoS-based consensus mechanisms.
“51% Attacks”
A 51% attack occurs when a malicious actor gains control of more than 50% of a Proof of Work (PoW) blockchain network’s total mining power. This control allows the attacker to manipulate the consensus process by outcompeting honest miners and creating the longest chain, effectively enabling double-spending, blocking transactions, or reversing previously confirmed transactions. Double-spending involves spending the same coins multiple times, undermining the blockchain’s trust and security.
The potential for a 51% attack is a fundamental vulnerability in PoW-based systems, as it exposes the network to a single point of failure. However, executing such an attack is costly and challenging for well-established networks like Bitcoin, as it requires acquiring massive computational resources, making it economically unfeasible for most potential attackers. As a result, these attacks generally occur when hash rate is low and large amounts of cloud computing power are available at low costs.
This became an even more significant issue when hash power rental platforms emerged along with the development of public blockchains. In the case of Ethereum Classic (ETC), they were victims of 51% attacks for 3 times on August 2020 and lost millions according to Cointelegraph.
Similar risks of 51% attack exist not only in other PoW public chains with graphics card mining, but also exist in blockchains like Bitcoin Cash (BCH), which uses the same Application-Specific Integrated Circuit (ASIC) mining as Bitcoin (BTC) but with significantly lower computing power. To address the 51% attack risk, BCH has even gone so far as to adopt a “less elegant” solution by limiting the rollback length.
In order to prevent these attacks, Conflux Network implemented a standalone PoS chain (Finality). The term “finality” refers to the point at which a transaction or block in a blockchain can be considered irreversible and securely part of the blockchain’s history. Participants in the PoS consensus sign the pivot block of the Tree-Graph in regular intervals. The pivot block with enough signatures is included in the pivot chain by all the PoW miners, even if its brother block has more weight.
Simply put, when PoS assigs a pivot block, all the PoW workers should follow it. This means that when the PoS consensus votes for a pivot block, even if a 51% attacker tries to modify this block, the PoW node will not approve.
Conflux Network requires PoS consensus to use its “assign pivot block” in a restrictive manner. A block must be confirmed for a few minutes under the PoW rules before the honest PoS nodes will sign it. This means that the block sorting and confirmation of the Tree-Graph are still accomplished by the PoW miners.
- The PoS chain is only used to deal with 51% of attacks. Therefore, it only includes basic features such as pivot block voting and voting committee election. It does not include the functionalities of general blockchains such as transactions and contract executions.
- The PoS chain features are built-in functionalities in the nodes of Conflux. Externally, there is still only one program: conflux-rust.
- There is approximately 1 PoS block generated per minute.
For more information on the basic concept regarding PoS Finality, please refer to this Conflux Forum post.
Participate in PoS Consensus
Web3 users can set up a PoS node on Amazon Web Services (AWS) and subsequently run a Conflux PoS staking pool. Users will need to first create an AWS account, configure the Conflux Client and sync the node. For more information, please refer to this Conflux Forum Post and the Docs guidance on Conflux.
In addition, when staking in the PoS Finality Chain, users receive PoS block validation rewards (staking rewards). The reward amount is dependent on several factors:
- Circulating Supply (C): Total circulating supply of CFX. This can be obtained from sources such as CoinMarketCap.
- Staked Supply (S): Total amount of staked CFX by all validators. This quantity must be estimated. A good back-of-the-napkin estimate is to sum all of the staked supply from public pools.
- Base Interest Rate (i): Fixed base interest rate, fixed at 4%.
- Staked CFX (staked-CFX): The amount of CFX that you stake.
Users can estimate their staking rewards in the PoS Finality Ledger, with the following formula:
PoS Interest Rate = sqrt(C / S) * i
Annual Staking Profit = staked-CFX * PoS Interest Rate
Note: Since the amount of staking and the total issuance of CFX are changing, the interest generated by each Conflux chain block is also changing. The interest generated by each block on the Conflux chain is: sqrt(total staking amount * total CFX issuance) * 4% / number of blocks per year.
For more information, please consult the Conflux PoS Technical Document.
PoW + PoS Hybrid Consensus
Conflux’s new PoS Finality Chain works alongside the main PoW chain. PoS validators are able to vote on confirmed pivot blocks. Once a pivot block is voted, all PoW nodes are forced to follow pivot blocks that are voted by the PoS Finality Chain and the transaction is considered irreversible. The PoW chain is still being used to maintain the record of all transactions realised in the Conflux network.
Furthermore, to reduce the complexity and potential risk of adding PoS finality mechanism, Conflux chose to leave the selection and packaging of transactions entirely to PoW miners, and the ordering of blocks still follows the Tree-Graph ordering rules, with PoS voting only on the finality of blocks generated by PoW miners.
The move to add PoS functionality to the network comes as Conflux gears up to expand its ecosystem to attract a wide range of new projects and dApps that can benefit from the hybrid approach.
About Conflux Network
Conflux is a new secure and reliable public blockchain with very high performance and scalability. It can achieve the same level of decentralization and security as Bitcoin and Ethereum but provide more than two orders of magnitude improvement on transaction throughput (TPS) and finality latency.
The major superiority of Conflux hinges on its novel design of consensus protocol, authenticated storage, and transaction relay protocol. In Conflux ledger, blocks are organized as Tree-Graph where each block references some other blocks with one of them being its parent block. By only looking at the blocks linked with parent edges, the ledger appears to be a tree structure (parental tree), while by looking at all the blocks, it appears to be a Directed Acyclic Graph (DAG).
The consensus algorithm of Conflux, which is called Greedy-Heaviest-Adaptive-SubTree (GHAST), enables all the nodes in the blockchain network to consistently agree on a pivot chain of blocks by applying the heaviest subtree rule on the parental tree in the ledger, and in turn reach the consensus on the total order of all the blocks based on the pivot chain. GHAST also allows the Conflux nodes to detect some attacks (e.g., balance attack that tries to generate two balanced subtrees) that may hurt the liveness, i.e., the ability to confirm transactions, and thwart these attacks by adaptively adjusting the weights of the blocks.
The Tree-Graph ledger and the GHAST consensus algorithm make Conflux nodes be able to quickly generate new blocks without worrying about that the existence of forks in the ledger may harm the security of the network, and hence enable the system to achieve both the high throughput and the low transaction confirmation latency. To learn more about the underlying technology, please refer to Conflux Docs.
In addition, as the only permission-less blockchain network endorsed by the Chinese government, the only regulatory compliant Chinese fiat-stable coin CNHC (www.cnhc.to) is issued on Conflux Network. CNHC is currently being used for remittance purposes of global merchants sourcing from China.
Conflux supports a wide range of Web3 applications, from gaming and non-fungible tokens (NFTs) to decentralised finance (DeFi). It also provides the infrastructure tooling needed to build, configure, and deploy decentralised applications on the chain. In short, Conflux offers a comprehensive ecosystem for Web3 developers and users. For more information on Conflux, visit https://confluxnetwork.org/.
Closing Thoughts
Conflux’s goal is to achieve a “decentralised public chain platform that is accessible and affordable to everyone”, rather than a “public chain with a specific PoW consensus protocol”. For this reason, adding PoS Finality to Conflux’s existing PoW consensus mechanism to improve confirmation speed and resist potential 51% attacks is in line with Conflux’s goals.
By layering the best of both PoW and PoS, Conflux is enhancing its utility and security for the next wave of Web3 innovation.
