Fast finality has become an intense area of focus for blockchain developers, as it’s one of the most important characteristics required by decentralized applications.
Finality can be defined as the moment when a block of transactions is permanently stamped onto the blockchain, meaning it can no longer be reversed or altered in any way. It’s the point at which blockchain transactions become immutable, or unchangeable. For many kinds of dApps, fast finality is crucial for their efficiency and their security, as they need transactions to be confirmed in the fastest possible time.
Problems stemming from slow finality first became apparent with legacy blockchains such as Bitcoin and Ethereum, which struggle to confirm transactions fast enough. Because they can only support a relatively low number of transactions per second, they have low finality, meaning users must wait for a time before their transfer can be confirmed.
Low finality makes legacy blockchains ill-suited for many modern dApps. For instance, blockchain games require almost real-time finality. If a player purchases an item from an in-game store or marketplace, they’re going to be extremely frustrated if they cannot use that item right away. Similarly, in DeFi, traders require their transactions to be processed and confirmed in the fastest-possible time frame so they can take advantage of asset price fluctuations.
A second problem with low finality is that it can lead to opportunities for “double spending”, which is where a malicious actor might try to spend the same funds twice.
Legacy Blockchains Struggle
Bitcoin is infamous for its low finality, which has become one of the major criticisms of the world’s most popular cryptocurrency. The problem stems from Bitcoin’s slow block processing speeds, with a new block added to the network once every 3-10 minutes. Once a transaction is added to a block, each corresponding block is considered to be a “confirmation” of that original transaction. Blocks only become permanent after six confirmations, which is the point where the economic cost of trying to reverse any transaction outweighs the possible benefits of doing so. This typically occurs after 10-60 minutes, depending on network traffic.
Ethereum, which first introduced the concept of smart contracts, attempted to improve on Bitcoin’s low finality by increasing its block processing times. On average, it handles around 14 transactions per second, yet its architecture means it takes a lot longer than this for blocks to be confirmed.
Transactions on Ethereum are only considered final after two epochs, with a single epoch equating to 32 slots where validators propose and attest to blocks. Two epochs occur approximately every 15 minutes, though the project’s long-term roadmap calls for the introduction of a mechanism called Single Slot Finality, which could reduce this time to just a few seconds.
Faster Finality
Ethereum’s slow finality led to the creation of various “Layer-2” networks that aim to offload transactions to a second layer where they can be confirmed much more quickly, and it also prompted the creation of various new blockchain architectures.
Perhaps the fastest blockchain in use today is Solana, which has emerged as one of the most popular networks for DeFi developers outside of Ethereum. It’s designed to be extremely performant when compared to other chains, and under test conditions has demonstrated the ability to process an incredible 65,000 transactions per second.
That’s an impressive number, but in reality Solana is much slower, currently averaging around 2,000 transactions per second. But even that number includes something called “vote transactions” for purposes of governance. If we’re talking about genuine transactions where users are either spending funds or engaging with some kind of protocol, the real number is more like 1,000 transactions per second. Because transactions are only considered final after 31 block confirmations, it means Solana’s finality can be pegged at around 12 seconds.
Solana does plan to increase its finality in future with the Firedancer update, which will introduce a new, third-party validator client to the network. In tests back in 2022, Firedancer showed that it can boost Solana’s transaction processing speed to as high as 1 million TPS, far greater than its current theoretical limit of 65k TPS, exceeding the speed of even the VISA network. Once Firedancer launches, it should significantly reduce Solana’s time to finality, increasing the network’s appeal for dApp developers.
Another blazing-fast blockchain is Avalanche, which has previously made claims of up to 4,500 TPS. As with all blockchains, that’s just a theoretical figure based on ideal conditions that simply never exist in reality. Back in the real world, Avalanche typically processes around 3.5 TPS, if we only count the C-Chain that handles EVM smart contract interactions. If we figure the various subnets of Avalanche into the equation, that number improves to around 15.5 TPS.
Despite processing transactions more slowly than Solana, Avalanche does boast faster finality overall, thanks to its proof-of-stake consensus mechanism, which confirms transactions in less than two seconds.
There’s also a lot of regard for Binance Smart Chain, which focused on improving finality with the BEP-126 update that was rolled out in June 2023. With that update, BSC integrated proof-of-stake authority or PoSA with its Byzantine Fault Tolerance or BFT mechanism. This had the effect of improving the network’s throughput, enabling transactions to be confirmed after fewer blocks. Previously, when BSC only used PoSA alone, transactions were finalized after 15 blocks, or approximately 45 seconds. With the update, transactions can be confirmed after just 2.5 blocks, reducing the network’s time to finality to just 7.5 seconds.
EOS Even Faster?
Readers could be forgiven for thinking that issues around blockchain finality have finally been solved, but the blockchain industry is a place where the innovation never stops. Blockchain projects continue to strive towards faster finality, and one of the most promising developments of all is taking place in the revamped EOS Network.
EOS recently announced the compilation of a key update called Spring 1.0, which is the first version of the network to implement the new Savanna consensus algorithm, which is a customized delegated proof-of-stake model. Savanna has the effect of slashing EOS finality to less than one second, a staggering 100-times faster than before.
EOS has termed this development as “instant finality”, and it was achieved by taking block-based consensus chains and transforming them into more distributed systems. The DPoS consensus algorithm is uniquely suited to do this, as it introduces a social element to finality, enabling its community of validators to delegate responsibility for validating transactions to trusted nodes, which can confirm blocks much faster when working alone.
Finality Equals Trust
Blockchain finality is crucial for many kinds of DeFi applications and blockchain games as it is the only thing that’s able to guarantee the validity of transactions. With fast finality, blockchains can process transactions instantly with a high degree of trust and security, reassuring users that it’s no longer possible to reverse or change them. By validating transactions and confirming them in less than a second, fast finality totally eradicates the risk of double spending.
For smart contracts, fast finality is crucial, as the details of any agreements are embedded directly within them and automatically executed when the right conditions are met. Finality guarantees that the outcomes processed by smart contracts are immutable as soon as the transaction is made.
By using a blockchain with fast finality, dApps can prove to their users that all of the transactions they process are secure and trustworthy almost as soon as they are executed, increasing trust among their users.
This article was originally Posted on Coinpaper.com
