Conflux Network is a proof-of-work (POW) blockchain that aims to eliminate the blockchain trilemma and offer a network that is secure, scalable, and truly decentralized.
While blockchain technologies continue to proliferate the decentralized finance (DeFi) space, many of them still face challenges relating to the blockchain trilemma. These challenges come as a result of scalability, security, and decentralization.
Although, there have been several attempts to solve these challenges by emerging and existing blockchains, the core of them still exists. Thankfully, with the emergence of Conflux, a proof-of-work blockchain, these challenges could be reduced to lesser problems. In this article, we shall be exploring the features of Conflux which stands out as a reliable blockchain.
Like most emerging blockchains, the founding of the Conflux Network came with it the formation of the Conflux Foundation. Formed in 2018, the foundation is responsible for the smooth running of the network.
The Conflux Foundation oversees the funding for the development of the Conflux ecosystem. It is a non-profit entity that aims to prevent frictions that may arise from the use of the Conflux Network. It’s also tasked with improving the network’s community participation as well as its development.
The foundation also intends to make appropriate adjustments should the network resources deviate from equilibrium. It will provide funds in the form of grants to enhance community development, and will also incentivize network participants and supervise the transfer of governance to participants of the network.
What is Conflux Network?
Conflux Network is a proof-of-work (POW) blockchain that aims to eliminate the blockchain trilemma and offer a network that is secure, scalable, and truly decentralized. It is built for the next generation of financial applications, e-commerce, and Web 3.0.
Originating from the research lab of Turing-Award recipient, Dr. Andrew Yao at Tsinghua University, the network makes use of a Turing-complete smart contract and a native token known as CFX.
The network’s use of the proof-of-work protocol is similar to that of bitcoin. However, while bitcoin is able to process transactions serially, Conflux is able to process transactions in parallel thanks to its employment of a unique Directed Acyclic Graph (DAG) structure.
The network also employs Turing-complete smart contracts which enable developers to build decentralized applications on the platform. While this is similar to the Ethereum network, the throughput generated on the Conflux network is quite higher than that of Ethereum. Practically, Conflux is able to process about 4000 transactions per second.
The Directed Acyclic Graph (DAG) structure, known as Tree Graph structure is the consensus algorithm utilized by Conflux. In combination with the POW protocol, it ensures that Conflux is able to take a step further in the area of next generation DeFi.
DAG must take a decision on two questions. The first one is to determine if the blocks are valid, and if they are to be incorporated into the blockchain. The second question is concerned with the order with which the valid blocks would be processed.
If a block is formally correct, it is accepted into the protocol, and arranged as a Tree-Graph. Each of the blocks possess two ends, the parent edge (attaching it to its parent block), and the reference edge (referring it to several other blocks).
Upon organisation of the blocks, Conflux makes use of a new technology known as Greedy Heaviest Adaptive SubTree (GHAST) to assign weights to the blocks in the Tree-Graph. The block with the heaviest weight is regarded as the pivotal chain. It is the most stable chain from the genesis block to the tip of the parental tree.
From the parental edges, the pivotal chain, and the reference edges, the blocks are split into epochs. Each epoch contains blocks that can be traced to the pivotal chain via the combination of parental edges and reference edges. In that way, an order is fixed and agreed upon by all honest participants in the network. Afterward, transactions are processed accordingly; the ones that are invalid, duplicating or conflicting are effectively ignored.
One important result of this novel approach is the high throughput it guarantees. The network is able to generate and process blocks at a faster rate, forks are not discarded and there is a high utilization of block space.
Conflux makes use of a token called CFX. The number of CFX generated at the genesis block is fixed at 5 billion, and is locked at the launch of the Conflux Mainnet to be gradually released into circulation.
The CFX can be used as a store of value, used as mining rewards, and can be exchanged into fiat currency or any other cryptocurrency. The pattern of distribution of the CFX has been described by the Conflux Foundation. The genesis tokens would be distributed among the Core group and the Community and Ecosystem building.
CFX is distributed in a very secure and transparent way.
Token Incentives and Governance
Tokens issued out on the Conflux network exist as liquid and illiquid. While the illiquid form cannot be immediately used, the liquid form can be immediately transferred and used on the platform.
Locked tokens are regarded as illiquid, and they can be locked through: stakes (when tokens are staked in view of future interest); bonded storage (as a means to purchase network space), and; as a means to purchase votes in network governance. In this case, tokens are locked up for a determined period of time.
Staked Tokens: When tokens are locked in view of a later interest, the interests paid are based on a fixed rate. At the time the user decided to unlock his token, the interests accumulated will be added to the number of tokens he initially staked.
Bonded Storage: To deploy a smart contract or a dapp on Conflux, the user needs to submit tokens as a way of creating bonded storage. When this is done, interests accumulated by the locked tokens are paid as incentives to the system miners, and not to the owners of the locked tokens.
This is important in order to continuously reward the maintainers of the network. Users who want to release their tokens locked up as bonded storage will have to first free up the space that they occupy on the network.
Voting: For users to be able to participate in the operations of the network, they must first have to obtain voting rights. This is achieved by locking up their tokens for a specific duration from the time of vote casting.
The number of votes allocated to a particular user will be determined by the entire period which his token has been locked. The longer the time, the more the number of allocated votes.
DAO Governance: As a result of conflux commitment to decentralization, it offers a pathway with which the governance of both the ecosystem fund and the community funds will be transferred to the network stakeholders. The road map for complete DAO governance is currently set to be within two years of the launch of Conflux.
Taking a peek at existing blockchains like Bitcoin and Ethereum, the shortcomings of DeFi blockchains were analyzed, and new solutions developed; thus, leading to the formation of Conflux.
The network solves the blockchain trilemma of speed, security and scalability, and also provides endearing solutions to other blockchain problems. As an insightful network, it goes further by providing bootstrapping initiatives for its economy and community while further providing funds to cover future development costs.
Additionally, Conflux also offers benefits in the form of mining rewards, user rewards and an opportunity to deploy smart contracts and other DApps on the network, thereby positioning it as a platform for an open, next-generation financing.