State Finality

In Proof-of-Work chains, finality is probabilistic, meaning the likelihood of a block being reverted decreases exponentially as more blocks are built on top of it. This is often measured by confirmation depth.

• Example: Bitcoin transactions are considered final after 6 confirmations, as the computational cost to reorganize the chain becomes astronomically high.
• Mechanism: Finality emerges from the Nakamoto Consensus and the assumption that the honest chain accumulates the most work.

Protocols using Byzantine Fault Tolerant (BFT) consensus, like those built with Tendermint Core, achieve instant, deterministic finality.

• Mechanism: Once a block is approved by a supermajority (e.g., 2/3) of validators in a single round of voting, it is immediately final and cannot be reverted.
• Trade-off: This provides strong safety guarantees but requires all validators to be known and responsive, limiting scalability in validator set size.

Ethereum's consensus layer uses a hybrid model called Gasper, which combines LMD-GHOST fork choice with Casper FFG finality. This creates two finality classes:

• Proposed Finality: Blocks are initially 'justified' and can be re-orged.
• Absolute Finality: After two consecutive epochs (approx. 12.8 minutes) where checkpoints are finalized by a 2/3 supermajority of staked ETH, the chain state becomes cryptoeconomically irreversible.

Layer 2 solutions like Optimistic Rollups (Arbitrum, Optimism) use an optimistic model for state transitions, relying on a challenge period (typically 7 days) for finality.

• Mechanism: State roots are posted to L1 (Ethereum) and are considered provisionally final. Anyone can submit a fraud proof during the challenge window to contest invalid state.
• Result: User withdrawals are delayed, but this model enables high throughput by defaulting to trust in the sequencer.

ZK-Rollups (zkSync, StarkNet) achieve near-instant finality for users by leveraging cryptographic validity proofs (ZK-SNARKs/STARKs).

• Mechanism: A prover generates a cryptographic proof that attests to the correctness of a batch of transactions. Once this validity proof is verified on the L1 contract, the new state root is immediately and irrevocably final.
• Advantage: Eliminates the need for challenge periods, enabling fast withdrawals and strong security inherited from the L1.

Many Proof-of-Stake networks enforce finality through cryptoeconomic incentives and slashing conditions.

• Mechanism: Validators stake substantial capital as a bond. If they are found to have signed conflicting blocks (a double-sign or surround vote), their stake is partially or fully slashed.
• Example: In Ethereum, slashing makes chain reorganizations beyond the finalized checkpoint prohibitively expensive, as it would require the destruction of at least 1/3 of the total staked ETH.

Probabilistic finality, used by Nakamoto consensus (e.g., Bitcoin), means the probability of a block being reverted decreases exponentially with each subsequent confirmation. Absolute finality, achieved by BFT-style protocols (e.g., Tendermint, Ethereum's finality gadget), is an explicit, cryptographic guarantee that a block is irreversible once finalized. The key security distinction is the liveness-safety tradeoff: probabilistic chains prioritize liveness (new blocks are always produced) while BFT chains prioritize safety (no two finalized blocks can conflict).

A long-range attack targets proof-of-stake chains where an attacker acquires old private keys (e.g., from a past validator set) to create an alternative history from a point far in the past. Defenses include:

• Subjectivity Periods: Clients must trust a recent, known state (a checkpoint) within a defined time window.
• Key Evolving Cryptography: Validator keys change over time, making old keys useless for signing.
• Checkpointing: Hard-coded, network-agreed block hashes that serve as immutable anchors.

In BFT protocols, finality reversion can occur if more than 1/3 of the validator stake acts maliciously (a Byzantine fault). This can lead to a safety failure, creating two conflicting finalized blocks. A liveness attack (e.g., a non-deterministic halt) occurs if more than 1/3 of validators are offline or censoring transactions, preventing the chain from finalizing new blocks. These attacks highlight the 1/3 and 2/3 Byzantine fault tolerance thresholds that define protocol security.

Economic finality is achieved by making reversion catastrophically expensive through slashing and inactivity leaks. In Ethereum's Casper FFG, validators who sign conflicting messages have their staked ETH slashed. During liveness failures, an inactivity leak progressively burns the stake of non-participating validators until a 2/3 majority is restored. This creates a strong cryptographic-economic disincentive, aligning security with the cost-of-corruption exceeding the profit-from-corruption.

Finality mechanisms can be disrupted by network-level attacks, even with honest validators.

• Partition Attacks: Splitting the network can cause partitions to finalize different chains, requiring a social consensus merge.
• Bouncing Attacks: Targeting the gossip layer to delay or reorder messages, preventing timely agreement.
• Time-Source Attacks: Manipulating a validator's clock (its time source) in a BFT system, as many protocols rely on approximate synchrony. Defenses include using robust peer-to-peer networking and multiple, reliable time servers.

A model where the likelihood of a transaction being reversed decreases exponentially as more blocks are added on top of it, but absolute certainty is never mathematically guaranteed. This is the model used by Nakamoto Consensus in proof-of-work chains like Bitcoin.

• Example: A Bitcoin transaction with 6 confirmations is considered extremely secure, but a theoretical chain reorganization could still undo it.

Finality achieved by making it economically infeasible to revert a block, as the cost of doing so (e.g., via slashing of staked assets) far exceeds any potential reward. This is central to Proof-of-Stake (PoS) systems like Ethereum.

• Mechanism: Validators stake substantial cryptocurrency. Attempting to finalize conflicting blocks results in the slashing of their stake, creating a strong financial disincentive for attacks.

The property where a transaction is considered permanently settled the moment it is included in a block, with no waiting period for confirmations. This is typically achieved via Byzantine Fault Tolerance (BFT) consensus algorithms.

• Protocols: Used by networks like Cosmos (Tendermint) and Binance Smart Chain. Once 2/3 of validators pre-commit to a block, it is instantly finalized and cannot be reverted without compromising the network.

The underlying protocol that enables network nodes to agree on the state of the ledger. The choice of consensus mechanism directly determines the type and speed of finality a blockchain offers.

• Key Types: Proof-of-Work (PoW) → Probabilistic Finality. Proof-of-Stake (PoS) with BFT → Economic/Instant Finality. Delegated Proof-of-Stake (DPoS) → Faster, but often with fewer finalizing validators.

An event where a blockchain splits into competing forks and nodes converge on a new canonical chain, causing previously seen blocks and transactions to become orphaned. The depth of possible reorgs defines the practical finality of a chain.

• Impact: A deep reorg can reverse transactions, breaking state finality. Networks aim to minimize reorg depth; Ethereum's move to PoS reduced common reorgs from multiple blocks to single slots.

A process where a trusted authority or a super-majority of validators periodically finalizes an older block, creating a point that cannot be reversed. This can add a layer of absolute finality to chains with probabilistic models.

• Use Case: In Bitcoin, checkpointing was used in early client software to prevent deep historical reorgs. In PoS Ethereum, checkpoints are part of the Casper FFG finality gadget, where epochs are justified and then finalized.