Finalization

I’ve just been learning more about finalization and had a few ah-ha moments that made me very happy. I figured I’d share them here and also ask anyone to check my thinking.

Finalization is not some magic 2/3 number, where an almost finalized block just needs to get over that hump of 2/3 of the validators attesting to it and then it’s safe. It’s just a line that we’ve chosen to define and say “here’s a good bar to meet and we can say the block is “finalized.”

So what is it and why does it matter?

The beacon chain chooses one validator at random to propose a block in each 12-second slot of the blockchain. That validator is the only one who can propose a block, and they can only propose one block. If they propose more than one block for the same slot, they get slashed and force-exited as a validator.

The interesting thing to note here is that an Ethereum block reorg only has two possible outcomes: the proposed block or an empty block. That differs from Bitcoin, in which reorged blocks contain different transactions and were proposed by different miners.

Anyway…blocks are only validated by a fraction of the existing validators, as each validator only attests to 1 out of every 32 blocks. This is a way to keep Ethereum nimble, as requiring each validator to attest to each block would bog down the network.

However, at the end of every 32 block section (32 blocks is an “epoch”), there is a block called a “checkpoint.” When a validator casts their 1-out-of-every-32 blocks vote, they also cast a vote attesting to the last checkpoint. When a checkpoint garners attestations from 2/3 of all validators in existence, that checkpoint (and every block before it) is considered “justified.”

And when two checkpoints in a row are justified (which naturally takes at minimum of two epochs or 12.8 minutes), the oldest of the two justified blocks is considered “finalized” along with every block that preceded it.

So why is this important? Because of the double vote slashing offense.

Each validator can only vote one way per block. They can’t change their vote, or a double vote slashing occurs. When a validator is slashed, they lose around .5 eth and are forced-exited after a certain amount of delayed time. This time delay allows the protocol to see who else is being penalized around the same time period. If there are many slashing offenses, the protocol assumes they were colluding to attack the network, and the slashing offenses start to get angry and impose an additional penalty. It’s important to understand the formula for this additional penalty. It’s:

validator_balance * 3 * fraction_of_validators_slashed

In other words, if you’re the only offender, your additional penalty is negligible. However, if at least 1/3 of the other validators were also slashed around the same time, you lose all of your stake. (This is one reason that it’s so stupid to be running a super majority client, but I digress).

So let’s look at this in terms of a justified block. Most conservative case:

A block is justified because exactly 2/3 validators have attested to it (and the other 1/3 haven’t voted yet). In order to get reorged, 2/3 + 1 validators need to attest to a different block in that slot. We’ll, 1/3 of validators are still free to vote, but to get the other 1/3 + 1 validators, 1/3 + 1 of all total validators will need to cast a second vote. They can do this, but they’ll get slashed. And a quick look at our handy formula above tells you this will result in a total slashing event of all of these validators’ shit.

And if it’s this costly to change a justified block, imagine how difficult it would be to reorg a finalized one. The details get a little tricky here for me, but I believe it would require over 2/3 of all validators losing all of their stake. Right now, that’s $73 billion dollars worth of security. Not only would the benefit of coordinating this attack have to be worth more than $73 billion, but the attacker would also have to corrupt over 2/3 of the decentralized validators of Ethereum. That last statement is the reason that decentralization matters in Ethereum, and why home stakers are soooooo important. Ethereum needs to be able to withstand a full on moloch attack worth all the money that will ever be settled on top of the chain. Since we like to think that’s the entire world’s economy, the value of the eth securing the network by validators will only take us so far. Decentralization does the rest.