What is chain reorganization?
Chain reorganization occurs when a block is removed from the blockchain to make way for a longer chain.
Besides the advantages, blockchain still has potential obstacles. The most common blockchain vulnerability is the block conflict, which suggests that if two blocks are appeared simultaneously, then a fork in the blockchain could occur.
This method of conflict resolution is based on the Longest Chain Rule (LCR), i.e. when there are multiple blocks, the longest chain will be considered valid. This means that each node on request the protocol only tries to expand the broadest branch. Because other fork transactions will be restructured into new blocks, this rule causes some of these transactions to be delayed, leading to blockchain reorganization.
Chain reorganization can occur with blockchains like Bitcoin and Ethereum, where Nodes can create a new block of similarity in the same location. The two nodes update copies of the ledger, if this happens, the node creates the next shorter chain and reorganizes the chain. In essence, chain rearrangement ensures that all node operators have the same copy of the ledger.
How does Chain reorganization work?
A Chain reorganization attack refers to the chain division in which nodes receive blocks from a new chain while the old chain continues to exist.
On May 25, the Ethereum Beacon chain experienced a seven-block reorg problem and took on high-level chain reorganization security risks. The authenticator on the Eth2 Beacon Chain (which has now upgraded the consensus layer) becomes asynchronous after a customer is updated to a specific customer. However, in the process, the validators on the blockchain network were confused and did not update their customers.
Seven-block reorganization means that seven trading blocks were added to the final removed fork before the network discovered it was not the standard chain. Therefore, blockchain reorganization will occur if some node operators are faster than others. In this case, the faster nodes will not be able to agree which blocks should be processed first, and they will continue to add blocks to their block strings, leaving the chain shorter when the next block is created.
For example, the X and Y miners can both locate the block validly at the same time, but due to the way the blocks propagate in the Peer-to-Peer network, part of the network will see the block of X first, then the block of Y.
If the two blocks have the same difficulty, the client will be randomly selected or selected the previously seen block. When the third miner, Z, creates a block located on the block of X or Y, the bond is often broken and the remaining block is forgotten, leading to the reorganization of the block chain.
In the case of Ethereum’s Beacon chain reorganization, nodes update about 12 seconds faster than validators that have not updated customers at block 3,887,074. Ethereum chain reorganization occurs when the updated client sends the next block before the rest of the authenticator. This makes the authenticator wonder who will send the original block.
Preston Van Loon, an Ethereum developer, has said that Ethereum reorg is due to the Proposer Boost fork decision that has yet to be fully announced on the network. Moreover, chain reorganization is a difference between up-to-date and outdated customer software, not a sign of bad fork selection.
How are blockchains linked to each other?
A nonce creates cryptographic hash when the first block of the chain is formed. Unless mined, the data in the block is considered signed and is indestructiblely linked to nonce and hash.
Each block consists of a title and several transactions. Then a hash output of a fixed length is created from transactions in a block and added to the block header.
After creating the first valid block, each subsequent valid block must include the hash output of the previous block header. Every valid block is linked to the blocks before it using the hash of the previous block header. Finally, a series of blocks (data chains), called blockchains, is formed by connecting each block to its predecessors.
What is the impact of chain reorganization?
Chain reorganization increases node costs reduce user experience and increases the bias of decentralized financial transactions (DeFi) and attacks by 51%.
Due to the need to switch to the new fork, status updates sometimes involve memory and disc costs when the reorg process occurs. Since it is possible to do it again, users will have to wait longer before they can confidently consider a related transaction to have been confirmed. As a result, businesses, such as exchanges, may have to wait longer before accepting a deposit.
Chain reorganization increases the risk of unsuccessful DeFi transactions due to user error, resulting in lower-than-expected trading returns. Reorg also increased the consequences of attacks by 51%. That means the attackers no longer have to defeat all honest miners; instead, they must beat the percentage of honest miners who are not retrained. The attacker’s job becomes much easier if reorganization occurs regularly.
See also: Margin And Futures On Binance – What Are The Differences?
What are the advantages and disadvantages of The Blockchain PoS?
Proof-of-stake blockchains (PoS) have many advantages over proof-of-work blockchains (PoW) because they are more environmentally friendly and decentralized. However, PoS also has some drawbacks, such as the double cost of blockchain reorganization.
First of all, the PoS consensus mechanism is much more environmentally friendly than the PoW. In essence, miners don’t need to waste processing energy on meaningless calculations to protect the network.
Besides, PoS is decentralized. While Mining PoW is largely dominated by specialized hardware equipment and is at risk when a single mining company will take over and monopolize the market, PoS is CPU-friendly in the long run.
However, there are certain limitations when using PoS. Since miners have nothing to lose and mining costs on some chains are low, miners can try to spend twice as much at no cost in the case of blockchain reorganization.
