What You Will Be Able To Do

• Define consensus and why it is hard
• Compare proof of work and proof of stake
• Explain forks and the longest-chain rule
• Distinguish kinds of finality
• Describe a 51 percent attack

The Agreement Problem

• Messages arrive in different orders
• Nodes crash or go offline
• Some participants lie to gain advantage
• Goal: one order of blocks for everyone

Four Questions Every Protocol Answers

• Who may propose the next block?
• How do others verify it?
• What happens when two valid blocks collide?
• What does cheating cost?

Proof Of Work In One Slide

• Miners race to find a valid nonce
• Winner proposes the block and earns the reward
• Everyone verifies with one hash
• Security: hardware and energy spent

Proof Of Stake

• Validators deposit coins as stake
• Proposer is chosen randomly, weighted by stake
• Other validators vote on the block
• Rule-breakers are slashed

Ethereum'S Proof Of Stake

• The Merge: September 2022
• A validator deposits 32 ETH
• Slot: 12 seconds, one proposer
• Epoch: 32 slots, committees attest

slot    = 12 seconds
epoch   = 32 slots
        = 384 seconds
        = 6.4 minutes

Forks: Two Blocks At Once

• Two miners find valid blocks together
• Parts of the network see different blocks first
• Both branches are valid for a moment
• The next block breaks the tie

A1 - A2 - A3
   \
    B2 - B3 - B4   <- heavier, wins

The Longest-Chain Rule

• Nodes follow the valid chain with most work
• Orphaned blocks drop out of the main chain
• Confirmations count blocks built on top of yours
• More confirmations mean lower reversal risk

Fork Choice In Python

• Chains are lists with a work value per block
• Pick the chain with the highest total work

def choose(chains):
    return max(chains, key=lambda c: sum(b['work'] for b in c))

base = [{'n': 1, 'work': 1}]
A = base + [{'n': i, 'work': 1} for i in range(2, 7)]
B = base + [{'n': i, 'work': 1} for i in range(2, 5)]
print(len(choose([A, B])))

Soft And Hard Forks

• Soft fork: tighter rules, old nodes still accept blocks
• Hard fork: changed rules, nodes must upgrade
• A refusal to upgrade can split the network for good
• Example: Ethereum and Ethereum Classic, 2016

Finality

• Bitcoin: probabilistic, risk falls with each block
• Many services wait around six confirmations for large sums
• Ethereum: finalised after two thirds vote across two epochs
• Reverting finalised blocks risks slashing a third of stake

The 51 Percent Attack

• A majority builds a private chain and publishes it
• Can reverse its own recent payments
• Can censor chosen transactions
• Cannot spend coins without the owner's signature
• Cannot mint beyond the supply rule

Stake-Weighted Selection In Python

• Pick proposers in proportion to stake
• Large samples approach the stake shares

import random
from collections import Counter

stake = {'Ana': 32, 'Ben': 64, 'Cem': 160}
names = list(stake)
weights = list(stake.values())
picks = random.choices(names, weights, k=10000)
print(Counter(picks))

How Decentralised Is It?

• How many independent block producers exist?
• Can ordinary hardware run a full node?
• How many separate software clients are in use?
• What if a big staking provider fails?

Recap

• Consensus is agreement on one order of blocks
• Work uses energy, stake uses locked capital
• Forks resolve to the heaviest chain
• Finality is probabilistic or economic
• A majority attacker can rewrite recent history only

Next Week: Ethereum

• Accounts, gas and the EVM
• The world computer idea
• Smart contracts at a high level
• Sending a transaction on a testnet

Questions And Exercise

• Build the fork choice function and switch chains
• Run stake-weighted selection 10,000 times
• Write a short attacker analysis