What is Conflux?

Strong Founding Team and Solid Investment Background

Conflux is a high-throughput public blockchain based on Proof of Work and a layered consensus mechanism, aiming to address issues such as throughput, scalability, and security faced by current blockchain networks.

Conflux employs a layered consensus protocol known as “Tree-Graph,” which allocates transactions to different sub-chains for processing, thereby enhancing the system’s throughput and performance. Conflux also supports smart contracts and decentralized applications (DApps) and offers development tools and SDKs to assist developers in building Conflux-based applications.

Additionally, Conflux adopts unique security measures, like the “interference-free” encryption technology used for communication between the main chain and sub-chains. Furthermore, Conflux uses a technique called a “random function” to generate blocks and validate transaction authenticity, boosting system security and preventing malicious attacks.

In summary, Conflux is a public blockchain with high throughput, a layered consensus mechanism, and security measures, aiming to foster the development of decentralized applications and address challenges faced by current blockchain networks.

The Conflux founding team boasts a strong background. The founder, Long Fan, holds a Ph.D. from MIT and is currently an assistant professor at the University of Toronto. Conflux’s Chief Scientist, Yao Qizhi, is the recipient of the 2000 Turing Award and currently serves as the dean of the Institute for Interdisciplinary Information Sciences at Tsinghua University. The CTO, Wu Ming, holds a Ph.D. in Computer Science from the Chinese Academy of Sciences and was a senior researcher at Microsoft Research Asia.

Moreover, in less than six months since its inception, Conflux has received support from traditional investment institutions and internet companies, raising $35 million in financing. These renowned institutions include Sequoia Capital China, Frees Fund, Baidu Ventures, and IMO Ventures. Post-financing, Conflux’s valuation exceeded $400 million.

source:https://www.cryptoninjas.net/2021/01/12/shanghai-government-invests-5m-in-blockchain-project-conflux/

Technical Background of Conflux

One of the main issues facing current blockchains is scalability. Traditional blockchain systems like Bitcoin and Ethereum, while secure and reliable, have very limited throughput and transaction speed. To address this problem, new blockchain systems like Conflux have emerged, aiming to solve the blockchain trilemma using innovative “Tree-Graph” technology and security measures like “interference-free” and “random function”.

Innovative Tree-Graph Technology Achieving High Throughput

As a Proof of Work blockchain, Conflux has a Turing-complete state machine built on a high-throughput consensus protocol. Conflux utilizes a consensus mechanism called the Tree-Graph, which allows Conflux to achieve high throughput while ensuring decentralization, security, and irreversibility.

In traditional blockchains, due to their linear structure, each block has only one predecessor and one successor, transactions in the blocks must be verified one by one. This results in slower transaction processing speeds and relatively lower transaction throughput. Moreover, because traditional blockchains have only one predecessor block, if that block is attacked, the entire blockchain could cease to operate. Thus, traditional blockchains have poor scalability.

Unlike the linear structure of traditional blockchains, the Tree-Graph technology used by the Conflux blockchain is a layered structure. Each child block can be generated by multiple parent blocks, forming a Directed Acyclic Graph (DAG)—a tree-like structure. This allows child blocks to be verified in parallel, i.e., multiple transactions can be processed in parallel within the blockchain, thereby achieving higher transaction throughput. Additionally, as each child block can be generated by multiple parent blocks, this means that even if a parent block is attacked, the entire blockchain can continue to operate.

GHAST Consensus Protocol Ensures Decentralization and Network Security

On top of the Tree-Graph technology, Conflux also adopts the unique GHAST consensus protocol to maintain network security and prevent malicious attacks. In this consensus algorithm, “interference-free” and “random function” are critical.

Interference-free: In the Conflux consensus algorithm, interference-free refers to the fact that nodes in the blockchain network are not influenced by other nodes when selecting the parent block for creating a new block. Each node can independently choose the parent block they consider optimal. This mechanism ensures that nodes in the network can make independent decisions during the consensus process, increasing the degree of decentralization and helping to prevent malicious nodes from interfering with the network.

Random function: In the Conflux consensus algorithm, the random function generates random numbers to achieve a fair and unbiased consensus process. Introducing the random function ensures that nodes face the same competitive conditions during the mining process, reducing the possibility of malicious nodes manipulating consensus outcomes. By using a random function, Conflux ensures fairness in the consensus process, further enhancing network security.

Tree-Graph Mechanism: PoW+PoS Parallelism Ensures Network Security

In addition, in the Tree-Graph consensus mechanism, Conflux implements a parallel operation of PoW and PoS, improving throughput while ensuring network security. Tree-Graph adopts a two-tier consensus mechanism: the base layer and the settlement layer. The base layer uses the PoW mechanism to generate blocks and validate transactions, while the settlement layer uses the PoS mechanism to confirm blocks and determine finality. Each PoW block is included in multiple PoS blocks in the settlement layer, which are voted on by validators. In the settlement layer, only selected PoW blocks can be confirmed and finalized, ensuring network security and stability.

Clever Use of Adaptive Difficulty Adjustment to Stimulate Incentives

Another innovation in Conflux is its adaptive difficulty adjustment mechanism. This mechanism dynamically adjusts block rewards and mining difficulty to maintain network security and stability while ensuring miner profitability. Simply put, the mechanism automatically adjusts the difficulty of the next block based on the block generation speed in the recent past, keeping the block generation rate within a reasonable range.

Specifically, when a miner mines a new block, Conflux calculates the block interval time based on the timestamp of the new block and the previous block and compares it with the target block interval time. If the block interval time is too short, indicating that the miner’s computational power is too high, Conflux will increase the difficulty of the next block to prevent the block generation rate from being too fast. If the block interval time is too long, indicating that the miner’s computational power is too low, Conflux will reduce the difficulty of the next block to increase the block generation rate. Through this dynamic adjustment mechanism, Conflux can adaptively adjust block rewards and mining difficulty according to actual conditions, maintaining network stability and security while providing a fair revenue mechanism for miners.

Superior Throughput and Transaction Speed

Due to the adoption of “Tree-Graph” technology, Conflux’s throughput and transaction speed have an advantage over other public chains in the market.

As can be seen from the table above, Conflux is superior to Ethereum, Cardano, and Polkadot in terms of transaction speed, transaction confirmation time, and transaction cost, but is inferior to Solana. However, Solana has not escaped the blockchain trilemma, with a rich history of network interruptions. In 2022 alone, it experienced 11 major network interruptions and 3 minor network interruptions, with downtime ranging from 1 hour 15 minutes to 17 hours 7 minutes. On the other hand, since its establishment in 2021, Conflux has not experienced any network interruptions or downtimes due to its innovative Tree-Graph technology.

What is the CFX Token?

The CFX token is the native token of the Conflux blockchain network. As the core of the Conflux ecosystem, the CFX token plays an important role in several scenarios:

Transaction fees: In the Conflux network, users need to use CFX tokens to pay transaction fees to complete transfers, call smart contracts, and other operations. CFX as a means of paying Gas fees helps maintain network security and operational efficiency.

Staking and Pledging: The consensus algorithm of the Conflux network requires nodes to stake and pledge CFX tokens to ensure the security and decentralization of the network. The amount of CFX tokens pledged will affect the weight of the nodes, thereby affecting the consensus process.

Incentives: Conflux uses a mining incentive mechanism to encourage participants to contribute to the security and stability of the network. Miners get CFX rewards by contributing computing power.

Ecosystem construction: CFX tokens also have a wide range of applications in the Conflux ecosystem, including decentralized finance (DeFi), non-fungible token (NFT) markets, cross-chain interoperability, etc. Through CFX tokens, users can participate in various applications and services in the Conflux ecosystem.

The CFX token plays a key role in the Conflux blockchain, helping to maintain network security, stability, and scalability. At the same time, as the Conflux ecosystem develops, the application scenarios and value of CFX may further expand.

CFX Token Distribution

Conflux divides ecosystem participants into direct builders, system maintainers, and ecosystem builders. The direct builders include the foundation responsible for developing the underlying technology of the Conflux public chain, the founding team, and the “fund” supported by the foundation; system maintainers are composed of “miner nodes” responsible for maintaining the operation and security of the Conflux system; ecosystem builders refer to “community users” who continuously create value for the Conflux ecosystem.

In its initial token issuance, Conflux issued approximately 3 billion CFX tokens, which were distributed as follows:

• First-round investors: They will receive 16% of the tokens as incentives, which will be unlocked over two years.
• Foundation Team and Founding Team: They will receive 36% of the genesis tokens as incentives. These tokens will be continuously distributed as a pool. Founding members include teachers and students of the Tsinghua Institute of Cross-information who participated in Conflux, members of the Conflux Foundation, and advisors to the Conflux project. These tokens will be unlocked over four years.
• Community Fund: 8% of the genesis tokens will be used to incentivize ordinary community users and encourage them to invest early in the construction and maintenance of the Conflux ecosystem. These tokens will be unlocked over four years.
• Ecological Fund: 40% of the genesis tokens will be used to incentivize community developers and incubate DApp projects in the Conflux ecosystem. These tokens will be unlocked over four years.
• Public Fund: In the initial stage, no additional CFX will be allocated to the Conflux Public Fund account.

Among them, as an ecological fund, 40% of the CFX tokens will be used to incentivize community developers and incubate DApp projects in the Conflux ecosystem. This could provide solid incentive support for building a stronger ecosystem in the future, attracting more developers to join the development of the Conflux network.

Collaborating with Enterprises to Foster Development

As of March 31, 2023, according to information from the Conflux official website, there are only 75 Dapps built on the Conflux network, including Defi, exchanges and wallets, NFT, infrastructure, and analysis applications.

source：https://confluxnetwork.org/en/ecosystem

Conflux is just starting in terms of ecosystem construction. Compared with the thousands of Dapps in the Ethereum ecosystem, Conflux is under considerable pressure. Moreover, most of Conflux’s applications are launched by the official team, and third-party developers have not actively participated in the ecosystem development. In the future, whether the team can effectively incentivize developers will become a very important part.

Conflux’s cooperation with large enterprises has attracted more public attention. On January 26, 2023, the Chinese social app Xiaohongshu integrated Conflux Network, allowing users to display NFTs minted on Conflux on their profile pages in a digital collection section called “R-Space.”

On February 15, 2023, Conflux Network announced a partnership with China Telecom on its official Twitter account and plans to launch the first BSIM pilot project in Hong Kong later this year. The BSIM card integrates Conflux’s Tree-graph, dual PoS, and PoW technology, providing high system performance support for any blockchain, thereby lowering the entry barrier for users to Web3 and the metaverse. Users’ public and private keys will be managed and stored internally by the BSIM card, which also provides encrypted storage, key retrieval, and other functions. The development of the BSIM card has been completed and has been successfully connected to Conflux’s mainnet for testing. According to the promotional video released by Conflux, users can store their private keys in the BSIM card and use BSIM’s signature to ensure the correctness of transaction information when making cryptocurrency transactions.

Conclusion

According to data from Tradingview, since the beginning of 2023, CFX has risen by more than 2,300% from its lowest to the highest point. As of March 30, 2023, CFX ranks 46th globally on Coinmarketcap.com with a market cap of $1.1 billion.

As a Layer 1 project, Conflux uses its innovative Tree-Graph technology, GHAST consensus protocol, and dynamic scheduling mechanism to achieve high throughput while still maintaining security, giving Conflux an advantage in the competition among various public chains. Cooperation with large enterprises such as Xiaohongshu and China Telecom may also provide Conflux with more potential development opportunities in the future.

However, as a newly started Layer 1 blockchain, Conflux has a significant gap in ecosystem construction compared to Ethereum, Solana, and other major Layer 1 blockchains. How Conflux can attract more global developers to build on its network in the future will be a key point of our attention.