Reorganization events is an crucial topic for blockchain architectures and consensus systems. Coinweb using L2 chains that are inside L1 chains and work across multiple chains, this is especially important.

Coinweb runs on top of proof-of-work consensus systems (PoW), as well as proof-of-stake (PoS) consensus. The latter usually use consensus algorithms in the BFT family, dBFT, pBFT or variations. The latter consensus algorithms have finality while PoW consensus has eventual consistency.

This article is about PoW L1 chains only.

Attacked and failed PoW chains

In casual parlance we talk about a chain being attacked when large reorganizations occur. The L1 data structure rarely has a concept of attack and no consistency problems arise during an attack. The problems caused by attacks are always related to some external system that does not operate under the consensus system of the L1 chain. The typical example is a double spend where some goods or services are exchanged for L1 coins and a later reorganization makes the transaction disappear. Exchanges are particularly exposed to this.

Coinweb explicitly defines attacks and failures of a PoW chain.

Broadly speaking, an L1 PoW chain in Coinweb can be in three states: Normal, Attacked or Failed.

Normal and Attacked states

The normal L1 PoW chain goes back and forth between the Normal and Attacked states. In the Normal state, anchors for the L1 chain posted on neighborhood chains are not in conflict with each other.

In the Attacked state, there are conflicts between these anchors and they point to orphan L1 tips, tips that never become part of the L1 canonical chain. These are sometimes called uncles, granduncles etc. Based on the occurrance of these alternative L1 tips, we do a parameter estimation for a model of the PoW chain.

In a simple model, the number of blocks appearing in a given time span follows a Poisson process. This means that it is possible for a miner to find a few blocks before the rest of the network sees these blocks.
Though multi-block orphans are quite unlikely to happen. A model taking into consideration network delays and random noise can be created and estimated, for example using a Kalman filter.

Failed state

A L1 PoW chain enters the failed state when an unlikely reorganization happens. The model we discussed previously will assign probabilities to various reorg events, and for a given small ε probability, we define that if such an event happens, the chain enters the failed state.

When an L1 chain enters failed state, the embedded L2 chain will be moved to a neighbor chain in a neighborhood graph reduction event.

From a CAP viewpoint, the failed state keeps consistency at the expense of availability. However, after moving the L2 chain to a (better) L1 chain, availability is restored while keeping consistency.

From a consensus protocol point of view, Coinweb implements a dynamic checkpoint system for the L1 chain so that if a reorg event happens beyond this checkpoint, the L1 chain enters the Failed state.