Last week, it was reported that Ethereum transaction finality experienced brief losses. While this unwanted instability poses security risks to the blockchain, it is not considered a critical situation. However, the delay in achieving finality sparked confusion regarding the blockchain’s functionality, leading to discussions on security concerns, as reported by CoinDesk. Let’s take a closer look into this matter.
The cause of the temporary loss of block finalization is currently being investigated. Prysm, a provider of client software used to operate a node on the blockchain, recently released a new version described as “the first full release following the recent mainnet issues,” including “critical fixes.”
When data blocks fail to finalize, there should be no downtime or noticeable difference in the end-user experience. However, a loss of finality can potentially give rise to security issues such as reorgs.
Reorgs occur when a blockchain simultaneously produces multiple blocks, usually due to a bug or an attack. Consequently, a validator node temporarily creates a new version of the blockchain, making it challenging to accurately verify the success of transactions while the previous version of the blockchain remains in existence.
Nonetheless, this incident caused some disruptions for end-users. For example, DYdX, a prominent cryptocurrency exchange platform, had to temporarily halt deposits following one of the incidents from last week. Similarly, Polygon’s zkEVM experienced delays with deposits.
In Ethereum’s proof-of-stake blockchain, validators initially propose blocks containing transactions. Once proposed, other validators must approve the block by adding their signatures to make it a permanent part of the blockchain. This process takes approximately 15 minutes. Once two-thirds of validators “attest” to the block, it eventually becomes finalized.
Thus, finality represents the point at which transactions on the blockchain are deemed immutable. Finality is crucial for ensuring that transactions within a block cannot be altered.
If finality cannot be guaranteed, the blockchain enters an emergency state referred to as the “inactivity leak,” resulting in penalties for validators who fail to achieve finalization. This state serves as an incentive for the blockchain to resume finalizing. Last week’s incident triggered Ethereum’s first-ever inactivity leak.
The Ethereum community acknowledges that the current timeframe for finalizing blocks is too lengthy. The Ethereum website highlights the risks associated with delays between block proposal and finalization, including the potential for short reorgs used by attackers to censor specific blocks or extract Maximum Extractable Value (MEV).
Interestingly, Ethereum co-founder Vitalik Buterin addressed the concept of finality seven years ago, illustrating its significance. When the initial loss of finality occurred on May 11th, developers promptly shared the issue on Twitter, announcing their plans to deploy additional resources to investigate the matter. After 25 minutes, the issue seemed to be resolved, and the chain resumed finalization.
Approximately 24 hours later, the chain ceased finalization again for about an hour, causing disruptions for certain infrastructure providers. In the past, finalization has temporarily halted due to bugs in the client software responsible for running the blockchain. Ethereum has multiple clients to mitigate flaws or glitches in the software, ensuring that the blockchain’s operations can continue.
According to Tim Beiko, who serves as the protocol support lead at the Ethereum Foundation, the recent incident was noteworthy, but Ethereum’s security and integrity remained unaffected.
He stated that the issue was promptly rectified, and clients received software patches within a day or two to prevent a recurrence of the problem. Ethereum developers are still investigating the cause of the blockchain’s failure to finalize and plan to discuss the post-mortem report in their upcoming Consensus Layer call.
Despite the delay caused by the finality stoppage, Ethereum’s network remained operational, and the incident presented an opportunity to test the protocol’s fallback options. However, several applications that rely on Ethereum were affected.
Jordi Baylina, technical lead at Polygon, noted that the finality stoppage caused deposits onto the Polygon zkEVM chain to be delayed. The zkEVM chain relied on Infura, which experienced temporary outages due to the loss in finality, resulting in further issues for users.
Although DYdX temporarily halted deposits due to the lack of Ethereum finality, they stated that they were investigating the issue. Marius van der Wijden, a developer at the Ethereum Foundation, tweeted that the incident was a great fire drill that enabled them to identify areas that needed improvement to enhance Ethereum’s resilience.
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