Productive, decentralized and secure: How Conflux (CFX) solves the blockchain trilemma
What is Conflux?
Conflux is a performance open-source blockchain platform with its unique consensus mechanism and innovative "two-space" design.
Conflux was founded in 2018, but the project's development started in 2017, during the first massive peak of cryptocurrency popularity.
The Conflux project is designed to promote blockchain education and research through its own Tree-Graph Research Institute based in Shanghai. The project has reached not only the Western market but also the Asian market, which makes its prospects quite encouraging.
How does Conflux work?
At the heart of the Conflux blockchain protocol is a hybrid consensus mechanism combining Proof-of-Work (PoW) and Proof-of-Stake (PoS) to provide high performance, security, and decentralization. Hybrid consensus mechanisms, as demonstrated by Conflux, are one solution to the well-known blockchain trilemma, according to which it is difficult for blockchain networks to achieve high-speed performance, decentralization, and security without sacrificing any of the above.
Unlike the classic Proof-of-Work algorithm, such as in Bitcoin (where blocks form a continuous linear chain), blocks are organized in a Tree-Graph structure in the Conflux blockchain. This means that in the Conflux network, miners can mine blocks in parallel with each other, which increases the blockchain platform's performance without compromising its security. According to the project's official documentation, the Conflux network can process up to 3,000 transactions per second. The transactions themselves are confirmed within a minute.
In addition to the tree structure of the blockchain, the Conflux protocol includes GHAST (Greedy-Heaviest-Adaptive-SubTree), a mechanism developed by Conflux Research Group to counter so-called "liveness attacks" (liveness attacks) by increasing the complexity of block mining and slowing down the speed of their generation.
The Proof-of-Stake algorithm aims to protect against the so-called "51% attack," in which malicious validators control the blockchain network at the expense of an advantage over other nodes in the network and promote malicious transactions, damaging the blockchain.
In addition, the Conflux blockchain consists of 2 main interacting spaces (modules):
- Conflux Core Space;
- Conflux eSpace.
Conflux Core Space is a basic blockchain network that runs on the hybrid consensus model described above. Its smart contracts enable the autonomous operation of decentralized applications (DApps).
Conflux eSpace is a standalone network compatible with the Ethereum Virtual Machine (EVM), so decentralized application developers can seamlessly port their Ethereum smart contracts and networks to Conflux.
Both Core Space and eSpace communicate with each other using a particular contract called CrossSpaceCall. Conflux is also able to interact via its cross-chain protocol, ShutterFlow, with other blockchains, such as:
- Ethereum,
- Binance Smart Chain (BSC),
- Huobi Eco Chain,
- OKEx Chain.
Conflux ņryptocurrency
CFX is the native cryptocurrency of the Conflux blockchain platform, which is used to pay the network's commission and staking fees to validators and their delegators.
The CFX token itself was not released until three years after the development of the Conflux blockchain platform began, in November 2020. As of July 2024, about 4.23 billion CFX tokens are circulating out of 5.018 billion of all existing tokens. However, the token has no-issuance limit, making it an inflationary cryptocurrency: to increase the CFX rate, the team needs to ensure that user demand continues to grow.
The CFX price reached its all-time peak in March 2021 at $1.54, and as of July 2024, it is trading at about ten times less than ATH amid a general correction in the cryptocurrency market.
Conflux has its own, albeit small, ecosystem of DeFi protocols with less than $30 million in total blockchain assets (TVL) and is mostly made up of little-known decentralized marketplaces such as ABC Pool, Swappi, and Nucleon. However, thanks to these DeFi protocols, the CFX token has additional use cases (e.g., liquidity mining and lending), which is helping to increase demand for the asset.
Prospects for Conflux
The Conflux project and its cryptocurrency showed positive momentum in 2023 amid the Chinese government's softening stance towards digital assets. In addition, Conflux is one of the few blockchain projects authorized to operate in China, which opens the door to attracting a large Asian audience.
The Conflux team has even partnered with China Telecom, China's largest mobile operator, to launch blockchain-enabled SIM cards in Hong Kong. This partnership could be a strong growth driver for Conflux's blockchain project.
Nevertheless, the token has been showing mostly negative dynamics since 2023, as well as the number of monthly active users, which has remained almost at the same level over the same period: about 10 thousand. For comparison, one of the largest platforms, Polkadot, considered "dead" by some critics, has 78 thousand monthly active users.
However, the decline in momentum can be attributed to the ever-increasing competition and generally not the most favorable times for many such projects. In June 2024, the Conflux team conducted a hardfork and launched a test network to improve the technology and infrastructure.
The Conflux team has also gained new partnerships with projects such as Mengli Carnival, OpenFlux Marketplace, PoPP Web3 Lab, and Cwallet. For example, together with OpenFlux, the Conflux team launched the OpenFlux Marketplace NFT trading platform. Time will tell whether new developments and partnerships will help to correct the situation with the negative dynamics of the project.
