Understanding Blockchain Finality: Why Fast Finality is Crucial for dApps

In the evolving world of blockchain technology, fast finality has emerged as a critical area of focus for developers. It’s an essential characteristic for many decentralized applications (dApps), ensuring transactions are confirmed quickly and securely.

What is Blockchain Finality?

Finality refers to the moment when a block of transactions becomes permanently etched into the blockchain, making it irreversible and unchangeable. At this point, transactions become immutable, providing a guarantee that they cannot be altered. This is a crucial feature for dApps that require high efficiency and security, such as blockchain games and decentralized finance (DeFi) platforms, where real-time transaction confirmation is vital.

The Challenges of Slow Finality

Legacy Blockchains
Older blockchain networks, like Bitcoin and Ethereum, face significant challenges with finality. Bitcoin, for instance, processes a new block every 3-10 minutes. Transactions are only considered permanent after six confirmations, which can take anywhere from 10 to 60 minutes, depending on network traffic. This lag creates inefficiencies, making Bitcoin unsuitable for dApps that need instant transaction processing.

Ethereum has made strides to improve finality compared to Bitcoin, processing an average of 14 transactions per second (TPS). However, due to its architecture, transaction confirmations still take longer. On Ethereum, transactions are considered final only after two epochs—approximately 15 minutes. Although Ethereum’s roadmap includes a Single Slot Finality mechanism to reduce this to just a few seconds, slow finality remains a limitation for now.

Impact on dApps
Slow finality affects various blockchain use cases:

• Blockchain Games: Players may experience frustration when they cannot use an item immediately after purchase due to delayed transaction confirmation.
• DeFi Trading: Traders require fast transaction processing to capitalize on price movements, making low finality a disadvantage.

Low finality also opens up vulnerabilities, such as the potential for double spending, where a malicious actor could attempt to use the same funds more than once.

Solutions: Faster Blockchain Finality

The limitations of legacy blockchains have led to the development of new architectures and Layer-2 networks designed to enhance finality speed.

Solana
Solana has positioned itself as one of the most efficient blockchains, boasting a theoretical limit of 65,000 TPS under test conditions. In reality, the network averages around 2,000 TPS, including vote transactions used for governance. When focusing solely on genuine transactions, this number is closer to 1,000 TPS, with an average finality time of 12 seconds (31 block confirmations). Solana plans to boost its finality further with the Firedancer update, which could increase transaction speeds to up to 1 million TPS, surpassing even the VISA network.

Avalanche
Avalanche is another blockchain known for faster finality, claiming up to 4,500 TPS under ideal conditions. In practice, it processes around 3.5 TPS on its C-Chain, which handles EVM smart contracts, and about 15.5 TPS when factoring in subnets. Avalanche’s proof-of-stake consensus mechanism enables finality in under two seconds, giving it an edge over many other blockchains.

Binance Smart Chain (BSC)
BSC improved its finality time with the BEP-126 update in June 2023, which integrated proof-of-stake authority (PoSA) with Byzantine Fault Tolerance (BFT). This upgrade reduced finality from 15 blocks (45 seconds) to just 2.5 blocks, achieving a finality time of approximately 7.5 seconds.

EOS: Pushing the Boundaries of Finality

One of the most promising innovations in blockchain finality comes from the EOS Network. With the release of Spring 1.0, EOS introduced the Savanna consensus algorithm, a customized delegated proof-of-stake (DPoS) model that slashes finality time to less than one second—100 times faster than before. This development, termed as “instant finality,” allows EOS to transform block-based consensus into more distributed systems. The DPoS algorithm enables validators to delegate transaction validation to trusted nodes, which accelerates block confirmation significantly.

The Importance of Fast Finality for dApps

Fast finality is vital for DeFi applications and blockchain games, as it guarantees transaction validity. When transactions are validated and confirmed in near real-time, it eradicates the risk of double spending and boosts user confidence. For smart contracts, fast finality ensures that the terms embedded within them are executed as soon as conditions are met, making outcomes immutable from the moment of transaction execution.

By adopting blockchains that offer fast finality, dApps can demonstrate that every transaction processed is secure and trustworthy almost instantly, fostering increased trust among users.

Conclusion: Why Finality Equals Trust

Blockchain finality is more than just a technical metric—it’s the cornerstone of trust in decentralized systems. Fast finality allows blockchains to process transactions securely and efficiently, ensuring users that their data and assets are protected. As the blockchain space continues to innovate, networks like Solana, Avalanche, BSC, and EOS are leading the way, pushing the boundaries of what’s possible for decentralized applications.

Stay informed as blockchain technology evolves, and witness how fast finality is shaping the future of decentralized applications.