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Key Takeaways:
- Zcash is considering adding a Trailing Finality Layer that uses proof-of-stake to "finalize" blocks mined via proof-of-work, giving transactions stronger guarantees of security.
- The TFL could pave the way for scalability upgrades like Layer 2 solutions and cross-chain asset transfers once it is operating smoothly.
Zcash, the privacy-focused cryptocurrency, has long operated on a proof-of-work (PoW) consensus mechanism like Bitcoin. But the energy and hardware costs of PoW have led many blockchains like Ethereum to transition to a more efficient proof-of-stake (PoS) model. Now, Zcash developers are proposing an intermediate "Trailing Finality Layer" to help pave the way for an eventual shift to PoS.
Current ZCASH Network (PoW) vs Proposed Hybrid ZCASH Network (PoS) Image Source: Electriccoin Blog
What is the trailing finality layer?
The Trailing Finality Layer (TFL) acts as a secondary consensus layer on top of Zcash's existing PoW chain. It utilizes a PoS system to "finalize" blocks that have been mined on the main chain.
Finality means that once a block is finalized by the TFL, it is extremely unlikely to ever be reversed or changed. This provides stronger guarantees and security for transactions compared to just relying on PoW confirmations.
The TFL trails behind the PoW chain by a fixed number of blocks, hence the name "Trailing Finality Layer." For example, if the trail length is set to 10, then the TFL will finalize block 1000 only after block 1010 is mined. This provides ample time for any chain reorganizations on the PoW chain to resolve before finality is applied.
Why adopt a trailing finality layer?
The TFL allows Zcash to gain some of the benefits of PoS like energy efficiency and faster finality, while still maintaining complete compatibility with the current PoW chain. Users and miners do not need to change anything- the TFL works in parallel to validate and finalize blocks.
This hybrid model offers a smooth transition path to full PoS in the future. Once the kinks are worked out and the TFL is operating well, the training wheels can come off and the TFL can become the main consensus with PoW playing just an auxiliary role. Ethereum similarly implemented a PoS Beacon Chain alongside its original PoW chain before eventually merging the two.
The TFL also paves the way for innovative Layer 2 scaling solutions down the road like state channels that rely on fast blockchain finality. And it allows for the possibility of cross-chain bridges that can move assets between Zcash and other PoS blockchains.
Overall, the Trailing Finality Layer offers an incremental step forward for Zcash that retains compatibility while opening up new possibilities for scalability, interoperability, and sustainability. The Zcash team is currently running an experimental TFL testnet to evaluate feasibility before potential implementation on the mainnet.
As Zcash continues its preparations to move to a more efficient network, the ZEC price is around $29.68. It cannot be said that the developments have had a significant impact on the price because there has been a 5.3% decline in the last 7 days. We will see in the coming days whether this development has a long-term impact on Zcash Price Prediction.