P6-commentary.txt

                      Protocol update commentary

Protocol Version: 6
Builds on Protocol Version: 5

Protocol version 6 changes protocol version 5 in two main areas. The
first area is a relatively modest extension of smart contract
functionality, with the main effect being better support for sponsored
transactions. The major update in protocol 6 however, is the new
consensus protocol, Concordium BFT.

Up to and including protocol 5, Concordium used a two-layer consensus
design, with a proof of stake Nakamoto style consensus at the base
layer with finalization on top which marked certain blocks as finalized.
The idea being that the base Nakamoto layer works as long as more than
1/2 of stake adheres to the protocol over long periods of time, but
the finalization layer ensures speedy, explicit, finalization, in good
conditions when there is more than 2/3 liveness and adherence to protocol.

While this two-layer design did serve Concordium well during the initial
phase, and is in theory robust, the two layer design is rather complex,
and makes it challenging to optimize the consensus for both throughput and
confirmation latency while maintaining security.

In protocol 6 a new consensus protocol Concordium Byzantine Fault Tolerance
(BFT) will be used instead. The protocol offers high transaction throughput
and lower confirmation time because a block can be produced as soon as the
previous block has been certified. The overall architecture remains the same.
There are still bakers and a subset of them, the finalizers. In contrast to
how time was split into slots in existing consensus, Concordium BFT no
longer has a notion of slots. Instead it advances by rounds. In each round,
a predetermined leader among the bakers should produce a block. The members
of the finalization committee then sign this block, and their collective
signatures are aggregated to form a quorum certificate (QC). This quorum
certificate is then included in the next block. If the leader fails to
produce a block in the round, or not enough signatures were gathered for a
QC, then the finalizers will instead send timeout messages, which are
aggregated to form a timeout certificate. Each block always contains a
quorum certificate and may contain a timeout certificate for the previous
round if and only if the previous round timed out. When blocks on a common
chain in two consecutive rounds have quorum certificates, the block in the
first of these rounds (together with its ancestors) is considered
finalized. At this point, the protocol ensures that it cannot be rolled back.

Regarding smart contracts, the main usability improvement is better
support for sponsored transactions. Account's public keys are now
exposed to smart contracts, so signatures by sponsorees can be verified
without first registering public keys. Other improvements to smart
contracts are compatibility with recent Wasm changes, and revision of
execution costs to better reflect the actual costs involved in
execution.