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Ethereum's New PoS Consensus
Post-merge Ethereum is transitioning to a new consensus mechanism named Gasper. Gasper combines Casper FFG (how to determine finality) and LMD GHOST (determining fork-choice rules) to achieve consensus. Similar to its old Nakamoto-style consensus in which liveness was prioritized over safety, Gasper is also a liveliness-preferring consensus protocol. Consensus algorithms that prioritize safety (such as Tendermint) fail if they do not receive the required amount of votes (2/3 of the validator set). This leads to the chain halting (the opposite of "liveness"). Chains that prioritize liveness will continue to generate blocks based on their "heaviest/longest chain" rule set no matter what, even if bad actors have corrupted the majority of the hash power/votes.
Casper the Friendly Finality Gadget is the name of Beacon Chain's PoS-based consensus protocol. Casper is a partial consensus algorithm that combines PoS and BFT consensus models. Casper's core design was modeled after the PBFT consensus method but, similar to Nakamoto Consensus, still identifies the "true" chain as the one with the greatest attestations. Casper FFG decides on which blocks become part of the chain.
Casper reaches finality through periodic checkpoints after a sufficient number of votes from its 440,000+ validators. Checkpoints can be subdivided into slots and epochs. A slot is when a block is added to the Beacon chain, and in PoS, it occurs predictably every 12 seconds. A different validator is assigned to propose a new block in each slot ahead of time. 32 slots (6.4 min) are grouped into an epoch. Each slot also has a group of validators (minimum of 128) called a committee assigned to it. Committees verify and attest to the validity of each proposed block. After successfully verifying the block, the committee members broadcast a cryptographic attestation of the block to the other validators and network nodes. Based on the validator attestations, the fork-choice rule LMD GHOST decides the current head of the chain. Generally, finality is attained with the necessary votes after two epochs.
Epochs are what is considered in the periodic checkpoints and for chain finalization. An epoch becomes justified if> 66% of the validators attest during that epoch. If a second epoch with > 66% follows the first, it will finalize that epoch and make the transactions irreversible.
Source: Consensys
The protocol contains a "correlation penalty" in which validators forfeit ETH rewards if they refuse to participate when called upon, and their existing stake is "slashed" if they propose numerous blocks in a single slot or submit contradicting votes. The quantity of ETH cut depends on the number of dishonest validators the protocol simultaneously slashes.
This penalty can result in the slashing of around 1% of a validator's stake if they are punished individually or approaching 100% of the validator's stake in the event of a mass slashing. The protocol imposes the penalty at the midpoint of a forced exit period that begins with an instantaneous penalty (up to 0.5) on day 1, followed by a correlation penalty on day 18, and then ejection from the network on day 36. In addition, the dishonest node incurs daily modest attestation penalty due to its presence on the network without submitting votes.
