Velvet has usually been seen as a sign of high class and nobility, but now velvet is a term for a new and exciting way of upgrading the software that runs the blockchain.
At least that’s what the hype around velvet forks seem to indicate. Velvet forks are a way for upgrading the cryptocurrency backend and have some people excited.
Before velvet forks, there were type kinds of forks that people talked about – soft forks and hard forks. Then Alexei Zamyatin, an Imperial College London research assistant, co-authtored a paper (found here) titled, “A Wild Velvet Fork Appears! Inclusive Blockchain Protocol Changes in Practice”.
Now before we jump into the inner workings of this paper, lets lay some groundwork between these major blockchain fork classifications.
Soft forks are generally seen as less disruptive in nature as they are known to be backwards-compatible with other protocols, although they are still controversial as they introduce a significant amount of change to the cryptocurrency, something that not all the users will happily agree with. Also, hard works are generally seen as undesirable as they split the blockchain in two with little consensus from the user community.
With velvet forks, some people think that the crypto world could circumvent some of the politics that get in the way of the major code changes.
Velvet forks was first coined by researchers who were building networks that can be used to improve side chains, which are a layer-two crypto technology for handling transactions off a traditional blockchain network. A velvet fork lets developers add additional rules to a blockchain without a complete consensus from the ecosystem.
How Velvet Works New Blockchain Protocol Works
How forks work in the cryptocurrency ecosystem is to protect new rules protocols, and they have been used often I the past for this practiced.
One notable hard for is the split between Ethereum to Ethereum classic, less noteworthy forks include the one to move Bitcoin to a better signature scheme, which adds it to a fast growing number of forks intended to spawn new cryptos with new features, while also making entrepreneurs (and scammers) a significant amount of money in a short amount of time.
Yet these mechanics come with their own levels of controversy, which is why researchers are particularly interested in how velvet forks can benefit the crypto ecosystem.
A paper was published in December 2017 that outlined velvet forks, as well as the mechanisms of how they operate. Of particular mention is the idea of gradual deployment without hurting the ecosystem of miners that haven’t complied with the new rules. With this method, it works similarly to a soft fork in that the clients are backwards compatible.
Also, the paper declares that velvet forks do not require a rule modification to the consensus layer, which means that the same rules will apply to everyone, making it advantageous over different fork methods.
Although velvet forks are not a common method for upgrading the network, velvet forks have be used in the past in various forms.
A good example of velvet forks working in practice is the decentralized mining pool P2pool.
As there are is no entity controlling payments to the miner for their work, the pool made a secondary blockchain with an easier difficulty level that only a percentage of the miners can contribute to. This blockchain is used to gauge the amount of computing power each miner is contributing, so that the protocol can dispense rewards proportionately.
Although more blocks are generated by P2pool using these new rules, miners that don’t accept the new terms can still accept the blocks by P2pool.
This means that P2pool is a working example of a velvet fork, as the blocks operate side by side without problem, and without causing a split.
Velvet Forks Vulnerability
Although velvet forks are an interesting idea and can work well with the proper set up, velvet forks have their own set of vulnerabilities.
Generally, the paper the describes the ways that velvet forks could be abused by malicious actors for their own personal gain.
For example, the paper describes a situation where some miners, named velvet miners decide to upgrade to the new rules whilst others decide to ignore the new rules. If the blocks that the miners create are in some way more profitable than regular blocks, the paper states that the other miners could be biased towards accepting those over the older blocks.
This could then have a negative impact on the security considerations of such systems; with the current attack models do not assume a variable utility of blocks.
A different attack vector is named selfish mining.
Selfish mining is a process where miners hide the reality that they have found a block, which keeps the other miners searching for that block while they move onto the next block. This then gives them an unfair advantage in finding the next block, which velvet forks opening up the possibility for this attack vector to be abused.
The Future Of Velvet Forks
Both of these weaknesses and the reality of change of velvet forks might enable researchers to spend more time looking into how velvet forks work and how they are best implemented into blockchain networks.
One proposed solution for velvet solutions is that they might be used for bringing the GHOST protocol that Ethereum was modelled after to bitcoin. GHOST will completely restructure the system to improve network speeds; it’s possible that it wouldn’t have enough support for a soft or hard fork, leaving a velvet fork as perhaps one of the only options.
Also, velvet forks could help revitalize older innovations.
One professor at Cornell, Emin Gun Sirer said that the appreciated the idea of using a velvet fork for adding the long stalled Bitcoin NG (next generation) protocol an idea he stated which seeks to improve the output by changing the bitcoin blockchain and the underlying network protocols that power it.
Emin stated that although the whitepaper is short of details, the underlying ideas of adding new functions without suffering from the risks and costs of either a hard or soft work is quite appealing to developers, Sirer told Coindesk an in interview.
Whatever the future for velvet forks is, what we know for sure is that they are due to be used more in the future over hard-forked alternatives.