IOTA has introduced the IOTA 2.0 consensus mechanism. It has been built on Nakamoto Consensus to tackle the challenges of Tangle, which are dynamic and interconnected in nature when it comes to ledger. The objective is to create a more adaptable and robust consensus model while making sure that the network is safe and secure.
IOTA made the initial announcement, emphasizing how Bitcoin has popularized the consensus.
The updated consensus mechanism is based on the principle that the only valid chain is the one that is the longest or heaviest. Simultaneously, IOTA pitched the concept of DAG, an acronym for Directed Acyclic Graph. DAG represents a more dynamic web of interconnected blocks, not just blocks that are sequentially linked to each other.
Tangle poses the challenge of network disruptions and malicious actors gaining access to the network. This can lead to different nodes having different views of the ledger. However, IOTA 2.0 upgrades this with a more adaptable consensus model.
That does not mean that blocks lose the right to participate in the network. IOTA 2.0 continues to thrive on individual nodes, giving all of them a chance to be actively represented in the process. Every new block that is created effectively encodes the opinion about its validity and transactions within Tangle. Votes are then cast within validation blocks.
The network’s security is ensured by ensuring the significance of a validator in the committee determines every vote. This means that the network calculates the Approval Weight before influencing the inclusion of consensus flags.
Nakamoto Consensus has been often referred to as the official representation of a significant evolution of DLT (Distributed Ledger Technology). IOTA simply goes on to create a more secure, adaptable, and efficient consensus model that makes sure the network is stable.
Transactions are processed and registered by UTXOs, that is, Unspent Transaction Output. It is utilized by IOTA 2.0 to offer advantages like the ability to trace funds by going back to history via block association. It also helps in conflict resolution by effectively preventing complex double-spend scenarios.
IOTA leverages the capabilities of the Tip Selection Algorithm. This helps IOTA address the challenge of nodes referencing every eligible block. Every block makes up for the issuer’s opinion by propagating through the past of Tangle.
IOTA 2.0 achieves agreement on the block via consensus flags and slot commitment chains. This includes Acceptance, Confirmation, and Finalization. Both represent different levels of confidence in the validity of the block and its inclusion in Tangle. Another element is the division of supermajority into total and online. This helps to make sure that the operations of Tangle are continuous.
Finally, the Chain Switching Rule is employed when there are disruptions in the network with a potential forking of slot commitment.