A new Ethereum Improvement Proposal (EIP) outlines specifications for implementing Casper FFG – possibly the most significant update Ethereum has ever gotten.
EIP 1011 contains details of the tailor-made hybrid consensus algorithm, designed by Ethereum developers to combine proof-of-work (PoW) consensus, like that pioneered by Bitcoin, with proof-of-stake (PoS), a consensus model with historic roots going back to the early days of blockchain.
Foretold in the Ethereum yellow paper, the transition from PoW to PoS isn't something the Foundation or the ecosystem takes lightly, as it will dramatically affect the way data is appended to the blockchain.
By employing a rudimentary combination consensus algorithm containing both Ethereum's standard PoW as well as its future PoS consensus models, Ethereum creator Vitalik Buterin believes risk can be mitigated during the changeover.
"Within Ethereum," wrote Buterin in the October 2017 publication of Casper FFG, "the proposal mechanism will initially be the existing proof of work chain, making the first version of Casper a hybrid PoW/PoS system. In future versions the PoW proposal mechanism will be replaced with something more efficient. For example, we can imagine converting the block proposal into some kind of PoS round-robin block signing scheme."
EIP 1011 proposes a layered solution as well, placing FFG on top of the preexisting PoW mechanism for block proposals as a "step-wise approach" to fully transitioning to PoS. This layering of Casper code will help provide assurance and finality to the underlying blockchain.
Generally speaking, the move from miners to validators will save wasteful electricity expenditures, provide economic finality, and provide greatly increased security – especially against 51 percent attacks and mining cartels.
Per official documentation, FFG will require minimal adjustments to Ethereum's governing protocol. This will allow the network to vet how the protocol performs on top of existing PoW architecture before developers take the next step toward a validation-dependent block proposal mechanism.
Recently, participants on the alpha Casper testnet, which was built on Buterin's pyethereum client, allowed users to send transactions, mine blocks, and become validators.