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Conflux, which claims to be China’s only regulatory-compliant public blockchain, and is dubbed by some as the “Chinese Ethereum,” has recently moved beyond Ethereum to integrate Bitcoin into its ecosystem. Its hybrid consensus mechanism enables it to support Ordinals and inscription protocols recently popularized by Bitcoin. In light of these developments, Conflux has introduced an EVM-compatible Bitcoin Layer 2 (L2) solution, marking a significant step toward seamless asset transfers between Conflux and Bitcoin.
Read on to learn more about Conflux and its latest innovation that’s set to further solidify its position in the blockchain space.
Key Takeaways:
The only regulatory-compliant, public permissionless blockchain in China, Conflux is a proof of work/proof of stake hybrid blockchain.
Conflux has introduced an EVM-compatible Bitcoin Layer 2 (L2) solution to foster greater interoperability in its ecosystem.
Its native token, CFX, is used for transactions and can be earned as a mining or staking reward. Staking CFX also gives users governance rights.CFX can be bought on Bybit as a USDT Perpetual contract.
Conflux (CFX) is a proof of work/proof of stake hybrid permissionless blockchain. It was initially a proof of work (PoW) blockchain, and in 2022, Conflux completed an upgrade that added a proof of stake (PoS) component, known as the Hydra upgrade. This advance allowed CFX token holders to earn rewards by staking their tokens to the PoS system.
The Hydra hard fork improves the Conflux blockchain technology by protecting against security attacks and giving developers greater project flexibility.
The Hydra upgrade also introduced the concept of Spaces into the network, featuring two main spaces: Core Space and eSpace. Core Space represents the original Conflux network, while the fully EVM-compatible eSpace operates as a sub-chain running over Core Space. While eSpace lets you easily deploy Ethereum projects at a low cost, Core Space is optimal for launching brand-new projects and regulated public blockchain DApps.
These Spaces aren’t separate blockchains. as they exist on a single distributed ledger, the Tree-Graph, and theConfluxHub enables asset transfers between them.
In January 2024, Conflux also unveiled an EVM-compatible Bitcoin L2 solution as an additional Space. It facilitates seamless asset transfers between Conflux and Bitcoin, which can catalyze the development of decentralized finance (DeFi) and GameFi apps. This L2 solution comes equipped with built-in BTC staking, which allows users to contribute to the security of Conflux’s platform. The PoS consensus mechanism can also support Ordinals and inscription protocols, promoting a more diverse range of asset creation.
Although both fiat-to-crypto trading and initial coin offerings (ICOs) are prohibited in China, crypto-to-crypto trading is permitted. Hence, Conflux can remain compliant with China’s regulations allowing new crypto projects to enter the local market.
Conflux is a Layer 1 public blockchain technology that also offers some benefits of a private blockchain through its hybrid format. It stands apart from Bitcoin and Ethereum with its Tree-Graph system. This divergent structure allows the Conflux network to process multiple blocks simultaneously. Such parallel processing makes Conflux’s throughput dramatically higher than that of blockchains with a linear structure (such as Bitcoin and Ethereum).
Conflux’s Tree-Graph structure combines with a consensus mechanism known as Greedy Heaviest Adaptive SubTree (GHAST) to manage the execution order of transactions with scalability in mind. Additionally, GHAST adds security with its ability to detect and prevent certain types of chain attacks.
The GHAST consensus algorithm is maintained through a decentralized node structure, which allows for scaling as more nodes join the network. To participate as a node, you need to set up and run this node on your computer.
There are three types of nodes on Conflux’s network, categorized according to the amount of data required for storage:
Full Node requires the most data, and is typically used for PoW mining and PoS staking.
Archive Node is used for RPC service.
Light Node functions as a wallet.
In addition to its Tree-Graph structure, there are several key aspects of the Conflux blockchain that make it stand out. For example, it supports Turing-complete smart contracts to help developers create new projects on the blockchain. Conflux is also interoperable, as its Shuttleflow cross-chain solution supports the use of Bitcoin and Ethereum assets. It also allows users to add any new ERC-20 token for their DeFi projects. In addition, Conflux’s blockchain technology features a robust software development kit (SDK) to help developers create projects. It specifically supports the four mainstream programming languages; Python, Java, JavaScript and Golang. It also offers community-developed SDKs and Solidity SDKs.
The network's DApp development tools include Truffle, Hardhat, ChainIDE and Studio.
Conflux users pay gas fees and cover storage expenses with CFX, the network’s native coin. CFX also supports the network's maintenance through staking and mining rewards. The Conflux August 2023 annual inflation report shows that miners earn 1 CFX per block, while PoS stakers earn CFX rewards in proportion to their stakes at an annual base interest rate of 0.04%, plus an APY of 12.9%.
In addition to earning rewards, users who stake their CFX tokens for more than a quarter annually will have voting rights for the network’s governance. The longer you stake your tokens, the more voting rights you earn (up to one vote for a stake of over a year). While you can extend the stake’s locked duration, you can’t reduce it or withdraw tokens while they’re staked.
With the integration of the Bitcoin L2 solution, CFX is effectively converted into an ERC-20 token. This facilitates interaction with DApps in the BTC L2 space, as BTC is used in this new space as a gas token to pay for transaction fees.
CFX can be stored in three crypto wallets: Fluent, MetaMask and Ledger.
Fluent is the Conflux network's native web3 wallet, built explicitly to store CFX and ERC-20 tokens and to interact with DApps in the Conflux ecosystem. The Fluent wallet supports both Conflux Core and eSpace.
MetaMask is a popular hot wallet among crypto enthusiasts, although it only supports eSpace assets.
Ledger is a secure hardware wallet that can store your CFX assets in both Core and eSpace. You can connect Fluent and MetaMask to Ledger Nano S or Nano X in order to store your CFX assets.
CFX is an inflationary token, with a current inflation rate of 1.9%. At its genesis, 5 billion pre-mined CFX tokens were allocated to Conflux Network’s direct builders and ecosystem contributors. The genesis tokens are distributed as follows:
12% — Private Equity Funders (released over two years)
4% — Foundation Holdings (plus the remaining tokens that weren’t sold to private round investors, unlocked monthly over two years)
36% — Genesis Team (released over four years)
8% — Community Fund (offered as rewards to incentivize community user participation, unlocked within four years)
40% — Ecosystem Fund (provided to community developers supporting DApps in the Conflux ecosystem, unlocked within four years)
Conflux Network's token, CFX, has surged from $0.215 in late January 2024 to $0.31 in early March, boasting a 44.19% increase in just over a month. This price surge is likely due to the unveiling of the network’s BTC L2 space (which could further boost Conflux’s interoperability), coupled with the overall bull market led by Bitcoin’s rally resulting from Bitcoin Spot ETF approvals in early January 2024.
CFX’s price of $0.328 (as of Mar 11, 2024) is 80.8% lower than its all-time high of $1.70 on Mar 27, 2021, and over 1,300% higher than its all-time low of $0.02 on Dec 30, 2022.
Many experts anticipate favorable growth for the CFX token. According to DigitalCoinPrice, CFX’s price may continue to soar over the next several years to hit $0.84 in 2025, which would reflect a 156% increase in roughly two years, with the potential to reach $2.40 by 2030. Meanwhile, PricePrediction forecasts a price of $0.746 by the end of 2025, with a projected rise to $4.45 by the end of 2030.
While price predictions for CFX indicate the potential for growth, it’s crucial to understand the key factors that will likely contribute to this growth going forward. Some of Conflux’s achievements in 2023 include its collaboration with China's social media and ecommerce platform, Little Red Book, to add the use of NFTs on its platform, and a partnership with China Telecom, the country's second-largest wireless provider, to develop blockchain-based SIM cards (BSIM).
Its latest innovation, the EVM-compatible BTC L2 space, extends the realm of possibilities for seamless interaction of DApps across its three Spaces, bolstering cross-chain interoperability. Moreover, enabling BTC staking for network security not only fosters adoption but also demonstrates Conflux's strategic acumen amid the current Bitcoin-led bull run.
Conflux has also been steadily advancing in its NFT and web3 journey, which could promote mass adoption. For instance, it’s teamed up with the renowned esports team JTeam (under the leadership of CEO and singer Jay Chou) to craft blind boxes featuring personally signed digital uniforms. These items can be worn as virtual clothing in the metaverse, elevating the experience of esports gaming. Additionally, Conflux has joined forces with Blossom House, a luxury resort in China, to create a limited edition NFT badge that offers exclusive perks, such as complimentary afternoon tea, access to hot springs and tickets to nearby attractions.
While these developments may be indicative of Conflux’s high growth potential, they shouldn’t be viewed as investment advice. Always remember to do your own research before investing in any cryptocurrency, as crypto prices tend to be volatile.
You can purchase CFX tokens on the world's top crypto exchanges, including Bybit. Before buying these tokens on Bybit, you need a Bybit account with a funded wallet. After opening an account, ensure that your wallet has the appropriate amount of USDT to complete the transaction. Bybit's intuitive trading terminal supports fast and easy USDT Perpetual trades with the CFXUSDT pair.
Conflux remains a cornerstone of China's crypto landscape, driving innovation to enhance interoperability and foster a flourishing ecosystem. As China’s economy continues to flourish, Conflux will thrive as that country’s first regulatory-compliant public permissionless blockchain.
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