Conflux is a high-throughput blockchain network founded by Turing Award recipient Dr. Andrew Yao. It uses a novel consensus mechanism called Tree-Graph, which optimizes security and scalability without compromising decentralization. The native token of the network, CFX, plays a central role in incentivizing participation and ensuring the ecosystem's healthy growth.
Understanding the Conflux Network
Decentralized blockchain networks store and organize data without relying on a trusted third party. This is made possible through consensus algorithms that allow all network participants to agree on a single version of truth without needing to know or trust each other.
Conflux utilizes a unique Proof-of-Work (PoW) algorithm known as Tree-Graph. This mechanism enables the network to process between 3000–6000 transactions per second (TPS), significantly higher than many established blockchains like Bitcoin and Ethereum. While high throughput is common among modern layer-one solutions, Conflux maintains decentralization—a core principle of Satoshi’s vision—unlike Proof-of-Stake (PoS) or Proof-of-Authority (PoA) models.
Beyond robust technology, a well-designed economic model is essential for sustaining network health and encouraging constructive behavior. Conflux emphasizes three crucial factors for a functional blockchain economy:
- A well-established value system
- Fair governance rules
- Healthy community collaboration
The CFX token is engineered to optimize each of these elements.
What Is the CFX Token?
CFX is the native utility token of the Conflux Network. It serves as the backbone of the ecosystem’s value system and facilitates various network operations.
Each CFX token is divisible into smaller units called drips, similar to Gwei on Ethereum or Satoshis on Bitcoin. One CFX equals 10¹⁸ drips. Users pay transaction fees in drips, which are awarded to miners who maintain the network.
The total supply of CFX is inflationary, meaning new tokens are gradually introduced into circulation. Currently, over 800 million CFX are in circulation, originating from pre-mined distributions and ongoing mining and staking rewards.
Liquid vs. Staked CFX Tokens
CFX tokens exist in one of two states:
- Liquid: Tokens that can be freely transferred and used.
- Staked: Tokens that are locked and cannot be transferred until unstaked.
Tokens become staked when they are:
- Intentionally staked to earn interest rewards.
- Locked to purchase votes in network governance.
- Used as bonded storage to keep smart contracts or data active on-chain.
Economic Incentives on Conflux
Conflux employs several incentive mechanisms to promote network participation, security, and efficient resource usage. These mechanisms reward both system maintainers (miners) and ecosystem contributors (users).
Staking CFX for Interest
Users who stake CFX tokens contribute to network security and receive interest payments at a fixed annualized rate of approximately 4%. Rewards are distributed when tokens are unstaked. This system effectively transfers value from non-stakers to stakers, encouraging more users to participate in securing the network.
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Bonded Storage for Smart Contracts
To deploy a smart contract, users must provide Collateral for Storage (CFS) at a rate of 1 CFX per kilobyte of data. This mechanism ensures that deployers are discouraged from storing unnecessary data on-chain, as the locked tokens generate interest that is paid to miners rather than the deployers. If deployers wish to free their tokens, they must remove the associated data from the blockchain.
This approach prevents network congestion and promotes efficient use of storage resources.
Participating in Governance
Conflux allows token holders to participate in governance by locking CFX tokens for a fixed period, measured in quarters. These locked tokens retain staking rights, meaning users continue to earn interest while contributing to decision-making.
Voting power is determined by:
- The amount of CFX locked
- The duration of the lock
The formula for calculating votes is:
Number of quarters × number of tokens × 0.25
Longer lock periods result in greater voting power. For example:
- Less than a quarter: No voting rights
- More than a quarter: 0.25 votes per CFX
- More than half a year: 0.5 votes per CFX
- More than a year: 1 vote per CFX
The maximum lock period is four years.
Mining on Conflux
Miners play a vital role in maintaining the Conflux Network through the Tree-Graph PoW algorithm. They receive rewards in the form of block rewards and transaction fees.
Initially, the base block reward was set at 7 CFX per block, with blocks mined approximately every 0.5 seconds. Block rewards decrease gradually over time through epochs—phases in the Tree-Graph lifecycle. By epoch height 3,615,000, the reward will reduce to 2 CFX per block. Unlike Bitcoin, Conflux does not have a halving event; instead, rewards diminish incrementally.
Miners also earn interest from CFS tokens locked by smart contract deployers. Additionally, the network incorporates a disincentivizing mechanism that penalizes attackers attempting double-spend attacks or other malicious activities.
The Conflux Foundation’s Role
The Conflux Foundation, a non-profit organization, designed the network’s tokenomics and economic incentives. Initially, it addressed the "cold start" problem by encouraging early participation and development. Today, the Foundation oversees resource allocation and implements changes based on governance decisions.
The Foundation manages two key funds:
- Community Fund: Supports community initiatives and growth.
- Ecosystem Fund: Fuels development and innovation within the ecosystem.
Over time, the Foundation plans to transfer control of these funds to a decentralized autonomous organization (DAO) governed by CFX stakeholders, ensuring the network becomes fully community-driven.
A Model for Scalability and Compliance
Conflux’s economic model is designed to support technological stability and scalability. By aligning economic incentives with network health, Conflux achieves both high throughput (3000–6000 TPS) and robust security.
As the only regulatory-compliant, public, and permissionless blockchain in China, Conflux also serves as a bridge for global projects and individuals interested in entering the Chinese market. Its unique blend of high performance, decentralization, and thoughtful tokenomics makes it a standout in the blockchain space.
For those looking to deepen their understanding of blockchain economies, 👉 explore advanced staking and governance strategies.
Frequently Asked Questions
What is the CFX token used for?
CFX is used for paying transaction fees, staking to earn interest, participating in governance, and providing collateral for on-chain storage. It is the core utility token within the Conflux ecosystem.
How does staking work on Conflux?
Users can stake CFX tokens to help secure the network and earn approximately 4% annual interest. Rewards are distributed when tokens are unstaked, incentivizing long-term participation.
What is bonded storage?
Bonded storage refers to the CFX tokens locked as collateral when deploying smart contracts or storing data on-chain. This mechanism ensures efficient resource usage and prevents network congestion.
How can I participate in Conflux governance?
You can lock CFX tokens for a fixed period to obtain voting rights. The number of votes depends on the amount and duration of tokens locked, with longer commitments granting more influence.
Is Conflux compliant with regulations?
Yes, Conflux is the only public, permissionless blockchain in China that operates in full compliance with local regulations, making it a unique gateway for global projects.
What makes Conflux different from other blockchains?
Conflux combines high throughput (3000–6000 TPS), decentralization, and a unique Tree-Graph consensus mechanism. Its economic model is designed to align incentives among all network participants.