How Does AuxPoW Leverage the Security of a Larger Blockchain?
Auxiliary Proof-of-Work (AuxPoW) allows blocks mined on a smaller chain (the secondary chain) to be simultaneously validated by the hash power of a larger, more secure chain (the primary chain, often Bitcoin or Litecoin). Miners on the primary chain can include the secondary chain's block header in their own block.
This means that to successfully attack the secondary chain, an attacker would need to overcome the combined hashrate of the primary chain, making a 51% attack economically unfeasible. It essentially piggybacks on the security budget of the dominant chain.
Glossar
Technical Requirements
Framework ⎊ The technical requirements for cryptocurrency derivatives, options trading, and related financial instruments encompass a layered architecture demanding robust infrastructure and stringent controls.
Security Budget
Budget ⎊ This is the total economic value, derived from block rewards and fees, dedicated by the protocol to incentivize honest behavior and secure the network against adversarial takeover.
Block Production
Validation Event ⎊ Block Production is the discrete event where a successful miner solves the cryptographic puzzle required to propose the next block of validated transactions to the network.
Primary Chain
Foundation ⎊ The Primary Chain, within the context of cryptocurrency and derivatives, represents the underlying asset or reference instrument upon which a derivative contract’s value is based, functioning as the core determinant of payoff profiles.
Block Header
Genesis ⎊ A block header, fundamentally, encapsulates metadata pertaining to a specific block within a blockchain; it serves as the block’s identifying signature and is critical for maintaining chain integrity.
51% Attack
Dominance ⎊ The 51% attack, within cryptocurrency contexts, represents a scenario where a single entity or coalition controls more than half of a blockchain network's hashing power or stake.