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I setup a small 3 node network that is using BABE and GRANDPA. When all 3 nodes are connected, it can produce blocks and finalize them. When 2 of the 3 nodes are connected, it can produce blocks but NOT finalize them.

How can I configure GRANDPA so that blocks can be finalized when 2 of the 3 nodes are connected?

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You can't do that in any safe manner. Every BFT consensus algorithm requires the total number of nodes to be at least 3f + 1 where f is the number of faulty nodes. In your case you have one faulty node, which means that the whole system should have at least 4 nodes, where 1 is faulty and the other 3 are healthy. With 3 nodes, no faulty node is tolerated.

In case you're interested in this here's the seminal paper on this topic: The Byzantine Generals Problem - Leslie Lamport, Robert Shostak, and Marshall Pease

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    If you ever wondered why he called it the Byzantine generals problem, he tells us here: youtube.com/watch?v=SXt3-iZpQQc&t=9060s
    – Squirrel
    Commented Mar 18, 2022 at 9:35
  • Ok, got it. I do want 3 available validators because we are testing this, but we can create 4, or I guess 2 GRANDPA authorities and 3 BABE authorities. Will try this, thanks!
    – Max
    Commented Mar 18, 2022 at 13:11
  • If this answered your question you should consider accepting the response :)
    – André
    Commented Mar 18, 2022 at 16:51

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