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What is stale block and how does it impact the performance of the ethereum blockchain?

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Nobody uses "stale block" term here. In Ethereum it is called "uncle". It is when your block is not included in the main blockchain, because your node was too slow to generate the chain, and somebody won by creating a longer chain. The longer chain wins, but Ethereum gives you money for a chain of 2 uncle blocks, this increases blockchain strength.

No performance problems exist due to uncle blocks, this is how Ethereum blockchain was thought to work.

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