Proof of stake(POS) Blockchain
Proof of stake(PoS) is a consensus mechanism for
blockchain networks. It redefines how blockchain
nodes agree on which record of crypto transactions
is accurate. PoS is a set of rules or system of
agreement that is used to validate cryptocurrency
transactions. It requires validators to stake tokens to
validate transactions. A growing number of the most
popular cryptocurrencies use some variation of the
PoS protocol,these are- Comos (ATOM), Cardano
(ADA), Polkadot (DOT), Solana (SOL), Vechain
(VET), Tezos (XTZ).
Features of Proof of stake(POS)
• Validation replaces mining
• Low entry
• Passive income
• Majority holders protect the system
• Validators take the transaction fees
Benefits of Proof of stake(POS)
• One of the primary benefits of Proof of stake is as
a consensus mechanism.
• It is more energy efficient because it does not
require expending computational resources, and
individuals can participate in the peer-to-peer
network without the need for purchasing and
setting up expensive powerful computers and
cooling systems.
• It makes the blockchain secure by incentivizing
proper validation and disincentivizing improper
ones.
connect@mobiloitte.com Whatsapp: +91 9999525801
Process of POS
• In the PoS algorithm, a set of nodes decide to
stake their own cryptocurrencies for the
transaction validation. They are called ‘stakers’.
• The larger the amount of stake and the longer the
duration of the stake, the better are the chances
of the staker to get transaction validation
responsibility.
Examples of proof of stake(PoS)
Proof of stake is the latest way of solving problems.
However, unlike PoW(Proof of work), PoS is more
focused on cryptocurrency mining solutions with fast
speed and more security. Let’s look at some
examples of cryptocurrencies that use PoS:
Ethereum 2.0: Proof of stake is an Ethereum
improvement proposal(EIP). Ethereum community
initially adopted it as a way to improve the
performance of the network.
Tezos: The Tezos network is a decentralized
blockchain with an incentive mechanism built on top
of it. This allows the network to reward validators
with newly created tokens for securing and
maintaining the network. As more people join the
system, their stakes are increased, incentivizing
them to become active participants.
Cosmos: A blockchain company based in
Colombia,Cosmos has successfully deployed a
proof-of-stack(PoS) network for wider use than
Bitcoin.Cosmos, a cryptocurrency that aims to
become the world’s first and biggest proof of
stake(PoS) cryptocurrency.
www.mobiloitte.com