LoginSign Up
Proof-of-stake

Proof-of-stake

Proof-of-stake (PoS) is a system by which a network (e.g., a cryptocurrency blockchain) aims to achieve distributed consensus.

Proof of stake(PoS) is a type of blockchain consensus algorithm that relies on participants having an economic stake in the success of the network. Unlike proof-of-work (PoW) based systems/algorithms where the algorithm rewards participants who solve computationally expensive puzzles in order to validate transactions and create new blocks (i.e. mining), in PoS the creator of the next ledger update (eg a blockchain block) is chosen in a deterministic and pseudo-random way where the probability that an account is chosen depends on the accounts stake in the system (eg its wealth in a system).

Proof of stake has been contrasted to proof of work as virtual mining, simplified with the phrase "One coin, one vote" as compared to proof of work's "one cpu, one vote".

History

The first example of a blockchain utilizing a PoS system was Peercoin, proposed by Sunny King and Scott Nadal in 2012. Other early PoS blockchains include Blackcoin and NXT.

Nothing at stake problem

Naive proof of stake algorithms suffer from the nothing at stake problem. The nothing at stake problem is characterized by the incentive for network participants to contribute blocks to every potential blockchain fork to ensure they receive a block reward on the winning chain.

Transition from PoW

A number of blockchains have transitioned, or are in plans to transition from PoW to PoS. Ethereum for example plans on moving from a proof of work protocol using Ethash to a proof of stake consensus protocol utilizing Casper.

Proof of stake variants

A variety of different types of proof of stake have been developed and implemented across blockchain networks.

Proof of stake type
Blockchains

"Coin age" proof of stake

Peercoin

Casper proof of stake

Ethereum, Rchain

Delegated proof of stake (DPOS)

Bitshares, EOS, Lisk

Others & hybrid

Nexus, Decred

Ouroboros

Cardano

PoS with Masternodes

Dash, PIVX

Proof of stake velocity (POSV)

Reddcoin

Random block selection

NXT, Blackcoin

Advantages

An advantage of proof of stake systems is the reduction in computational power required to maintain the system compared to proof of work.

Criticisms

The security and scalability properties of proof of stake mechanisms as compared to proof of work mechanisms continue to be debated in the blockchain community.

Timeline

People

Name
Role
Related Golden topics

Further reading

Title
Author
Link
Type

A (Short) Guide to Blockchain Consensus Protocols

Amy Castor

A proof of stake design philosophy

Vitalik Buterin

A Provably Secure Proof-of-Stake Blockchain Protocol

Aggelos Kiayias,Ioannis Konstantinou, Alexander Russell, Bernardo David, Roman Oliynykov

Academic paper

Consensus in Blockchain Systems. In Short.

Chris Hammerschmidt

Cryptocurrencies Without Proof of Work

Iddo Bentov, Ariel GabizonAlex Mizrahi

Academic paper

Inflation and participation in stake based token protocols

Doug Petkanics

Ouroboros: A Provably Secure Proof-of-Stake Blockchain Protocol

Aggelos Kiayias, Alexander Russell, Bernardo David, Roman Oliynykov

Academic paper

Proof of Stake

Multiple

Proof of Stake FAQ

Vitalik Buterin

Proof of Stake versus Proof of Work

BitFury Group

Documentaries, videos and podcasts

Title
Date
Link

Formal Barriers to Proof-of-Stake Protocols - BPASE '18

Jan 30, 2018

Companies

Company
CEO
Location
Products/Services

References