Proof-of-Stake

Written by Saurabh Deshpande

Introduction

Proof of stake is one of the distributed consensus mechanisms. Unlike proof of work systems, proof of stake systems mandate network participants or miners to prove ownership by depositing ("staking") a certain amount of tokens. A new block is selected in a pseudo-random manner depending on the users’ stake. If they attempt to behave maliciously, they will have their stake slashed as punishment.

Another important consideration in the PoS system is the way the block producer is selected. If the proportion of the stake is the only parameter, then richer forgers will always have an advantage. To avoid this, there are popular block selection methods such as coin-age based selection or randomized block selection.

Though PoS systems are more environmentally friendly and efficient compared to PoW systems, PoS systems open new possibilities of attacks such as nothing at stake attack. A lot of research is going on in this area to make proof of stake a viable long term solution. Examples: Peercoin was the first to implement a proof of stake based consensus and Ethereum plans to move away from its current PoW model to PoS model.

Suggested Reading

What is Proof-of-Stake by Shaan Ray

What is Proof of Stake? (PoS) by Max Thake

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