The Proof of Stake (or PoS) protocol
The Proof of Stake (PoS) protocol is a consensus protocol based on the participation of nodes in the network to validate transactions and produce new blocks, without having to solve cryptographic challenges as in the Proof of Work (PoW) protocol.
This consensus protocol takes into account the participation time of nodes in the blockchain and the amount of a given crypto asset controlled by each node, to determine who can validate transactions and add new blocks to the blockchain.
Dentro de los nodos validadores, el nodo que finalmente vaya a validar un bloque se decide de manera aleatoria, pero dando una probabilidad mayor a quienes cumplan unos criterios, como:
Within the validator nodes, the node that will ultimately validate a block is decided randomly, but with a higher probability given to those that meet certain criteria, such as:
The amount of native crypto asset of the network that the node has (staking).
Time spent participating in the network: the more time, the greater the likelihood of being chosen.
When these criteria are established and the validator nodes are randomly selected, the chosen nodes will be able to validate transactions, thus receiving rewards for their efforts (in this case, the opportunity cost of having a significant amount of crypto assets in staking).
In addition, the validator node also receives transaction fees paid by nodes that propose to register transactions on the network. In both PoW and PoS, whoever enters a transaction to be incorporated into the blockchain has the option of including a fee to make their transaction more attractive to the node that creates and proposes a new block, and thus be incorporated as soon as possible. This voluntary fee is in addition to the cost (gas fees) that must be paid to use the blockchain.
On the other hand, these consensus protocols incorporate penalty mechanisms to discourage validator nodes from acting maliciously, i.e., the crypto assets they contribute constitute a kind of finance to be able to validate, and part of them may be lost if they are subject to sanctions.
Among its main features, it is worth noting that it is an environmentally friendly technology because it does not require powerful computers to perform mining activities.
Pros and cons of the Proof of Stake (PoS) Protocol
On the advantages side, we can find:
Lower energy consumption: it does not require large amounts of energy and processing resources to validate transactions and produce new blocks. This translates into a smaller carbon footprint.
Greater scalability: it can handle a large number of transactions on the blockchain, as nodes do not need to solve complex cryptographic challenges to validate transactions. Some of these blockchains can validate millions of transactions per second, which would allow them to be used in payment applications.
On the other hand, it has the following disadvantages:
Less descentralisation: this consensus protocol could lead to greater centralisation, as nodes with a larger amount of crypto assets would have more power over transaction validation. In other words, to achieve greater scalability, a certain degree of decentralisation must be sacrificed.
Distribution issues: if the initial distribution of the crypto asset is not equitable, it could perpetuate and exacerbate inequality in the network.