Blockchain consensus mechanisms. Proof of Stake

3 min readNov 9, 2021

🎯 We are back with another part where we are going to explain different blockchain consensus mechanisms!

This is a very important part in order to achieve a full understanding of the blockchain technology itself, especially when developing a crypto project.

As we mentioned earlier, all the blockchain technologies work with the help of certain consensus mechanisms so-called “proofs” like Proof of Stake, Proof of Work, Proof of History. The whole transaction management within a blockchain is dependent on those algorithms, we need them for safely conducting transactions on a blockchain ledger and creating new blocks that are being added to a chain.

As we were explaining the inherent of Proof of Work (PoW) a consensus mechanism, it is time to dive into an understanding of Proof of Stake. without one a blockchain technology can’t conduct transactions properly and in a safe matter.

📝 Proof of Stake (PoS)

This consensus mechanism has appeared later than the Proof of Work as the alternative solution to the PoW method of verifying transactions on a blockchain. Conversely, Proof of Stake is way much more energy efficient rather than PoW. In PoS, transactions are getting verified not by the amount of computing power that is explicitly incorporated into a process of solving hashed puzzles.

Instead, PoS offers to every digital asset holder to put their coins at stake (in other words — to lock them in a network pool. This process is controlled by the smart contracts) in order to become a transaction validator in a particular blockchain network. Hence, the network as Ethereum blockchain requires their validators to put at least 32 ETH at stake in the network pool in order to be chosen as a validator.

Furthermore, the algorithms choose their validators based on some requirements as staking age (the total staking duration of a user), or node’s wealth. It is important to understand, that the validators can verify only those blocks, which weren’t created themselves.

Basically, validation trust is guaranteed by the stake amount of a validator. So, when a malicious validator tries to attest a faulty block, it is going to lose all its stake.

Conversely to PoS, the validators get different types of a reward than they get in PoW for successful block validation and transaction verification. Instead of being rewarded with a new block, validators are being rewarded with a transaction fee.

🔒 Security?

The security of a blockchain network running with a PoS is guaranteed by the stakes of validators. If a bad actor would impose a threat to a network, it should have control over 51% amount of staked native coins. Which is quite impossible to achieve.

Further, at least ⅔ of all validators must collectively agree on a transaction or a block creation. If they would fail, then it would lead to a permanent loss of their stake.

However, the PoS method has become to be a better alternative to a PoW and solve issues of it, it is still not mature enough or hack-proven.

Most of the known projects are using PoS purposely, Cardano and Tezos.

As blockchain developers, we would like to shed a light also on other consensus mechanisms of blockchain. Stay tuned for part 3!