In short, we'll go cover 4 types of Consensus Protocols:
- Proof-of-Work
- Proof-of-Stake
- Delegated-Proof-of-Stake
- Proof-of-Authority
One of the promises of the blockchain is that it's a 'trustless system'.
Anyone in the community can join and participate in the network of nodes that verify transactions on the blockchain.
Consensus protocols are the varied methods blockchains use to achieve a trustless system.
What's a blockchain?
A blockchain is a network spread across multiple nodes. Each node can verify transactions made on the network, and then commit those transactions to the final state of the blockchain.
Anyone can submit info to the network.
So it's important to have rules in place that everyone can use to decide what info to commit to the network.
How do they work?
The consensus protocol at the heart of a blockchain gives a specific method for verifying whether a transaction is true or not.
All nodes on the network must agree on the state of the network, following the protocol to do so.
Consensus also:
- Prevent a single entity from taking control
- Trust users without a controlling third-party
- Prevents Double spending, where someone creates their own version of the network to take control and spend the same coins multiple times
Common types of consensus protocols:
PoW (Proof-of-Work)
'Miners' earn rewards for solving computational problems that validate blocks and add them to the network.
This method has been criticized for being heavily energy-intensive and slow to process transactions.
Ex: Bitcoin, Ethereum1
PoS (Proof-of-Stake)
'Forgers' stake(loan) money in the network, with the next verifier getting chosen in a lottery fashion. Having a bigger stake means having a higher chance of being chosen to validate.
They are rewarded for correct validations and punished for wrong ones by losing some of their Stake.
Ex: Ethereum2, Solana
DPoS (Delegated PoS)
Similar to PoS, except stakeholders can vote on who validates the next block
Ex: Cardano, EOS, Tron
PoA (Proof-of-Authority)
Predetermined block validators, who are public and held accountable for their actions.
Most Testnets use this method. Since testnets are for testing and developing code, they don't need a fully decentralized network, just the blockchain tech.
Ex: Rinkeby(Ethereum-Testnet)
Conclusion
Consensus protocols, like the rest of blockchain tech, are constantly evolving to address the challenges in bringing about a Web3 future.
There are other interesting ones, like Proof-of-burning, or Elapsed-Time (PoET)
What other protocols have you heard?
Tell me below!
This thread was a summary of the contents in this article: https://decrypt.co/resources/consensus-protocols-what-are-they-guide-how-to-explainer
Top comments (0)