Proof of Stake(PoS) Evolution
Hello friends! In this crypto world, everyone wants to get the depth knowledge about the technology used in blockchain before investing in a project so that they can be able to compare the growth of that particular project with other projects. So, I would like to discuss Proof of Stake generally called PoS. After going through with this article, you would be able to understand the below-mentioned terms along with the various advantages and disadvantages of these.
• PoS (Proof of Stake)
• DPoS (Delegated Proof of Stake)
• LPoS (Leased Proof of Stake)
• TPoS (Trustless Proof of Stake)
Mostly these words can be seen in the whitepapers of the projects. Let's start understanding it from the very basic.
PoS (Proof of Stake)
Image Source: lisk.io
Proof of Stake is the most common method used in blockchain where you have to keep your coins in the company's wallet to earn some extra coins as a reward by validating the transaction on blockchain. Recent changes in Proof of Stake such as improvements in scalability and security shows that it will be definitely staying for a longer time in future.
In 2012, the first PoS was initiated first by peercoin and It was actually introduced to overcome the Proof of Work (PoW) issue where a lot of power energy was required.
Unlike miners, who are responsible to solve the really tough algos, the network instead uses a pool of validators. The validators are people who are willing to stake their cryptocurrency on the blocks of transactions over public blockchain and get random rewards on every cleared transaction. The rewards are totally depending on the share of staked coins.
Pros
• Transaction Speed is faster than mining
• Energy Efficient
• Requires Decent Hardware
Cons
• Investing money into one coin can cause vulnerability
• Less rewards as compared with masternodes
• Richest stakeholders have the power to control the system
Coins/Tokens: Peercoin, Stratis, Reddcoin, Navcoin, Blackcoin etc.
DPOS (Delegated Proof of Stake)
Image Source: lisk.io
In 2014 , a blockchain engineer Daniel Larmer first introduced the concept of Delegated proof of stake. In DPOS Stakeholders elect delegates called witnesses from their coin balances. The bigger coin holders have more voting power and it may vary depending on coins. Users can even delegate their voting power to other users, whom they trust to vote for witnesses on their behalf. These witnesses stake blocks of new transactions and add them to the blockchain.
Pros
• More scalable than Proof of Stake
• Any attack can easily be trapped by the witnesses
• Delegates give rewards fairly
• Much faster than traditional Proof of Stake method
• No Hardware required to become a witnesses
Cons
• Witnesses could organize into cartels
• Power is in the hand of few people so the attack can easily be organized
• Reflection of centralization
• Participants do not necessarily reward directly
Coins/Tokens: EOS, Lisk, Steem, Bitshares, Ark
LPoS (Leased Proof of Stake)
Image Source: docs.waveplatform.com
Developed by NXT community based on java. A decentralized blockchain platform that allows for the creation of custom tokens. In leased proof of stake, all users take part in securing the network and profiting from transaction fees without requiring any technical knowledge or the need to download the blockchain. User just needs to have minimum fixed coins to generate blocks means anyone can run the network node if he/she has those fixed coins and get rewards. Additionally, Users has the power to lease their coins to a network node to get extra rewards. In every minute leased poolers have the chance to win whole transaction fee in the form of lottery. So, stakeholders have two methods of earning through nodes and from leasing.
Pros
• Even small coin investors can generate new blocks and get benefits from leasing.
• The user can get huge profit from by winning the lottery by just leasing their coins.
Cons
• High lease balanced accounts have more power over the network
• Requires Specialized Hardware
• Little bit expensive if coin prize goes higher
• Less Authorization
Coins/Tokens: Starta, Monster Byte, Ocean Lab, Tidex token, Kolion, Bowhead, Minex, Dotcoin & more
TPoS (Trustless Proof of Stake)
Image Source: Stakenet Whitepaper
Trustless proof of stake also referred to as offline staking. It was first developed by Stakenet (XSN) in 2017 (live in 2018) by getting the idea from masternodes technology. It has picked the same core of bitcoin technology and an adjusted coinage, like peercoin for the validation of newly created blocks. The feature allows to securely stake XSN coins in cold storage and move the blockchain at the same time while transferring from the hardware device. The requirements to become a merchant, with the help offline staking, are zero. User can do all the tasks of masternodes features like instant send, coin mixing, hosting a decentralized exchange and marketplace or a governance system and some additional tasks like lightning network, atomic swaps, masternodes and enhanced privacy without any hassle.
Pros
• The highest level of security compared to other Proof of Stake mechanisms
• All masternodes features
• Cross chain capabilities
• Multi-currency wallet
Cons
• Fixed Block rewards
• Less adoption & awareness
Coins/Tokens: Stakenet (XSN)
Image Source: medium.com
Conclusion
Hopefully, we would see more advancement in Proof of Stake in near future. Although, all methods are still working efficiently but Trustless Proof of Stake (TPOS) mechanism has a great future in the upcoming years comparatively to the other Proof of Stake system.
Which one you think would have the brighter future? Upvote, Comment and Resteem!!!
Cheers and Steemit!!!
Regards,
Danny Crypto
@text2crypto