We all know the advantages of the Proof-of-Stake consensus mechanism over Proof-of-Work, which are: efficiency, safe, and decentralized. However, there is always a progression in the cryptocurrency industry. New projects emerge and offer a so-called ‘enhanced’ version of PoS itself. So what are the variants of Proof-of-Stake and which coin sparked the idea behind it?
Standard Proof-of-Stake (PoS)
This is the PoS system we all know. It was first introduced by Peercoin in 2012. In this classic PoS, a person has to stake a number of coins in order to be a validator. The more coin a person own will increase the chance of him/her to become the next block creator in the blockchain. However, since this system creates an issue of ‘the richer get richer’, many cryptocurrencies today have used some other method to choose the next block creator besides the amount of coin staked, including random block selection and coin age-based selection. Etherium, which is the second-largest blockchain network in the world is on the way to switching their consensus from PoW to PoS soon in their upcoming Casper Protocol.
Delegated Proof-of-Stake (DPoS)
Delegated Proof-of-Stake introduced another party besides the validators into the system, which are delegates, who are the token holders. Since the beginning, there will be a certain fixed amount of validator selected to forge now blocks into blockchain. Delegates will the vote which validator to forge the next block, with the amount of coin staked will determine the voting weight. The validator that wins the voting will proceed and create a new block, then the reward will be shared and distributed to the delegates. This system was first introduced by BitShares blockchain in 2016 and currently applied by some famous projects like EOS and Tron.
Leased Proof-of-Stake (LPoS)
Leased Proof-of-Stake is an enhanced version of standard PoS. It has the same set of rules as PoS, however, it has a feature that incentivizes small token holders. These users can lease their coin to staking nodes that have more balance thus more likely to be chosen as the new block creator. The Staking nodes will receive the rewards after creating the block and will share the rewards to the leaser accordingly to the percentage of coins leased. These leasers have full authority over their own coins, and they can break the lease anytime they want. The project that uses this consensus mechanism is Waves.
Anonymous Proof-of-Stake (ZPoS)
PIVX is the first coin that introduces anonymous Proof-of-Stake consensus. It is a consensus mechanism made possible by the Zerocoin protocol. As to how it sounds through its name, nobody can know how many coins a person stakes in the network. It enables people to own a private crypto balance while earning rewards securely and privately.
Many cryptocurrencies still keep PoW while implementing the PoS consensus mechanism for security purposes. Many coins started with the PoW system but then added PoS for validating the transaction and adds block into blockchain in order to be more efficient and making 51% attack expensive. This hybrid emerges as a solution to combine the advantages of each consensus mechanism. Many cryptocurrencies are using this hybrid system, including DASH and ZCoin.
All Proof-of-Stake variant aims to give the best experience for users through efficiency and decentralization. We believe that PoS will be the future. Therefore, it is a great opportunity to grasp. Honest Mining is a staking pool platform that enables everybody to be a transaction validator and block creator of a blockchain. You can start staking with minimum investment on the Honest Mining platform. Staking with us also does not require any technical skill, and a few clicks from you will do. Join the Honest Mining staking pool for PoS coins and earn your rewards today!