The Proof-of-Stake framework has emerged as an innovative solution to tackle the electricity consumption concerns associated with Bitcoin and Ethereum. As these dominant blockchains came under scrutiny for their excessive energy demand, a UK study highlighted the staggering amount of power required per Bitcoin transaction. costs in excess of $100 in terms of energy costs.
Recognizing the looming issues with Bitcoin's Proof-of-Work model, in 2012, Sunny King and Scott Nadal penned a groundbreaking paper. Their work revolved around the staking method, where nodes are selected based on their coin holdings rather than competing through intensive computational tasks.
In a PoS system, the likelihood of a participant being selected to add a new block – alongside receiving incentives – grows with the number of coins staked, thus steering clear of the escalating energy costs typical of Bitcoin mining.
Proof-of-Stake Is Born
In its inception, Peercoin was crafted by Sunny King in 2013 as a Bitcoin alternative. While it initially relied on a combination of PoW and PoS, it matured to favor the latter, although both models coexist even today to ensure decentralization. Peercoin Marking a milestone in 2014, Pavel Vasin introduced Blackcoin, the first true PoS cryptocurrency, which eliminated PoW mining and worked towards equitable distribution.
Despite Blackcoin's initial advancements, the project didn't quite captivate the masses. While it persists today, its value nosedived from a peak of $1.05 in 2018 to a trifling 3 cents. Blackcoin Blackcoin, although not a strong contender, paved the way for subsequent PoS endeavors. The same year saw Jae Kwon lay the groundwork for what would burgeon into his next big project.
The release of a significant whitepaper this year by prominent figures hinted at the evolution of future PoS projects, with Vitalik Buterin, co-founder of Ethereum, innovating with a punitive PoS algorithm key to the anticipated Ethereum 2.0 launch.
In 2014, BitShares emerged on the scene, making history as the pioneer of the Delegated Proof-of-Stake model, a concept embraced by numerous blockchains like EOS and Tron. Tendermint The early PoS concepts led to the flourishing third generation of projects such as Algorand, Cardano, and prominently, Tezos. Cosmos Network Launched in 2018, Tezos distinguished itself with a Liquid Proof-of-Stake protocol, which democratized network participation, fostering decentralization and robust governance. proposed Slasher Tezos’ LPoS stands out by making delegation optional, in contrast to DPoS's fixed delegates, thus promoting a fluid validator set for better governance.
Tezos enables its community to partake in block creation by delegating their tokens for rewards. Known as 'baking,' this process involves selecting a capable baker to generate blocks, achieving consensus through a community-based validation system.
PoS Hits The Big Time
LPoS allows anyone with a stake exceeding 8,000 XTZ to join as a baker, setting it apart from the restricted validator access in DPoS due to high resource demands. Tezos .
Tezos ensures decentralized governance and security while safeguarding against double-spending by endorsing nodes to report malicious activities.
Tezos has successfully scaled its PoS operations, anchoring a burgeoning DeFi ecosystem and inspiring a fleet of competitive projects like Cardano and Cosmos.
Tezos’ LPoS consensus The PoS landscape witnessed pivotal expansions in 2020 with the debut of several mainnets including Polkadot and Harmony, each cultivating their unique ecosystem.
The cryptocurrency world anticipates a pivotal shift as Ethereum transitions to PoS, a move driven by the quest for a more eco-friendly and decentralized network.
Ethereum's substantial energy demands outstrip Visa transactions, marking the PoS switch as a critical move to curtail its burgeoning carbon footprint.
The Future Of Blockchain?
As the frontrunner in the blockchain sector, especially in the realm of DeFi, Ethereum's switch to PoS might be the defining event for the future of cryptocurrency consensus. $91 million in total value locked Oliver Dale, the Editor-in-Chief at Blockonomi and Kooc Media founder, champions open-source and blockchain technology.
Oliver's insights have garnered attention from major platforms like Nasdaq and Forbes. Reach out at [email protected]. $336 million in TVL in DeFi.
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