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What is a proof of stake (PoS) consensus algorithm?

A Proof of Stake (PoS) consensus algorithm is a set of rules governing a blockchain network and the creation of its native coin, that is, it has the same objective as a Proof of Work (PoW) algorithm in the sense that it is an instrument to achieve consensus. Unlike PoW, there are no miners involved in the process.

How does the POS algorithm work?

Nodes make transactions. The PoS algorithm puts all these transactions in a pool. All the nodes contending to become validator for the next block raise a stake. This stake is combined with other factors like ‘coin-age’ or ‘randomized block selection’ to select the validator. The validator verifies all the transactions and publishes the block.

How do ispos work?

ISPOs have taken place on Cardano, which uses the Ouroboros protocol. Delegators stake ADA in a stake pool of their choice. The more stake a pool has, the bigger the chance for it to become a validator node and contribute to the network’s consensus.

What is the difference between POW and POS?

While PoW mechanisms require miners to solve cryptographic puzzles, PoS mechanisms require validators to hold and stake tokens for the privilege of earning transaction fees. Proof-of-stake (POS) is seen as less risky regarding the potential for an attack on the network, as it structures compensation in a way that makes an attack less advantageous.

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