Basic Proof-of-Stake consensus mechanisms

Abstract

In this chapter, we have discussed the basic PoS principles, from how it works as a PoW alternative to its economic implication, as well as several widely recognized chain-based PoS schemes: Peercoin, PoA, and Nxt. Among them, Peercoin was the first public blockchain to implement the PoS idea using coin age to evaluate stake weight; PoA leverages the Follow-The-Satoshi (FTS) mechanism to select a group of validators based on stake weight who will jointly sign a new block; Nxt improves Peercoin by abandoning coin age and refreshing the stake value for every new block cycle. These chain-based PoS schemes inherit Bitcoin's networking functions and blockchain finalization rules after block generation, including peer-to-peer block propagation and the longest-chain rule. We also highlighted the challenges of chain-based PoS related to costless simulation, such as the nothing-at-stake problem, bribery attack, long-range attack, and stake-grinding attack. Lastly, we provided an overview of alternative PoS mechanisms which have been the trend in the last several years.