The Role of Proof-of-Work in Transaction Integrity and System Resilience in Decentralized Finance Systems: An Overview

Abstract

Proof-of-Work (PoW) is a consensus mechanism used by some decentralized cryptocurrency systems as the basis of transaction agreement among independent network nodes, without the need for a central authority. It requires computational time and energy to discourage malicious activities such as double spending and manipulation of the distributed ledger. This article provides an overview of the application of PoW from a Decentralized Finance (DeFi) systems perspective and its effectiveness in supporting decentralized transactions and asset management. In addition, recent advances in enhancing scalability and reducing energy consumption are discussed to address concerns regarding the efficiency and sustainability of PoW. Drawing on recent research, this article identifies several basic criteria that can serve as a foundation for understanding and anticipating future trends for the role of PoW within decentralized finance systems.