POS: Proof Of Stake ? What else ?

Proof of Stake (PoS) is an alternative consensus protocol to Proof of Work (PoW ) used in blockchain technology to validate transactions and create new blocks. Unlike Proof of Work, which requires enormous computing power to solve complex mathematical equations, Proof of Stake relies on the concept of the cryptocurrency’s “stake” or “stake”.

In a Proof of Stake system, validators or “stakeholders” must prove that they hold a certain amount of cryptocurrency to be allowed to validate transactions and create blocks. Validators “stake” their cryptocurrency in blocks and are rewarded accordingly. The amount of the reward depends on the number of blocks created and the amount of cryptocurrency involved. It’s not really poker: if the validator is honest, he doesn’t normally lose his stake (unless he’s a poor system administrator, but that’s another story…), as the risk of loss is most often linked to fraud attempts.

The main advantage of Proof of Stake is that it is much more energy-efficient than Proof of Work, as it does not require the use of large amounts of computing power. What’s more, Proof of Stake is considered more secure, as it makes 51% attacks much more difficult. In the context of this blog, I’d like to highlight the elements that can make blockchain technology more ecologically responsible (and clearly the Bitcoin blockchain doesn’t allow this…) and so Proof of Stake is obviously one of the solutions.

However, Proof of Stake also has its drawbacks, notably the risk of centralization of power among the richest and most powerful validators, as they have the ability to bet a disproportionate amount of cryptocurrency compared to other users. To counter this, some implementations of Proof of Stake introduce mechanisms that limit the amount of cryptocurrency a validator can bet. For Etherum, we recently switched from Proof of Work to Proof of Stake. I thought to myself: “great! I’ll be able to set up a server, participate in the decentralized Etherum blochain and earn ETH as a reward!” but I was quickly disillusioned: you have to stake 32 Ether which are “Stakés” (i.e. blocked and not immediately recoverable) for a very long time. At today’s price, this represents €49,984 (yes, almost €50,000!). Who can afford to block that kind of money and risk losing it if the server isn’t properly configured or secured? Not me, at least not at the moment… Some smart guys have taken advantage of this to set up services where you block a few ETH on their servers (and so they get several working servers with 32 ETH) and in return for this loan you get a few crumbs of reward. It’s better than the Livret A, but I still find it very limiting.

To sum up, Proof of Stake is an alternative to Proof of Work, which has the advantage of being more energy-efficient while offering a high level of security. However, it is important to consider the potential drawbacks and the measures needed to mitigate them (a little more fairness in the distribution of rewards, please!).

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