Proof of Authority as the Core of Consensus in ParaState

Blockchain is a technology that helps improve the security of transactions between different users. It is a data structure where the information is organized in blocks. In this way, a third party is not necessary for you to trust the transactions, since the connection is direct.

For this to work, different consensus protocols. These are rules and principles that indicate how the nodes of the blockchain network communicate. They serve to ensure that all aspects of the platform work. There are several types, such as proof of work or PoW, proof of stake or PoS, and a more recent one, proof of authority or PoA, the one used in the ParaState Testnet Plato.

Why did ParaState select PoA?

The protocol known as proof of authority has recently gained popularity. It is a new family of consensus algorithms. Although there are other consensus systems, this algorithm has high performance and tries to improve the current systems. In this section we will try to clarify all the doubts that may arise about the PoA used by ParaState so that you can understand how it enhances the ecosystem.

The PoA uses the identity of a user as a stake. In this way, it relies on well-known and reputable validators to create blocks and give computational power to a network.

In Plato, there are a limited number of validators as in any other blockchain network that uses the Proof of Authority mechanism; and the blocks and transactions are verified by users who have already been approved, who act as moderators.

This model allows ParaState the perfect balance to maintain privacy while taking advantage of the advantages of the blockchain.

Additionally, testnets present a robust use case for proof of authority. The PoA consensus is ideal for providing a controlled environment to test features before launching them on the mainnet.

Key differences of the PoA used by ParaState with respect to other consensus protocols

As of today, there are different consensus algorithms:

• Proof of work (PoW) is one of the most used with public blockchains like Bitcoin. PoW uses mining nodes that can be used by multiple miners. The miners check the transactions by looking at the proper hash for the content of that block and the previous one and in return receive cryptocurrencies from the blockchain as a reward.
• Proof of stake (PoS) is an algorithm that tries to improve the PoW and does so by reducing mining work. In this method you do not have to mine; therefore, there is not the same reward as in PoW. In this way, it minimizes the use of electrical energy and adds the use of smart contracts.

The downside of PoW is that it is not very scalable. Before a new block of transactions is confirmed, it has to be approved by the rest of the network nodes. For its part, although the PoS tries to improve the number of transactions per second (TPS), the difference is not so great and it is not very scalable either.

That is where the proof of authority or PoA comes in as an alternative so that the TPS can be increased. In addition, it offers better solutions for private blockchains.

Furthermore, these PoS algorithms assume that users with tokens staked on a network will be incentivized to act in the interest of the network; otherwise they risk losing their stake. Although it seems logical to think that the higher the amount staked of a user, the greater their motivation to take care of the success of the network, the truth is that this does not take into account that while identical stakes may be equally valuable from a monetary standpoint, they might not be equally valued by their holders.

PoA-based networks like ParaState allow network participants to stake their identity. As a consequence, ParaState validators are recognized entities that put their reputation on the line for the right to validate blocks.

This modification to the PoS model eliminates the need to consider potential discrepancies between validators and ensures that all network participants are equally motivated to work for the success of your network.

DAO as a voting tool in a PoA environment

ParaState is a highly scalable solution for decentralized applications developed on Substrate or Ethereum that want natural compatibility with the largest ecosystem of the blockchain industry, Ethereum.

By default, ParaState is conceived as a decentralized autonomous organization (DAO) funded by license fees generated by transactions on other networks using ParaState technology.

ParaState intends to initially rely on off-chain voting protocols like Snapshot to account for votes, and will seek to develop more direct participation.

Since the PoA provides a more controlled environment to exercise decentralized chain voting, DAO decisions on improvements or proposals for Layer 1 or 2 solutions on the ParaState blockchain with a PoA consensus mechanism allows the creation of a highly efficient bidirectional bridge that increases, in turn, the confidence of the actors involved in decentralized governance.

Proof of Authority is a great option for a sidechain, as it enables you to drive thinner and narrower platforms tailored to the needs of a limited number of known stakeholders.

Not least, PoA networks that connect to ParaState may represent a better solution from the point of view of superior performance compared to other traditional consensus mechanisms.

With PoA, decentralized governance in these parallel environments to the ParaState ecosystem can be highly efficient, private and secure without the need to undermine the decentralization characteristic of a blockchain network.

With reputation at stake, and a uniform identity verification procedure, the decisions of key players such as validators in a PoA network guarantee the integrity and reliability of the system.

Because the PoA protocol works based on the reputation of the validators and the inclusion of nodes previously authorized and verified by their identity, authorized by the DAO in the case of ParaState, it is almost impossible for malicious actors to join the network.

About ParaState

Known as Ethereum on steroids, ParaState is a multi-chain smart contract platform bridging the application and developer ecosystem between Polkadot, Substrate and Ethereum, as well as other chains wanting to provide Ethereum compatibility. While supporting the EVM pallet to provide seamless compatibility with all existing Ethereum applications, ParaState also provides developers with a next-gen smart contract implementation environment, Ethereum-flavored WebAssembly. These two infrastructures are ensured to talk to each other and share the same account system on ParaState.

Join ParaState’s community:

Website | Blog | Twitter | Telegram | Discord | Facebook | Github