This is one of the varieties of the proof of stake consensus mechanism. So we’ll first go over the main features of the original PoS, and then move on to the differences.
So. The PoS consensus mechanism was first introduced to the general public in 2012 by an anonymous developer operating under the pseudonym Sunny King. The point is what. Each network member can become a validator for a new block. That is, to confirm the authenticity of transactions and receive a certain reward for this. To do this, you just need to block a certain amount of the asset in the form of a stake or a bet. In this case, the validator is chosen by the lottery method, where there are more chances to win against those who have more stake. This provides the following benefits:
- Computing power independence. It doesn't matter what kind of computer you have - if it can support the operation of a blockchain node, then you get a chance to become a validator. The unconditional advantage of large mining pools is a thing of the past.
- Accounting for the inflation rate. The reward depends not only on the basic features of the protocol, but can also be automatically adjusted to take into account the inflation rate. This encourages people to be more attentive to their tokens and more actively participate in the work of the community.
- Decentralization. Regardless of what form of PoS mechanism is used, the network can achieve, if not complete decentralization, then its high degree.
These are common features common to all forms of proof of stake. And then the differences begin - both in the methods of delegating funds, and in the ways of punishing mistakes. And now we will analyze one of the most common PoS options - Bonded Proof-of-Stake or "linked proof of stake".
Features of the method
Delegation is optional (but a limitation in the number of validators is possible), the process does not require the transfer of assets and trust (non-custodial), all token holders get a vote on amendments to the protocol. However, there is a reason why the method is called "bound". The fact is that in case of a violation of the rules, a failure in security and the continuity of uptime, the penalty is imposed on both the validator and those who transferred their stakes to him.
On the one hand, this is an advantage, since it solves the problem of the ratio of bets that could arise with validators. Its essence is that they must have a certain percentage of their own assets in the total stake, which is why many people had to refuse. The so-called "over-delegated" or "over-delegated" state. On the other hand, this means that those who delegate their assets must carefully choose who they will transfer them to, and then carefully monitor the activities of their validator.
The method was first tried on the Cosmos and IRISnet projects (which is also based on the Cosmos SDK / Tendermint). The main difference is the limitation of the maximum number of validators to a hundred people, of which one is automatically selected, taking into account the total share of assets (even the proportion between own amount and delegated ones is taken into account).
To summarize
The Bonded Proof-of-Stake protocol implies the active involvement of all community members in the work on improving the project. At the same time, the mechanism for maintaining decentralization and opposing the consolidation of assets in the hands of a group of users remains. The main advantages of classic PoS also remain, as well as the ability (and sometimes the need) to delegate your funds for more efficient work.