Date
Sep 27, 2022
A consensus mechanism refers to the protocols, concepts, and incentives that ensure that there is a single, consistent, and true version of the blockchain.
Consensus mechanisms depend on honest validators, so protocols are designed to incentivize the validator to do the right thing by having a vested interest in the blockchain.
Some of the popular protocols used to align incentives are explained below:
- Proof of Activity: a hybrid between Proof of Work and Proof of Stake (example: Decred)
- Proof of Authority: the validators put their reputation at risk to be selected for validation (example: VeChain)
- Proof of Burn: the validator proves they have capital at risk by destroying a preset amount of assets to be selected for validation (example: Factom)
- Proof of Capacity: the validator proves they have capital at risk as the validator with the highest amount of space in their hard drive is selected for validation (example: Signum)
- Proof of History: uses timestamps to verify the time between transactions so nodes do not have to rely on each other or retrace older transactions (example: Solana)
- Proof of Importance: the validator proves they have capital at risk as the validator with the highest number and size of transactions, staked assets, and network activity are selected for validation (example: NEM)
- Proof of Stake: the validator proves they have capital at risk by posting collateral that can be destroyed if the validator is dishonest or underperforms (example: Ethereum)
- Proof of Work: the validator proves they have capital at risk by expending energy and maintaining powerful computers (example: Bitcoin)
Interesting read in understanding the thought experiment behind designing consensus mechanisms, known as The Byzantine Generals Problem: https://lamport.azurewebsites.net/pubs/byz.pdf