Pool of Stake: Facing fundamental problems
Proof of Work has been the state of the art of consensus algorithms for first-generation blockchains. PoW is not ecologically sustainabland exhibits fundamental problems that compromise decentralization. First-generation cryptocurrencies. One of the most popular vectors of block projects has recently been the solution of the problems of traditional mining. Due to significant growth rate of the network over time, Bitcoin’s PoW algorithm is facing fundamental problems.
Proof of Stake is the new kid on the block and 2018/2019 will be the years in which PoS will be fully adopted by major players in the blockchain field. When PoS becomes the new gold standard of blockchain, Pool of Stake will be ready to become the biggest staking pool for PoS. The core value of cryptocurrencies lies in fully trustless, permissionless protocols and decentralization.
Proof of Work History
Bitcoin presence in 2019 as the first type of krypto currency, blocking technology as a basis and mining opportunities to get coins, more and more people were able to earn effectively using the Proof of Work algorithm. Initially, any miner had enough PC and installed application, because mining did not require as much processing power as it does now. The bitcoin network and the number of participants in it grew progressively. and with them the need for more powerful equipment. So users began to use special equipment specifically designed for mining.
With its appearance, people began to collect the first mining farms, after which the use of the Proof of Work algorithm developed into the emergence of large mining pools, which resulted in a number of negative consequences. Perhaps, will radically change the principles that existed in the crypto-currency market before. In order not to be unfounded: ICO within the framework of the project Pool of Stake started quite recently, on July 20, and already at the time of writing the review (July 31) its founders managed to collect € 2.58 million, overcoming the soft cap threshold of € 2 million.
The emergence of expensive special equipment for mining, the opportunity to mine Crypto currencies is getting smaller. because small miners are starting to be replaced by organizations that produce extra coins, in the form of professional pools. Since then, the concept of decentralization introduced by Satoshi Nakamoto that was put in bitcoin began to lose its meaning, and mining became more centralized.
In the end the concept of decentralization was questioned. because of the situation now smaller miners do not have the slightest chance to get crypto currencies, hash controlled by large mining. the maximum transaction speed with the current block size is 7 transactions per second, transaction value reaches $ 50, and annual transactions Electricity consumption because mining can easily compete with many countries.
The situation is that as of January 2018, 77.1% of the total hashed control the 5 largest pools, among them: BTC.com (23.2%), AntPool (18.2%), ViaBTC (12.8%), BTC.TOP (11.8%) and SlushPool (11.2%). In their technical documentation, the developers of the Pool of Stake project provided a diagram of the bitcoine hash and mining pools that control it. This proves once again that the principles of the Proof of Work protocol do not allow to properly observe the concept of decentralization, and "power" is concentrated in the hands of centralized structures.
The appearance of Proof of Stake
Low efficiency and high power consumption using the Proof of Work algorithm became the reason for creating in 2012 a completely new mechanism. Pool of Stake will be ready to become the biggest staking pool for PoS. In PoS, there are no miners as such. Instead, there are validators or stakers. The next block is proposed and voted on by a set of randomly chosen validators. The voting power of each validator depends on his or her weight (amount of staked coins). PoS uses a new concept - "staking" (staking). it means didn't need for expensive equipment. Instead of them new participants appeared.
Proof of Stake has become a more effective alternative to Proof of Work. Steykers do not create new coins, but only confirm transactions, receiving a reward for this in the form of part of the transaction commissions. In this case, the validator that confirms the transaction is determined based on the number of coins in its account. Thus, the more coins, the more chances to get a reward in the form of commission for the transaction. “The significant advantages of PoS include security, reduced risk of centralization, and energy efficiency.” This means that small miners can earn money by validating transactions in PoS.
The solution tried by Proof if Stakes is to create a simple algorithm that is more efficient, decentralized and environmentally friendly, which is expected to be very useful for proof of work. but in fact what happened was not as smooth as planned. therefore Proof of Stake still has significant deficiencies.
The deficiency of Proof of Stake
The high risk of monopolization is the first and one of the main problems of the PoS algorithm. on the other hand The concept of the mechanism assumes the possibility to be chosen to confirm the transaction and to receive the corresponding reward depends on the number of coins in the user's wallet. It is more effective than in Proof of Work, but , not everyone can afford to meet the requirement "the more the better."
While participants with large reserves of crypto currency in their wallets will receive most of all coins received, smaller participants will remain in much less favorable terms. In fact, their chances of receiving rewards are minimized, even given that the concept of decentralization is being respected. Hence one more negative consequence - the so-called "51% attack", in which steakers with more than 51% of the total volume of tokens become a threat to the rest of the participants.
The second problem of Proof of Stake is also associated with small miners. The mechanism provides for a round-the-clock connection in order to be able to confirm the transaction, but not all miners, even large ones, are ready for this. The result - decentralization, which we wanted to achieve with the help of Proof of Stake, is only achieved conditionally.
Pool of Stake
Pool of Stake is creating a safe pool for Proof of Stake coins, the future of blockchain. Qtum, Stratis, Universa and soon Ethereum holders can unite in the Pool of Stake and start staking together. "The future of blockade for Proof of Stake". In order for the mechanism to really justify itself, it needs effective changes and solutions that will allow absolutely all participants without exception to enjoy its advantages.
The creators of Pool of Stake offer small participants in the system to get rid of the existing shortcomings of the algorithm and unite in one pool of steakers, in parallel with this, combining their coins. aims to operate in all types of PoS blockchains- Smart Contract platforms or blockchains with a delegated mechanism. The main goal for Pool of Stake is to increase the profits for small coin holders by enabling a trusted environment to pool funds together. For this purpose, two tokens are used. Thus, they will be able to take part in stealing along with large stakes, round-the-clock confirming transactions and getting much more profit from transaction commissions than working alone.
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