Proof-of-Stake, unlike Proof-of-Work, requires all validators to hold native coins. This incentivizes validators to participate in the validation process regardless of block rewards, whereas in Proof-of-Work the incentive decreases with the size of block rewards.

Proof-of-Stake's ability to generate consensus with low block rewards


Since Proof-of-Stake does not encourage competition between rival groups attempting to amass computational power to obtain block rewards, it does not require a significant increase in cost when scaling to a greater quantity of users.

Scalability without incurring greater computational costs

- Ability to generate consensus with low block rewards
- Scalability without incurring greater computational costs

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This consensus mechanism depends on selecting validators by their proportion of holdings. Cardano is an example of a blockchain that uses Proof of Stake.

Proof of Stake Protocol

Saleh, Fahad. (2021). Blockchain Without Waste: Proof-of-Stake. Wake Forest University. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3183935


Blockchain Without Waste: Proof-of-Stake

- Nothing-at-Stake problem
- Validator fraud
- Wealth concentration
- Double spending
- Staking pools

Concerns regarding Proof-of-Stake

- Restricting access to update the blockchain
- Sufficiently low block rewards
- Sufficiently modest block reward schedule

Conditions for generating consensus with Proof-of-Stake

Advantages of Proof-of-Stake

- Follow-the-Satoshi (FTS) algorithm
- Digital Signature Scheme (DSS)

Implementations of Proof-of-Stake

- Peercoin blockchain
- Nxt blockchain
- Decentralized applications (dApps)
- Algorand


Proof-of-Stake in practice

The Follow-the-Satoshi algorithm divides time into periods called time slots. Only one block can be added to any blockchain branch in any given slot.

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