Novel Consensus Mechanisms Providing Alternatives To PoW And PoS

The eternal debate around the Proof-of-Work and Proof-of-Stake consensus mechanisms in blockchain has never been settled, and there is a good reason for that. The truth is, both mechanisms have their strengths and weaknesses, so people will always beg to differ on which is best. 

While the debate rumbles on, a number of projects are trying to settle the matter once and for all by coming up with alternative consensus mechanisms. Recent innovations include Metatime’s Proof-of-Meta, Slimcoin’s Proof-of-Burn and Humanode’s Proof of Human Existence and Uniqueness.

Consensus mechanisms are the method by which blockchain networks are able to achieve distributed agreement about their current state. They’re needed because of the decentralized nature of blockchains. Without any centralized authority to verify transactions, blockchains must find a way for all participants in the network to reach a consensus. 

The most widespread consensus mechanisms are Proof-of-Work (PoW) and Proof-of-Stake (PoS). PoW is used by some of the best known cryptocurrencies, including Bitcoin, Litecoin and formerly by Ethereum too. With PoW, participant nodes are required to prove they have performed number-crunching work and submitted it to the system in order to qualify for the right to add new transactions to the network. However, the drawback of this system is that it leads to high energy consumption as miners devote massive amounts of computing power to solving these mathematical problems. Not only does this lead to expensive electricity costs, but becoming a miner on Bitcoin’s network these days requires a huge investment in computing infrastructure. 

The PoS consensus mechanism emerged as an alternative to PoW and is now used by Ethereum and numerous other popular blockchains. It was designed to solve the problem of PoW’s high energy consumption, and involves network nodes “staking”, or locking up cryptocurrency funds for the right to participate and validate transactions. While PoS is much more environmentally-friendly, it has its own problems as it incentivizes hoarding rather than spending. In addition, PoS ecosystems are often dominated by “whales” and early adopters who possess significant reserves of tokens, leading to greater centralization. 

A Superior Way To Reach Consensus

Although PoW and PoS are the most widely used consensus mechanisms, their imperfect nature has compelled some of the crypto industry’s brightest minds to look for alternatives. A number of interesting contenders have emerged in recent years. 

For instance, Proof-of-Authority (PoA) is a novel consensus mechanism that aims to sacrifice decentralization for faster transactional throughput. With it, approved validators are tasked with verifying new blocks of transactions. The system is based on reputation, giving these validators an incentive to act ethically and avoid tarnishing their reputation, which would see them replaced. One notable project using PoA is Ethereum Express, and it claims to have solved Ethereum’s scalability problems by carrying out a blazing-fast 200 transactions per second. Because it’s fully compatible with the original Ethereum network, Ethereum Express is hopeful of attracting developers who place greater value in rapid transaction finality. 

That said, very few crypto projects are willing to sacrifice decentralization, seeing this as sacrosanct. Metatime’s Proof-of-Meta (PoM) aims to ensure its MetaChain network remains decentralized while still providing fast transaction throughput. It does this with an inclusive consensus mechanism that involves three types of miners: MetaMiners that use Meta Proof of Stake (MPoS), MacroMiners that use Meta Proof-of-History (MPoH), and MicroMiners that use Proof-of-Social Work (MPoSW). The idea is that everyone can contribute, no matter how much resources they devote to the network. It accommodates mining rigs, PCs and even smartphones, with the exact role determined by the computing resources each node is able to contribute. 

MetaMiners use the MPoS mechanism to verify, log and sign block transactions on the network, while MacroMiners contribute to the decentralization of the network, verifying transactions and backing it up using the MPoH mechanism. Finally, MicroMiners use MPoSW to establish relationships between applications and users by confirming transfer transactions between participants. 

While Metatime claims it solves the blockchain trillema problem, the confusing nature of PoM means it’s not for everyone. Those who prefer simplicity would do well to consider  Proof-of-Burn (PoB), which was developed by Iain Stewart and encourages users to “burn” crypto to earn the right to add new blocks to the network. 

The idea with PoB is that validators demonstrate a long-term commitment to the token by making a small sacrifice. It’s a way of investing in the network’s future. Stewart offers an analogy to describe PoB, saying burnt tokens are similar to mining rigs in PoW. Essentially, the PoB miner burns their coins to acquire a virtual mining rig, which enables them to mine blocks. The more tokens they burn, the more powerful their virtual mining rig becomes. 

Tokens are burnt by sending them to a verifiably unspendable address, and new tokens can be earned whenever the miner successfully adds a new block to the network. Slimcoin is one of the first projects to adopt PoB, allowing miners to burn tokens for the right to compete for all future blocks over the next 12 months. 

With its tongue-twisting Proof-of-Human Existence and Uniqueness (PoHEU) consensus mechanism, Humanode is determined to become the most distributed and democratic blockchain of all, based on the principle of one human = one node = one vote. Network nodes are created using “cryptobiometric authentication”, which combines liveness detection mechanisms that verify the uniqueness and existence of human participants with cryptographically secure matching. In the system, all nodes are equal in terms of their voting and validation power, as nobody can create more than one. 

In Humanode’s system, the user’s cryptographically secured biometric identity becomes their stake, enabling them to participate in approving and verifying transactions. Each node has an equal chance of winning the rights to produce the next block. With this approach, Humannode aims to prevent the centralization we see in both PoW and PoS systems. To protect people’s identities, ZK proofs are used to encrypt identity data in secure enclaves. 

No Consensus On Which Is Best

It’s unlikely that we’ll ever reach consensus on which mechanism is superior for blockchains. The reality is that there are hundreds of blockchains in the world, all designed for different purposes. So the best consensus mechanism is the one that meets the needs of its users. In some networks, where decentralization is not a priority, the focus is on transaction finality. In others, decentralization is the most prized aspect of all, hence a system like Metatime’s PoM can be beneficial, encouraging any device to participate. 

The process of getting blockchain validators to reach consensus will likely always be much simpler than getting the community to agree on which mechanism is best overall.