Current blockchains are using many different consensus mechanisms to solve at least 2 of the 3 problems of the impossible trinity, Proof of Authoriy was also born to solve the above problems. Join Weakhand to learn more about what is Proof of Authority? Can blockchain really solve the long-standing problems of blockchain?
What Is Proof Of Authority?
Proof of Authority (PoA) is a term in the blockchain field, it is a consensus algorithm based on the authorization of a number of predefined entities to confirm new transactions and blocks.
These entities are called “authorizing entities” and they are responsible for authenticating transactions. Not a computer as in Proof of Work (PoW) or Proof of Stake (PoS), PoA is often used in private or enterprise-owned blockchain networks.
The number of validators of PoA is usually not greater than 100, it ensures very good security and scalability, but in terms of decentralization, it cannot be guaranteed.
To participate in a blockchain network using the Proof of Authority mechanism, those selected need to stake an amount of platform tokens. If there is fraud or any problem, they will be fined based on the amount of tokens. there.
What Are the Problems That Proof Of Authority Solve?
Let’s take a look at the impossible trinity that is the problem that all blockchains face:
- Decentralization: Shown in the number of people participating in network authentication.
- Security: Shows whether the blockchain is vulnerable to attack or not.
- Ability of extension: Shown in transaction speed and transaction fees that users have to pay.
Popular consensus mechanisms at the present time such as Proof of Work or Proof of Stake are very well solving two problems: decentralization and security, but the scalability is very poor because of the number of nodes. node or validator participates in authentication a lot.
Proof Of Authority solves the scalability problem by limiting the number of validators participating in the network and verifying the identity of all validators participating in the network to ensure security.
This will enhance the user experience while reducing the loss of network decentralization, which is the core characteristic of blockchains.
Advantages Of Proof Of Authority
Proof of Authority has the following advantages:
- Increase transaction speed: because there is no computational puzzle solving process, PoA can confirm transactions faster than Proof of Work and Proof of Stake.
- Decentralization and decentralization: PoA can assign blockchain management rights to designated representatives, ensuring the decentralization and decentralization of the system.
- Energy saving: PoA does not require the use of high computing power like PoW, thus saving energy and minimizing environmental impact.
- Ability of extension: PoA is more scalable than PoW and PoS, since multiple management nodes are not required and integrity is guaranteed by designated representatives.
Disadvantages of Proof Of Authority
Proof of Authority also has the following disadvantages:
- Do not disperse: PoA is not truly distributed and can create some security and reliability issues as designated validators can be attacked. (e.g. Axie Infinity was hit with a $600M hack)
- Concentration of power: PoA can create a concentration of power and does not ensure fairness in cases where the designated validators are dishonest or connected with each other with malicious intent.
- Ability to handle influences: If validators are affected by technical problems or attacks, the processing capacity of the blockchain can be severely affected.
- Difficulties in selecting validators: Selecting validators to participate in PoA can be very difficult, especially in the absence of a clear and trustworthy consensus among stakeholders.
- Not suitable for most blockchains: Most blockchains at the present time are operated by a very large network of nodes and validators, so verifying all participants is almost impossible.
Outstanding Projects Using PoA Mechanism
BNB Chain
BNB Chain is a blockchain built and developed by the largest exchange in the Crypto market at the present time. Binance initially named this blockchain Binance Smart Chain, but later changed it to BNB Chain due to concerns about legal issues.
Currently BNB Chain is operating with only 29 validators verified by Binance, the transaction speed on this network is also quite fast with an average TPS of 50 and transaction fees of only about $0.02 for a money transfer transaction.
Ronin Network
Ronin Network is a Sidechain developed by the Sky Mavis team specifically for gaming with the most prominent project being Axie Infinity. Ethereum was once Sky Mavis’s choice for game development, but the project team chose to build Ronin because Ethereum is too expensive and not suitable for gaming.
There are 12 verified Governing Validators who will participate in validating transactions by default, and an additional 10 validators with the highest number of staking tokens will also participate in validating. This number has increased quite a bit compared to 9 validators at the time the network was hacked, causing a loss of $600M.
Blockchains for exchanges
In addition to BNB Chain, there are also many blockchain exchanges that also use the PoA consensus mechanism such as Cronos (Crypto.com), HECO Chain (Houbi), OKChain (OKX), etc. Translators prefer to use this mechanism because it is simple and easy to implement with their existing relationships.
Summary
Above are the things you need to know to understand what Proof of Authority is? Hopefully, through this article, Weakhand has given everyone an overview of the consensus mechanism used by many major blockchains today.
