List of All Proof of Stake (POS) Coins
March 2023

Proof of Stake Coins

POS is a type of algorithm by which a cryptographic blockchain network is aimed at achieving distributed consensus. In POS-based cryptocurrencies, the one that forms the next block is chosen through random selection and various combinations of wealth or shares. Instead of a system based on POS computing power, it is a protocol that takes into account digital asset ownership. the POS protocol, presented in an article published by the developers of the blockchain Sunny King and Scott Nadal in 2012, is focused on eliminating the high energy consumption and some other problems necessary for Bitcoin mining. Peercoin was the first cryptocurrency to employ POS technology.

In the Proof of Stake protocol, users who want to be able to verify transactions and receive a share of income must lock their cryptocurrency assets to be used for verification. In this locking process, called "staking", the amount required to be used for this operation in the wallet cannot be withdrawn from the wallet until the lock is removed, this is identified as the user's share on the network. In blockchains using the proof of stake protocol, users share block verification rewards and transfer fees paid by other users (miner fees) in proportion to their shares. We can lien this process to owning shares of a publicly-traded company. In the same way that people who own more shares receive a higher share of the profits distributed by the company, users who allocate more cryptocurrency resources for staking also receive a higher share of the revenue.

The most prominent feature of Proof of Stake is that it puts capital power at the forefront instead of computational power. For this reason, it is necessary to have an asset to be stowed instead of starting to process by running a piece of equipment. In the POS protocol, a user who holds more cryptos in his hands can also increase his power on the network. The verification process is based on some rules. Users with more assets in their wallets are increasingly likely to become validators. The POS protocol is based on the fact that wallet owners earn by confirming transactions. The user with more assets receives a larger share of the revenue. But it is worth noting that this does not work the same way on all types of POS.

The Proof of Stake protocol, which highlights the asset ownership of users, has evolved over time and has started to be offered with different options. Delegated Proof of Stake (DPoS) and Leased Proof of Stake (LPoS) are the most prominent POS types. DPoS takes advantage of the power of stakeholders to resolve consensus by voting fairly. It uses a social reputation system to achieve consensus in the blockchain social network. DPoS, which is called the least decentralized protocol compared to others, aims to ensure that cryptocurrency holders have a say in the management of the network. On the other hand, in the LPoS protocol, users are allowed to rent a certain percentage of an entire node. This system works exactly like POS, but it also uses a leasing method to provide an incentive for participation to users who hold a small number of assets. Waves are the most well-known of the cryptocurrency units in the LPoS protocol.

In our previous blog, we discussed POW coins. In this article, we have also mentioned POS coins, and now let's look at the differences between the two. In the simplest terms, Proof of Work and Proof of Stake algorithms are two different ways to generate cryptocurrency. They are required to confirm transactions on a blockchain without the need for a third party. The difference between the two algorithms is noticeable in basic issues such as network security, environmental sustainability, barriers to entry, and decentralization. Now let's clarify the issue with a few examples. To start POW, it is necessary to purchase hardware, but for POS, it is enough to register in the system and make a stake. On the other hand, when verifying a new block in POW, the processing power is based on it, while the share (coin) held by a person in POS is based on it. POW is more reliable, while POS is more efficient. In POW, miners who want to add blocks to the chain have to compete using computer processing power. However, there is no competition in POS because the validators are randomly selected by the algorithm.

The POS system is used by a rising number of the most popular cryptocurrencies. Let's give an example of some of the POS coins. Solana, Avalanche, Polkadot, Cardano, and Cosmos are some of them. Cardano and Solana, like Ethereum, are dedicated to delivering smart contract capability. On the other hand, Cosmos allows many blockchains to communicate with one another. If you are interested in Polkadot, Avalanche, and Solana, you can also find the blogs we have reviewed on our page.