February 5, 2023

What is proof of activity (PoA)?

What is proof of activity (PoA)?

Proof of activity is one of many algorithms used to ensure authenticity. all transactions occurring on the blockchain. Proof of Activity is a mixed approach that combines two other widely used algorithms - proof of work (PoW) and proof of ownership (PoS).

The most popular cryptocurrency, bitcoin,uses the PoW algorithm, which has an inherent feature of increasing the level of mining complexity over time. Although this method prevents spam and hacker attacks on the Bitcoin network, it leads to the fact that more and more computing power is used for mining, which in turn increases the cost of energy consumption.

Since the cost of electricity andthe equipment increases as the complexity of mining in the PoW network grows, as an alternative, the PoS algorithm has appeared, which gives the authority to mine or confirm transactions, depending on how many cryptocurrencies the user owns.

Although the PoS algorithm successfully reduces energy costs and uses cheap hardware, it contributes to the accumulation of cryptocurrency by large players.

Both PoW and PoS protect the network from 51% attack. Such an attack allows you to completely control the network, block confirmation of new transactions, stop payments between different users of the blockchain, and even cancel transactions made in the past, which can lead to the phenomenon of double spending.

Proof of Activity (PoA) presents fromitself is a hybrid of PoW and PoS algorithms and contains their best characteristics. The mining process in PoA is identical to POW mining - miners try to get ahead of each other in the calculation of the new block. When mining a new block, the system switches to POS, and the new block contains only the header and address of the miner.

Based on the header data, a newrandom group of validators who must confirm or sign a new block. The more cryptocurrencies a user owns, the more likely he is to be elected as a validator.

As soon as all validators sign the mined block, it receives the status of a complete block, is identified and added to the blockchain.

Since PoA is based on PoW and PoS, it is partiallyhas the disadvantages of both protocols. More computing power is still needed to mine the blocks at the POW stage, and whales are still more likely to get on the list of validators and accumulate more digital assets through rewards.

POA also prevents a 51% chance of attack,since it is impossible to predict who will sign blocks in the future, and competition between validators does not allow to accumulate computing power in the group.