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What is Proof of Authority (PoA)?

What is Proof of Authority (PoA)? How the PoA algorithm works

What is Proof of Authority (PoA)? What problem does PoA algorithm help solve in Blockchain? What are the advantages and limitations of this algorithm?

In addition to familiar algorithms such as Proof of Work and Proof of Stake, there are a number of other consensus algorithms that offer alternative methods to reach consensus in blockchain system.

In this article, we will find out about proof of authority (Proof of Authority, PoA), application, pros & cons of PoA.

What is Proof of Authority (PoA)?

PoA stands for Proof of Authority, or Proof of Authorization, which is a reputation-based consensus algorithm that offers a practical and efficient solution for blockchains. The term was coined by the co-founder and former CTO of Ethereum, Gavin Wood, in 2017.

Proof of Authority is a variation of the Proof of Stake consensus mechanism, in which the algorithm values the identity & reputation of the participants, not the value of the tokens they hold.

The Proof of Authority model is based on a limited number of validators, and this makes it an easily scalable model.

Blocks and transactions are validated by approved participants who act as the moderators of the system.

What problem does Proof of Authority (PoA) solve?

In the context of Proof of Work being so profitable and expensive, Proof of Stake algorithms emerged as one of the popular alternatives to PoW. The strength of PoS is clear:

  • PoS provides a stronger financial incentive for validators to operate.
  • PoS does not require a lot of computational effort and specialized equipment.
  • PoS also opens the door for sharding, making the blockchain network more scalable in the future.

With all these advantages, it is no surprise that Ethereum, the second most popular blockchain network in the world, is currently in the process of transitioning from Proof of Work to Proof of Stake. However, PoS also has a significant drawback.

PoS works on the assumption that those who have tokens staked in the network will be incentivized to act for the benefit of the network, otherwise, they risk losing their share of the token.

So it seems reasonable to assume that the larger a person’s staked tokens, the more motivated they are to take care of the network’s success.

However, this assumption does not take into account that although identical shares may be of equal value from a monetary point of view, they may not be valued equally by the holder.

This is what Proof of Authority aims to improve. The idea behind the PoA algorithm is that instead of focusing on the economic value of the token, network participants determine their identity.

Validators in the PoA system are known entities, they stake their “reputation” on top to have the right to validate blocks.

This modification to the PoS model eliminates the need to consider currency spreads between validators and ensures that all network participants are equally motivated to work for the success of the network. their network.

Advantages and limitations of PoA compared to PoW, PoS

The identity verification requirement makes PoA impractical for public blockchains like Bitcoin and Ethereum, which have hundreds or even thousands of validator nodes.

That is why PoA networks often have fewer validator nodes, which makes them less decentralized. On the plus side, they are also capable of providing higher throughput.

Like PoS, Proof of Authority does not require excessive computational effort and specialized equipment.

Additionally, PoA networks typically only accept entities with longstanding reputations as their validators, meaning that achieving that role is often beyond the reach of the average person.

PoW, PoS, or PoA all have their own strengths and weaknesses.

We know that decentralization is a highly valued property in the crypto community, and that PoA is a consensus mechanism that sacrifices decentralization in exchange for high performance and scalability.

However, PoA is still an interesting approach that cannot be ignored, and is seen as a suitable new blockchain solution for blockchain applications that do not prioritize decentralization.

Blockchains using PoA  algorithm

Exchange Chains is one of the application cases using Proof of Authority.

Exchange chains do not prioritize decentralization, they need an easy to scale blockchain ecosystem to expand the exchange ecosystem & use cases for the project’s native token.

One of the very successful blockchain PoA is Binance Smart Chain. After its launch, BSC quickly attracted many users, projects and witnessed a significant growth in BSC’s on-chain data.

In addition to BSC, we have countless other Exchange chains like HECO, OKExChain, Gatechain, Cronos,… And without exception, all of them have PoA consensus algorithm. Personally, I think that Exchange chains & PoA will still develop in the future and be a piece in the Multi-chain picture.


Thus, we have learned what Proof of Authority (PoA) is, its applications, advantages and limitations. If you have other questions related to the above topic, please comment below for Idolmeta.net to support right away!



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