Proof of Activity (PoA) in Blockchain

Proof of Activity (PoA) in Blockchain

4 mins read3.8K Views Comment
Updated on Dec 15, 2023 17:26 IST

Have you ever wondered what Proof of Activity is in the context of blockchain? It's a consensus mechanism that blends Proof of Work and Proof of Stake elements. In this system, mining begins using Proof of Work, but the blockchain switches to Proof of Stake for validation, ensuring enhanced security and efficiency in the network. Let's understand more!

Today, we picked up proof of Activity (PoA) in this series of learning various consensus algorithms in blockchain. In this article, you’ll learn about the workings of the PoA mechanism and its pros and cons. PoA mechanism ensures that all blocks of transactions added to the network are genuine and valid. It’s a way that helps miners get network agreement (or consensus) to add their new block. Moreover, PoA protects the blockchain network against external and internal attacks. 

Table of Content

What is Proof of Activity (PoA)?

Proof of Activity combines proof of work (PoW) and proof of Stake (PoS) mechanism. 

PoA

First, PoA uses the mining concept by proof of work, where miners have to do complex mathematical computations to prove their efforts and sincerity to the network. However, instead of mining a block of transactions, PoA allows miners to mine (or add) a blank template block with header information and mining reward address. Once this almost empty block gets mined, the mechanism switches to Proof of Stake (PoS).

Then a group of validators is picked at random. They are responsible for validating or signing the new block. Validators analyze the header information of the block and then mark it as valid or invalid. This process continues until a block receives the required number of validators (or signers).

The higher coins the network participant holds, the stronger are their chances of being picked up as a validator (or signer).

Once the group of validators signs the new block by the miners, it’s marked as a valid, complete block and gets added to the blockchain network. Finally, the transactions will be recorded on the newly added block.

At last, the mining fees/rewards are distributed among the miners and the group of validators who contributed to the mining process.

Let’s see how the proof of Activity (PoA) mechanism works step by step. 

How does the Proof of Activity (PoA) Algorithm work?

Following are the steps to the PoA algorithm.

STEP 1: Process of Mining the Block (by Miners)

Miners try to submit their almost empty block (with header information and miner’s reward address) by solving a complex mathematical puzzle (finding the correct nonce and block hash)—similar to PoW.

Proof-of-Work (PoW) in Blockchain
Proof-of-Work (PoW) in Blockchain
Proof of Work (PoW) in the blockchain is a consensus mechanism that lets miners add a new block to the network based on the computation done to find the perfect...read more
example

Once the miners submit their nearly blank blocks, the consensus approach switches from PoW to the PoS mechanism.

STEP 2: Process of Signing the Block (by Validators)

This step uses the concepts of the Proof of Stake (PoS) mechanism for using network validators. However, here validators and miners are separate entities. 

A group of network participants called validators (or signers) verifies the block submitted by the miners. These network validators are selected based on their coins in the network. The higher the coins held by a validator, the greater the chances of getting their signed block chosen.

Validators analyze the header information and miners’ reward address of the block and then mark it as signed or unsigned. 

Note: The process of signing continues until a block receives the required number of signs on their block by the validators. 

STEP 3: Adding transactions

Once a block gets signed by the required number of validators. It marks a valid and complete block. Afterwards, new transactions from the transaction pool add to the block. Finally, the block gets added to the blockchain network. 

The mining reward is distributed among the winning block’s miner and the validators for their contribution to the network.

 

Decred (D-Cred) is the best-known cryptocurrency that utilizes proof of activity. 

image

Benefits of Proof of Activity (PoA)

Following are the advantages of the Proof of Activity mechanism:

  • PoA combines to utilize PoW’s hashing system and PoS’s digital signing.
  • It highly reduces the probability of a 51% attack on the network.
  • Maintains the difficulty level to protect the network.
  • PoA has high fault tolerance as the whole system will never shut down completely.
  • Provide earning opportunities to both miners and network validators.

Limitations of Proof of Activity (PoA)

Following are the disadvantages of the Proof of Activity mechanism:

  • High energy consumption for mining blocks.
  • Due to massive computation, the mining process takes a lot of time.
  • Requires expensive hardware for computation.
  • There’s nothing at stake from both miners and validators leading to internal conflicts and a bad reputation.
  • The number of validators could be less due to a lack of interest.

Conclusion

In the above article, we discussed proof of Activity in blockchain technology. We covered the workings of the PoA mechanism along with its pros and cons. As PoA combines PoW and PoS, we showed how and when to use them.

Proof-of-Work (PoW) in Blockchain
Proof-of-Work (PoW) in Blockchain
Proof of Work (PoW) in the blockchain is a consensus mechanism that lets miners add a new block to the network based on the computation done to find the perfect...read more

Proof-of-Stake (PoS) in Blockchain
Proof-of-Stake (PoS) in Blockchain
Proof-of-stake is a consensus mechanism used to decide the next global change in the network. It uses a staking mechanism where participants lock up some of their coins to get...read more

Proof of Burn (PoB) in Blockchain
Proof of Burn (PoB) in Blockchain
Proof of Burn in the blockchain is a consensus algorithm that allows miners to add their block by sending some of their coins to an unspendable account. Proof of Burn...read more

Proof of Capacity (PoC) in Blockchain
Proof of Capacity (PoC) in Blockchain
Proof of Capacity in blockchain is an alternative solution to the problems by proof of work and proof of stake. It uses the storage capacity for mining a block in...read more

Proof of Importance (PoI) in Blockchain
Proof of Importance (PoI) in Blockchain
Proof of Importance (PoI) in blockchain sets new standards for network participants or coin hoarders to become eligible for harvesting a new block of transactions in the network. It rewards...read more

Proof of Elapsed Time (PoET) in Blockchain
Proof of Elapsed Time (PoET) in Blockchain
Proof of Elapsed Time in blockchain uses a time-lottery-based consensus mechanism, distributing wait time to each participating node in the network. Proof of Elapsed Time in blockchain uses a time-lottery-based consensus...read more

FAQs

What is a 51% attack on a network?

A 51% attack means gaining at least 51% of the computation power of the whole network (in the case of PoW). Else gaining 51% of staked coins in the network (in the case of PoS).

What is the Consensus Mechanism?

The consensus mechanism helps network participants decide the following global change (like adding a new block of transactions) in the network.

What is proof of work (PoW)?

Proof of Work (PoW) in the blockchain is a consensus mechanism that lets miners add a new block to the network based on the computation done to find the perfect hash.

What is proof of stake (PoS)?

Proof of stake is a consensus mechanism used to decide the next global change in the network. It uses a staking mechanism where participants lock up some of their coins to get selected.

About the Author

This is a collection of insightful articles from domain experts in the fields of Cloud Computing, DevOps, AWS, Data Science, Machine Learning, AI, and Natural Language Processing. The range of topics caters to upski... Read Full Bio