Applicature, a boutique blockchain agency with presence in the US and Europe, has launched its proof-of-stake consensus protocol on Ethereum to secure, stabilize and improve transactions in multiple industries: banking, supply chain, marketing including loyalty systems .
It was developed in the fall-winter period 2017-2018 and is ready for testing. Due to the high demand from customers and the already existing PoW, which was not always suitable for certain tasks, Applicture decided to develop its own AEPoS (Applicature Ethereun Proof of Stake Consensus Protocol).
Proof of commitment
Proof of Stake (PoS) is the blockchain consensus and reward algorithm that distributes rewards according to the declared economic interest in the game, for example by holding the digital assets. Such a declared interest is called participation.
Main differences between PoW and PoS
Proof of Work (PoW) is all about mining. To get a reward, you have to solve a hard block algorithm (puzzle). Solving the block is called mining. All blocks must be verified by mining. This means that the miners have to use a lot of computing power to validate transactions to solve the puzzle. The amount of the reward depends on how fast you do the math. To solve the puzzle faster, the miners have to invest in new hardware and it burns tons of energy. When the block is resolved, it is added to the public blockchain. More miners mean more security.
PoW includes the following steps:
1) Mining process to validate transactions
2) Miners are rewarded for solving the block
3) The block is added to the blockchain
In Proof of Stake you have to put a block on it for mining, a certain amount of coins that cannot be used for future use for several days. This ensures that no one can take control of the network by breaking down blocks one by one. At the moment the stake size is equal to the total coin age the user owns, but there are plans to implement an option for a miner to indicate the stake size.
Miner of the block is decided with a partially stochastic procedure. But the bigger the stake, the higher the chance of breaking a block.
As the age of coins increases over time, there is a minimum limit to how long potential miners must keep coins in order to be successful in mining. This feature does not allow to use pure PoS without distributing the initial funds to some nodes. Starting funds can be assigned a specific coin age to stimulate the mining of the blocks from the start.
Likewise, the upper limit for the growth of the coin age is set in order to make the mining process fairer and more decentralized.
Benefits of PoS
1) PoS is much more environmentally friendly, you don’t have to invest in multiple hardware to solve puzzles, which saves energy resources
2) Resistance to 51% attacks
Ethereum and Proof-of-Stake approach
The Ethereum platform plans to move to a hybrid PoS approach. Since Ethereum was used as the basic blockchain platform, all the usual perks of Ethereum are also available here. Peercoin PoS-PoW, on the other hand, has a stable work history of several years, based on the approach to PoS. The core of Peercoin PoS lies in the concept of Coin Age, which is the value that a person accumulates when they hold onto their coins. At the same time, the implementation of Peercoin has many distinctive features in terms of its design decisions and the need to use hybrid algorithms.
The application team says:
“Our implementation is an application of the Coin Age concept to the Ethereum platform and should be viewed as a pure PoS implementation that is adapted to the rules of Ethereum. According to our information, Ethereum has not yet been used for a pure PoS implementation. You don’t have to solve a puzzle in Application Ethereum Proof of Stake. Instead of proving how fast you can do calculations, you need to prove how much ETH you own. These are so-called masternodes. When you create a masternode, you lock a certain amount of Ethereum to prove you have it. “
Peercoin as a hybrid of PoW-PoS
Application Ethereum PoS is an adaptation of Peercoin PoS. While Peercoin is a hybrid PoS-PoW blockchain, it is designed to rely more heavily on PoW at the beginning of the blockchain and gradually increase the number of PoS blocks.
PoS is a general approach that can be implemented in very different ways. The Ethereum platform plans to move to a hybrid PoS approach. Peercoin PoS-PoW, on the other hand, has a stable work history of several years, based on the approach to PoS. The core of Peercoin PoS is the concept of coin age, which is the value that a person accumulates while holding on to their coins. At the same time, the implementation of Peercoin has many peculiarities in terms of its design decisions and the need for the hybrid algorithmic approach.
The proof of stake makes sense in areas where high demands are placed on energy efficiency and fairness. In PoS there are no competitions for computing resources. You don’t have to solve a puzzle to be rewarded. An owner of the higher stake receives a block fee reward. It can be useful in the following industries:
- Supply chain
- Loyalty systems