Proof-of-Activity (PoA) is defined as a blockchain consensus algorithm that doesn’t only ensure that transactions are genuine but also ensures that miners reach a consensus. It is a combination of PoW and PoS. Decred (DCR) is an autonomous cryptocurrency who use PoA.

Although the spamming and hacking on a blockchain network are prevented with the help of PoW, the difficulty is increased in cryptocurrency mining as time passes by.

What’s Required In PoW:

  1. A large amount of computing power is required. Electricity consumption costs are more.
  2. New-age mining hardware devices are required. They are expensive.
  3. The effective work contribution to a blockchain network is required for the validation of transactions.

PoS emerged as another choice as the electricity and hardware costs increased with the difficulty increasing in cryptocurrency mining. Cryptocurrency mining in PoS depends upon the amount of a cryptocurrency a node holds. Reducing the electricity bills and using low-cost hardware are the two purposes of PoS. Crypto coin hoarding is promoted in PoS, but crypto coin spending is not promoted here. The chance of a 51% attack isn’t only prevented by PoW, but also prevented by PoS. 

*Proof-of-Activity (PoA) tries to bring the best of PoW and PoS. 

How PoA Works:

  1. The starting of a PoA mining process is just like a PoW mining process. Miners in the blockchain network will try to solve a mathematical equation or mine a new block with more computing power. When the new block is mined, the system will be directed into PoS. The new block will contain a header and the reward address of the first miner.
  2. A group of validators will be selected randomly for validating or signing the new block. The new block will be validated or signed by taking the details of the header into consideration.
  3. If a validator holds more crypto coins, then he will have the more chance of getting selected as a signer. If the group of validators signs the new block, then the status of a complete block will be gained.
  4. The new block will get identified. It will be added to the existing blockchain. The transactions of the new block will be recorded.
  5. If the selected signers are not present for signing the new block, then the process will be moved to the next winning block where a new group of random validators will be selected depending on the amount of the cryptocurrency they have. If a winning block doesn’t receive the required number of signers and gain the status of a complete block, then the process will be continued.
  6. The first miner and the various validators who has contributed to the new block will be rewarded.

PoW is criticized for the partial use of PoW and PoS. Although a large amount of energy is required in the PoW stage, the more chance of getting selected as signers and gaining more rewards is still there. The chance of a 51% attack is also prevented in Proof-of-Activity (PoA).

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