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Proof-of-Stake Overview

A consensus protocol ensures that every transaction is replicated and recorded in all the machines in the network in the same order. This is critical for an autonomous entity like a blockchain, because even slight differences in information on a single node could have significant consequences in terms of network desynchronization.

There are several approaches to achieving consensus or "agreement", the most well-known of which is probably proof-of-work (PoW), which is used by Bitcoin and many other cryptocurrencies. In a proof-of-work consensus, one node on the network solves a difficult cryptographical problem and wins the right to add the text block to the chain, which will typically include a financial bonus for the winning node, called a block reward.

The Kowala Protocol utilises an approach called proof-of-stake (PoS), which is designed to be lighter and faster than proof-of-work. In a proof-of-stake consensus, a number of known, stake-holding nodes take turns to propose the next block in the chain. Depending on the implementation, the block reward can be allocated entirely to the proposing node or shared between one of more of the stakeholing nodes.

In this section of the documentation we will look at a special category of consensus protocols, proof-of-stake protocols, and describe Kowala's approach to the problem. We'll also go into detail on the main properties of the project elements related to the consensus protocol. This module is heavily based on the work of Ethan Buchman as well as on other resources provided by the Tendermint/Cosmos team and resources provided by the Ethereum project.

Understanding Proof-of-Stake

This section is broken down into several parts:

  1. In Kowala Protocol we introduce the project's protocol and include a breakdown of how the Kowala Protocol consensus differs from other implementations like Tendermint.
  2. In Proof-of-Stake Pitfalls, we're going to go through the major obstacles of implementing a PoS system.
  3. The Network Safety section outlines the faults that could be potentially expected and how we cope with them.
  4. Finally, the Algorithm section details the actual process of achieving consensus, and includes a breakdown of how the Kowala Protocol consensus differs from other implementations like Tendermint.

It might also be worth referring to the glossary.