Proof of Staked Authority (PoSA) Meaning

Jan 2, 2024 | Updated Mar 13, 2024

Proof of Staked Authority is the amalgamation of proof of stake and proof of authority consensus mechanisms.

What is Proof of Staked Authority(PoSA)?

Proof of Staked Authority (PoSA) is a consensus mechanism that combines the elements of proof of stake (PoS) and proof of authority (PoA) consensus mechanisms. This hybrid algorithm facilitates faster block times and reduced transaction costs but at the expense of decentralization.

PoSA is mainly used by BNB Chain, previously known as Binance Smart Chain. It was designed to minimize the shortcomings and weaknesses of both PoS and PoA algorithms while leveraging their inherent strengths, such as scalability, security, and low transaction costs.

So, how exactly is PoSA related to PoS and PoA algorithms?

Proof of Stake (PoS) is a consensus algorithm used by blockchain networks that select validators based on their cryptocurrency holdings in the network to create and confirm blocks. Proof of Authority (PoA) is a modification of PoS, where validators stake their reputation or identity rather than the network’s native token.

Since PoSA merges these two algorithms, it inherits their key factors for validation – economic stake and reputation or authority (such as past performance or community recognition). For a participant to be preapproved as a validator in a PoSA network, the participant has to stake a specific amount of crypto and be recognized as a trusted node within the network. Technically, a central authority, like in PoA networks, is in charge of picking the validators. When validators propose a valid block, they are compensated using transaction fees.

PoS Vs PoSA

In PoS, participants with substantial holdings are likely to be selected as validators. This is disadvantageous to smaller stakeholders. On the contrary, all PoSA validators typically stake the same amount of tokens, facilitating a more balanced validation participation. It ensures that the validators are invested in the network’s success without giving much advantage to large stakeholders.

In addition, the amalgamation of PoS and PoA makes block creation in PoSA systems faster than in PoS networks. For instance, the average block time for Ethereum (PoS network) is 15 seconds while the block time in BNB Chain (PoSA network) is 3 seconds.