Leased Proof of Stake (LPoS) Definition
Leased Proof of Stake (LPoS) is an enhanced variation of the proof of stake (PoS) consensus algorithm, which allows coin holders to lease or “pool” their computational power to other nodes, thereby increasing the nodes’ likelihood of validating blocks and earning rewards. This innovative model intends to foster decentralized system and community participation on a broader scale.
Leased Proof of Stake (LPoS) Key Points
- LPoS is a modification of the proof of stake (PoS) consensus algorithm.
- In LPoS, stakeholders can lease their coins to a full node, increasing the node’s weight in the staking process.
- Leasing does not involve the transfer of ownership of the coins.
- LPoS encourages wider network participation, enhancing the security and decentralization of the blockchain network.
- Higher staking power leads to a higher chance of validating a block and earning rewards.
What is Leased Proof of Stake (LPoS)?
The Leased Proof of Stake (LPoS) is a unique model where stakeholders can lease their coins to full nodes (usually those continually connected to the network) and thereby participate indirectly in the block validation process. The leasers do not lose control or ownership of their coins. This novel staking approach allows participants to earn profits from their coin holdings without needing to operate a full node.
Why is Leased Proof of Stake (LPoS) important?
LPoS is significant as it provides more inclusivity and flexibility for participants in the blockchain network. It allows smaller coin holders, who do not possess the requisite resources to operate a full node, to share profits from the staking process. In turn, it contributes to a more decentralized network and promotes democratic participation.
How does Leased Proof of Stake (LPoS) work?
In LPoS, holders can ‘lease’ their stakes to a reputable node operator who is always online, a requirement for maximizing profits. It doesn’t mean giving away the stakes, rather providing the representative nodes more power to validate and forge blocks. The rewards gained through this process are later split among the stakeholders, according to the proportion of their leased stakes.
Who uses Leased Proof of Stake (LPoS)?
The LPoS system is particularly beneficial for coin holders who do not have enough coins or resources to become a profitable staker individually. By pooling their coins, they can partake in the block validation process and also share in the resultant staking rewards. Cryptocurrency networks and Blockchain projects such as Waves and Neo have adopted this method.
When was Leased Proof of Stake (LPoS) introduced?
Leased Proof of Stake (LPoS) emerged as a refinement of the traditional PoS mechanism, to engage a more extensive user base in the blockchain decision-making process. The Waves platform first introduced it in 2016 as part of its blockchain protocol to aid smaller stakeholders.
Where is Leased Proof of Stake (LPoS) used?
Because of its innovative nature in escalating public blockchain security and engagement, LPoS is applied in various scalable public blockchain networks. Waves, one of the top blockchain protocols, implemented LPoS to enhance its network security, efficacy, and democratized participation.
