# Chain Based Proof of Stake: Comprehensive Guide

All the Key Points...

In this blog, we will see a detailed view of Chain Based Proof-of-Stake and how it works? what are the different algorithms in it?

Proof-of-Stake (PoS) consensus model is used in blockchain networks where the more tokens you have, the higher your chances are of adding the next block of transactions to the chain and being rewarded with tokens from the network itself.

A personal stake to the overall system asset ratio determines who can add the next block of transactions to the chain based on how many tokens are held.

This algorithm uses pseudo-random selection to decide who can add the next block of transactions to the chain based on how many tokens are held.

## What is Chain-Based Proof-of-Stake?

Chain-based proof of stake (CBCPoS) is a consensus algorithm that’s designed to choose validators in a way that they always include transactions with minimal delay.

The main advantage of CBCPoS over other consensus algorithms like proof of work or delegated proof of stake is that there are no delays between blocks being created; as a result, it results in higher transaction throughput and scalability.

It has also been proven mathematically to have greater security than PoW while still retaining many of the characteristics that make it worthwhile.

This paper will cover all aspects of chain-based proof of stake including its implementation using Python3, Rholang smart contracts, and an example scenario demonstrating use cases for blockchain applications.

It will also demonstrate how chain-based proof of stake can be used in projects such as Janus an open-source public blockchain for custom applications where chain-based token staking provides vital functionality for users.

## How does it Works?

Chain-based proof of stake is more efficient than other consensus models as there are no forks caused by a network split, and a blockchain with low token distribution will naturally be more decentralized.

If you have 15% of tokens in circulation and your node controls 15% of the stake, you control 30% of total consensus significantly less than what is required for PoW or PoS systems. That means forking will not be as likely to occur.

In addition, if an attacker wishes to launch an attack on a chain-based proof of stake system they must purchase 51% of all stakes which is incredibly expensive considering that each token has value.

There are also issues surrounding collusion where miners can vote on blocks that award themselves transaction fees at lower costs (this happens quite often).

Chain-based proof of stake eliminates these problems because users must purchase shares from others who own stakes rather than trying to mine new coins themselves.

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## History of Chain Based Proof of Stake Systems

CB-POS consensus mechanism was originally proposed by Sunny King in 2012, based on peercoin’s proof of work (POW) blockchain.

Chain-based PoS uses an algorithm that chooses who can add a new block of transactions to a blockchain.

A validator is chosen at random and given an opportunity to create a block, as long as they own coins/tokens on that particular chain.

They are selected at random using a specific set of criteria and tokens; if they don’t produce a block within some time limit or have some other rules, they are replaced with another randomly selected participant.

Chain-based POS systems have since been implemented in more cryptocurrencies including PIVX and ARK.

Other than being included here as an educational reference only, chain-based proof of stake has not been formally used for any project currently open for participation.

Most projects currently implementing staking use either DPoS or CBCPOSv3 because these chains use tokens that provide special benefits when it comes to voting power.

Sunny King still occasionally works on CB-POS chains but all current implementations remain proprietary technology.

Many people believe Sunny King left chain-based POS behind in favor of delegated proof of stake (DPoS).

Which many also consider a superior model because stakeholders can simply vote out bad actors as opposed to having complex algorithms determine who should be allowed to make blocks.

## List of Chain-based Proof of Stake consensus

There are currently a few chain-based proofs of stake algorithms in production, along with one hybrid model.

It is an approach to a consensus algorithm where participants prove ownership over coins on a blockchain network and earn tokens through an asset’s block reward.

Due to its personal element, chain-based proofs ensure complete decentralization (in theory) while also solving some serious issues plaguing existing consensus models like PoW/PoS hybrids and DPoS models.

1. Delegated Proof-of-Contribution (DPoC)
2. Secure Proof of Stake (SPoS)
3. Hybrid PBFT/Aurand
4. Proof of Stake (PoS)
5. Delegated Proof of Stake (DPoS)
6. Proof of Stake Time (PoST)
7. Proof of stake Boo (PoS Boo)
8. High Interest Proof of Stake (HiPoS)
9. Asset PoS  (APoS )
10. Traditional (Tiered) Proof of Stake (TPOS)
11. Casper the Friendly Finality Gadget (FFG)
12. Correct By Construction (CBC) Casper
13. Variable Delayed Proof of Stake (vDPOS)
14. Proof of Stake Velocity
15. Magi’s Proof of Stake (mPoS)
16. Leased Proof of Stake (LPoS)
17. Delegated Proof of Importance (DPoI)
18. Leasing Proof of Stake (PoS/LPoS)

## Advantages of CBCPoS

Chain-based proof of stake (CBCPoS) is a type of algorithm that chooses who can add a block to its blockchain based on how many tokens are held by a node.

It attempts to create an alternative to traditional PoW (proof of work) by also considering how many tokens are staked at any given time.

This form of consensus is known as chain-based proof of stake because, unlike other types, it creates blocks on a single chain and not within chains or layers.

Since there’s no concept of creating separate chains, CBCPoS is great for improving transaction times but only if you have enough token holders staking their tokens regularly.

If your network isn’t large enough yet, then you’ll find yourself waiting longer for transactions to be added to each block.

## Disadvantages of CBCPoS

Two main disadvantages of chain-based Proof-of-Stake are security and vulnerability to centralization.

Because stakers must keep their wallet open in order to participate, CBCPoS is less secure than other protocols that offer anonymous or zero-knowledge proof systems.

The possibility also exists for greater centralization if rewards become high enough to incentivize large stakeholders with lots of tokens. However, through careful design, a cryptocurrency can mitigate both of these issues.

Additionally, because each validator receives block reward regardless of whether they add a block or not, network propagation attacks are possible against chain-based Proof-of-Stake; such attacks would prevent blocks from propagating to new validators and consequently increase their chances of being selected as an adding node.

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## Current Chain-based Proof of Stake Networks

Casper (Ethereum), Ouroboros (Aeternity), Algorand (Nimiq). Chain-based proof of stake is based on chain selection.

The blockchain network is secured by validators who take turns proposing and voting on blocks, following a specific set of rules.

Those with more tokens are more likely to get selected, but there’s no explicit link between staking and block creation.

Miners usually choose to include transactions that pay them a higher fee. However, chain-based proof of stake changes all that; instead of mining power, chain-based protocols require users to own a minimum amount of coins.

As such, chain-based PoS incentivizes users to run nodes because they literally have skin in the game; if someone doesn’t want to participate in consensus (i.e., run a node) then they lose their money.

## Conclusion

Chain-based proof of stake is one of two leading consensus models that determine who can add a new block to a blockchain network.

Like other proof of stake systems, chain-based proof of stake creates an incentive structure where participants are rewarded in proportion to their contributions to maintaining consensus.

Although one of several alternative cryptocurrency consensus algorithms, it’s one of two leading methods alongside hybrid proof of work/proof of stake being explored as an alternative to existing cryptocurrencies and more widely used, promising protocols.