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Staking, Consensus and the Pursuit of Decentralization

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This is quite similar to a “bonded proof-of-stake” system, which Ethereum 2.0 plans to adopt, in which users must actively lock up their assets to stake, receive proportional voting power, and endure “slashing” penalties if they vote against consensus. Finally, there are the hybrid models like Tezo’s “liquid proof-of-stake,” which allows users to delegate their voting and staking rights or exercise those themselves, and like Decred’s “hybrid proof-of-stake” model, which combines elements of PoS and PoW with miners proposing blocks and token stakers acting as validators.

In the early days of PoS implementation, there were two primary objections to the mechanism vs. PoW that revolved around the fact that stakers did not actually have anything at stake (the “nothing-at-stake” problem), which meant they could support an alternate version of the blockchain at no cost (the “long-range attack” problem). In the wild, perhaps the most widespread practical problem of PoS systems is actually shared with PoW systems: a consolidation of power and capital to a limited number of major players and a feedback loop allowing those with the most power to gain more.

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