Consensus is one of the foundational elements of the blockchain architecture, and it has a major influence on how the blockchain performs. From an outside view, most people not familiar with blockchain probably think of crypto mining as a core activity of all blockchain, even though it is just a single step in one of many consensus protocols used today.
One thing the Web3 industry is well known for is its incredibly rapid innovation. And because of that, we’ve seen a major exploration of consensus methods. Many have been proposed, developed, and introduced, and the strongest have seen growth in blockchains. Each method has its strengths and weaknesses, and some are designed with a particular use case in mind. As the industry itself has grown, it has also become clear that performance for these consensus methods is key, and only the strong will survive. Let’s look at the leading methods and what they offer for the growth of the Web3 industry.
What is consensus performance?
Before we list any methods, we have to understand that “performance” is more than just speed. To be effective, performance must take into account several critical elements. Security is paramount, as a compromised blockchain is worse than none at all. Decentralization is important, in part for security but also to support the other core benefits of blockchain as a whole. Speed is indeed important, and part of this speed must also include speed with efficiency (low energy usage, low processing) and scalability (able to handle mass adoption). Related to this is the ease with which we can implement a consensus method, and whether we can use it for different use cases. The method must be robust, and able to handle inevitable faults that will occur in any decentralized system. And the method must be embraced by the community it supports, including how the participants are incentivized.
Based on these criteria, there are a handful of consensus methods that stand out. They might not check all the boxes, but they excel at many of them (and we will talk about their shortcomings). The standard bearers of the industry, Proof of Work (PoW) and Proof of Stake (PoS) are still widely used because they work well. The leading users here are Bitcoin (PoW) and Ethereum (PoS). Elected democracy models like Delegated Proof of Stake (DPoS) push the accelerator to gain speed and efficiency over PoS, with some potential risks. Platforms like EOS have used DPoS to create ultra-fast transaction speeds. Cutting-edge methods, such as Byzantine Fault Tolerance (BFT), create an impressive ruggedness that allows wide decentralization without sacrificing speed or security and is highly resistant to attack. Because it is cutting edge, there is active exploration taking BFT in different directions, but the fastest performance is likely with Supra’s Moonshot family of BFT-based protocols. Finally, specialty protocols that focus on a particular niche, such as Proof of Space and Time (PoST), work well with architectures that are heavily focused on user adoption (anyone with a computer can join) and minimizing energy usage. Chia is a good example of this.
Let’s explore each category to discuss the pros and cons, and what place it might hold in the future of the blockchain industry.
Standard bearers and elected democracy
Proof of Work and Proof of Stake has had years to explore ways to become more efficient, scalable, durable, and accessible. How have they done? While PoW is still around, it is primarily because it is the engine driving the Bitcoin phenomenon, and there is far too much value in that system for anything to change and risk affecting it. Is PoW fast? No. Is it efficient? Quite the opposite. But is it secure, and does it keep pumping out blocks? Yes. And because Bitcoin as a cryptocurrency is so incredibly valuable, this isn’t likely to change. On the other hand, this is the same reason Ethereum 2.0 switched to PoS. It created massive improvements to speed and scalability, and because Ethereum’s goal was to use the network to transact information across an entire ecosystem, this was key. Without major compromises in security, PoS allowed the Ethereum ecosystem to maintain its legendary status and in fact, accelerate growth once gas fees dropped considerably and scalability increased. PoS allowed this to happen, and many other chains still use it as a result. That said, it has proven to be fallible, and various attacks on PoS chains have been successful, resulting in major losses and damaged communities. For those chains who have the desire to speed up their network even more, the Delegated Proof of Stake attempts to strike the balance between the decentralization of PoS while allowing a necessary amount of controlled centralization, mimicking an elected democracy where those staking can elect delegates to act in their place, creating a smaller group of (hopefully) trustworthy individuals who can run the consensus tasks more quickly. This can be very effective, although just like an elected democracy, there is a risk of corruption as elements of centralization are allowed in.
Cutting edge exploration
The newest research is always exciting to see, and in the case of Byzantine Fault Tolerance, the foundation is built from older mathematical principles. This has made a strong leap in maintaining the strength and speed of PoS while building surprisingly robust protection both against concerted attacks and general issues that can occur in a distributed system. With BFT it can be developed further, and with Supra’s Moonshot protocols, some variations emphasize different features. The solutions are very complex, and their description alone would fill up a whitepaper (and have, here). One of the boosts Supra uses with their BFT is “Optimistic Proposal”. At a very high level, this means that instead of waiting for verification at certain steps, validators assume that the system is behaving as it should and moving forward, saving significant time. The system has safeguards in place to catch when the system is having an issue and needs correction, but the “optimistic” assumption creates a more efficient network without compromising security. Expect to see much more from BFT as different platforms explore its different use cases.
Our Moonshot Consensus protocol is already the new gold standard in protocol security. Here’s why.👇
The Problem – No amount of testing or rounds of code review can guarantee the absence of protocol logic flaws. Only a full formal verification can provide such an assurance.
— Supra (@SUPRA_Labs) March 27, 2024
Niche focus
There are many different niche focus areas, but a key consensus method is the Proof of Space and Time. This method is interesting because it is the only Nakamoto consensus algorithm since Proof of Work, and it is in many ways the opposite of PoW. Instead of requiring massive resources to use, PoST requires only a computer with some spare capacity and a connection to the internet. With a well-developed consensus method, the software can make use of anyone’s computer who would like to participate, without their having to have a particular level of hardware, and indeed without their needing any technical proficiency. This solution is elegant because while it may not create the fastest speeds or the best-performing network, it can fully utilize resources that are sitting dormant, and must be efficient enough to work on most computers (so it uses little energy overall). This fits well within a niche that is either environmentally focused, focused on adoption from a non-technical audience, or for things like charities where the “space and time” is donated for a good cause.
Wrapping up
Consensus methods push the Web3 industry forward, and their continued innovation helps us move toward these grand visions of mass adoption, ultra-fast transaction speeds, and a fully reliable (and transparent) system that is incorporated into our daily lives. By studying what has worked best and what will likely lead to the near future, we can better understand where Web3 is headed.
Featured image credit: Arnaud Jaegers / Unsplash
