As we all know that blockchain technology is developing day by day and new blockchains with unique and more advanced features are starting to appear. There are a number of consensus algorithms on which various blockchains are based.
The mechanisms that are widely used today are Proof-of-Stake (PoS) and Proof-of-Work (PoW). But blockchain developers are working hard to introduce different and more advanced consensus mechanisms. One such mechanism is the Leased Proof-of-Stake mechanism used by the Waves platform.
Leased Proof-of-Stake (LPoS) |
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The Leased Proof-of-Stake mechanism, abbreviated as LPoS, is a consensus mechanism used by the Waves platform, blockchain-based exchange, and token development platform.
Leased Proof-of-Stake is an extension of the Proof-of-Stake mechanism. In PoS, investors stake their respective tokens and can act as a node to validate transactions and blocks. But Leased Proof-of-Stake is something different from a PoS mechanism.
Leased Proof-of-Stake, as the name suggests, is a consensus mechanism by which investors can lease their crypto assets (tokens) to validator nodes that use these tokens to continue transactions carried out on the platform.
Here, leasing means giving tokens to a particular node operator for rent and getting a percentage of the tokens earned as a reward.
In LPoS, investors can stake tokens and lease them to node operators and when these tokens are used by nodes for mining purposes, profits will be transferred to tenants (token givers).
When a tenant leases multiple tokens to a node, it does not mean that the tokens are transferred to the node address, but these tokens remain in the tenant's wallet and the tenant has full control over them.
Rewards given to tenants can be in the form of WAVE tokens or other tokens that can be run on the platform.
It is very important to choose a node that can reward tenants with high profits, because there are different node operators that provide different percentage of rewards.
The rent from the lessee also depends on the amount rented from the investor. The more the amount rented, the more reward is given to the tenant as profit.
Tenants can cancel the lease whenever they want as they have full control over the tokens rented.
I repeat that the selection of node operators to lease tokens is a very important factor to get more profit.
The more transactions made by the node, the more rewards for the tenant. And node operators are rewarded with mining rewards. In this way, both bodies can make a profit.
The Waves platform uses this consensus mechanism to improve network scalability (increases on-chain scalability rather than lightning techniques).
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@dani0661
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This is a great write up shows how investors lease their tokens to node operators
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I'm learning about leased proof of stake for the first time. Your post is educative. Thanks for sharing.
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Thank's
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This is an amazing article. Thank you so much for sharing
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Thank's
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