Overview of PoS Validators
In the realm of blockchain technology, validators are the linchpins of proof-of-stake (PoS) networks, tasked with the critical functions of verifying and appending new transactions to the blockchain. Unlike proof-of-work (PoW) systems that rely on computational power for validation, PoS validators secure the network through cryptocurrency staking, a process where validators lock up a portion of their holdings as a form of security deposit. This mechanism not only ensures the fidelity and security of the blockchain but also facilitates a more energy-efficient alternative to the computationally intensive PoW model.
Role of Validators
Validators are integral to the consensus mechanism of PoS blockchains, ensuring the integrity and security of the network by verifying transactions and blocks. They participate in the consensus protocol by casting votes, which are validated through cryptographic signatures. Validators must run a full node, remain actively online, and safeguard their private keys to prevent security breaches. Additionally, they play a pivotal role in the governance of the blockchain, with an obligation to vote on all proposals, thereby influencing the future direction of the network.
Becoming a Validator
To become a validator, an individual must stake a predetermined amount of the blockchain’s native cryptocurrency. This staking acts as both a qualification for participation and a deterrent against malicious actions. If a validator acts against the network’s interest or fails in their duties, they risk having their stake slashed as a penalty.
For exmaple, on Ethereum, the minimum stake is 32 $ETH. Whereas for Cosmos chains, rather than a minimum stake amount, there’s a cap on the total number of active validators per chain, with the validators that have the largest staked amounts being those in the “active set.”
These are just two examples, with plenty of others currently in use, and with new methods and uses for validators being developed every year.
Responsibilities and Duties
Validators are expected to be vigilant and active contributors to the network’s wellbeing. They must keep their software up to date, maintain continuous operation of their servers, and participate in governance by voting on proposals. Failure to vote can result in penalties, emphasizing the importance of active participation in network governance.
Exiting the System
Validators can choose to exit the system by unstaking their cryptocurrency. However, to ensure accountability, a withdrawal period is enforced, allowing time for any fraudulent activity to be identified and penalized.
Proof of Stake Explained
PoS allows cryptocurrency holders to stake their coins to create validator nodes, which are then eligible to verify transactions. The selection of validators to process transactions is typically randomized but influenced by the size of their stake and other factors, such as the duration of staking. This process not only secures the network but also rewards validators with transaction fees or new coins, incentivizing participation and investment in the network’s health.
“Mining” Power in PoS
In many PoS systems, the probability of being selected to validate transactions correlates with the amount of cryptocurrency staked. This model encourages the formation of staking pools, where individuals combine their staking power to increase their chances of being selected as validators, sharing in the rewards proportionally.
Staking with Validators in Cosmos
The Cosmos Hub and the Cosmos SDK were one of the first pioneers of the concept of Proof of Stake, and by extension all Cosmos SDK built chains, including Celestia, Dymension, Osmosis, Injective, BNB Chain, and many others, are operate on the proof of stake model.
For Cosmos SDK chains, there is a crucial counterpart to validators in the PoS equation.
Delegators.
This is you in most cases. For Cosmos chains, it’s not only validators that are able to stake tokens to secure the network and earn rewards, any holder of the token is able to as well. Users can stake their native cosmos tokens with validators of their choosing on those token’s home chains, meaning $ATOM on the Cosmos Hub, $OSMO on Osmosis, etc.
Staking your tokens with validators in primarily handled in your wallet of chose, although many other third party tools and interfaces do exist, some that even add features like automatic restaking to compound your rewards while you sleep!
PoS vs. PoW
The fundamental difference between PoS and PoW lies in their approach to achieving consensus and security. PoW relies on computational power to solve complex puzzles, which consumes significant energy. In contrast, PoS achieves consensus through staking, drastically reducing energy consumption and offering a more sustainable and scalable model.
Understanding PoS
PoS is a consensus mechanism that selects validators based on the amount of cryptocurrency they stake. It was introduced as an energy-efficient alternative to PoW, with validators chosen randomly or through various selection criteria, including the size of their stake and the length of time it has been staked.
Security and Efficiency
PoS is considered more secure against attacks, such as the 51% attack, because it makes such attacks less economically viable. Validators have a vested interest in maintaining network integrity due to their staked assets. Furthermore, PoS significantly reduces energy consumption compared to PoW, addressing one of the major criticisms of blockchain technology.