@ChrissCrypto 24 July 2020 more from that month

A Complete Guide to Leased Proof-of-Stake (LPoS)

**A consensus algorithm is one of the significant pillars of blockchain technology**. **Proof-of-Work** **(PoW), developed by Satoshi Nakamoto in 2008**, was **the first consensus mechanism**. In essence, nodes compete against each other to validate a transaction on the network and get rewarded. PoW is used in Bitcoin and Ethereum. https://www.investopedia.com/terms/p/proof-work.asp#:~:text=Proof%20of%20work%20describes%20a,launching%20denial%20of%20service%20attacks. **Proof-of-Stake** **was developed later as a solution to PoW challenges**, including time consumption and high power consumption. PoW uses an algorithm to randomly pick the validator of a transaction from a pool of nodes. The higher the stake, the higher the chances of being selected. This article is about one of the versions of PoS - Leased Proof-of-Stake (LPoS). https://www.investopedia.com/terms/p/proof-stake-pos.asp#:~:text=Proof%20of%20Stake%20(PoS)%20concept,power%20he%20or%20she%20has.   What is Leased Proof-of-Stake? **Leased Proof of stake (LPoS) is a modified version of Proof-of-Stake (PoS)**. **It allows users to lease out their stake to miners. Mining nodes**, **in return**, **share a part of their earnings with the leaser**. **LPoS is a new way to make a profit from mining without having to mine yourself**. **The** **Waves platform** **currently supports LPoS**. Unlike regular PoS that requires that a node holds a certain amount of coins to mine a block, all LPoS nodes can participate in mining by leasing their Waves to full nodes in what is called Account-Leasing. https://wavesprotocol.org/   How It Works **In Waves**, **only full nodes can validate transactions**. The platform's ***lite users*** **can't hold a full node**. Validators are picked from full node owners based on their stake. To participate in mining, a lite user can choose to shift to a full node or help a full node owner get selected as a validator by leasing them WAVES tokens. LPoS involves two main types of transactions: ***Lease transaction*** – it activates the leasing process. The token holder initiates a Lease transaction, specifies the node address (recipient address), and the number of funds to lease. ***Lease cancel transaction*** – stops the leasing process.   Features of LPoS **Balance Leasing** LPoS allows users to passively make a profit by leasing coins from their wallets or other cold storage to miners. **Fixed Tokens** Mining in LPoS doesn't add any tokens to the network. **Tokens are fixed and leasable**. Leased tokens are locked in leasers’ accounts; therefore, they cannot be traded or transferred unless the leaser stops the leasing. **Decentralized** **Most blockchains give incentives to users who join a mining pool creating a centralized system**. **In LPoS**, however, **rewards are linearly distributed based on the amount of stake; hence no mining pool required**. Besides, leasing follows a **P2P protocol** to ensure no third-party involvement. https://academy.binance.com/blockchain/peer-to-peer-networks-explained **Transaction Fee As Rewards** **Miners in LPoS receive transaction fees as a reward for processed blocks** contrary to block rewards given in most blockchains.   Benefits of Leased Proof-of-Stake **Validate With Less Stake** **In a PoS network**, t**he validators are picked based on their stake**. That may challenge the fairness of the system where some nodes are chosen repeatedly. **With LPoS**, **you can boost your chances of being picked by accepting a lease from other users**. **Earn with Fewer Tokens** **LPoS allows minor token holders to earn by leasing their limited tokens to full node owners**. Token holders get a percentage from the profit generated by the full node. **Control Over Funds** **Leased tokens are locked in the leaser's wallet**. They can neither be traded nor transferred. While the leaser can't spend the locked funds, they can decide to stop the lease and make the leased money available for spending. **Fewer Energy Consumptions** **A lease transaction can be activated using a phone**. A handful of nodes can now do the process that requires multiple nodes with high computing power with the support of phone users. **Higher Processing Speed** **LPoS-based systems are fast and efficient since a few nodes are involved in validating a transaction at a given time**. LPoS is an excellent alternative to Bitcoin's PoW that makes **4.6 transactions** per second. https://towardsdatascience.com/the-blockchain-scalability-problem-the-race-for-visa-like-transaction-speed-5cce48f9d44   LPoS Weaknesses **Possible Cartel Formations** Malicious activities can be orchestrated on the LPoS, where members lease to a single full node. This node will always be in front of the validators' pool, giving it an advantage over other nodes. **New Technology Shortcomings** **LPoS is still a new technology whose vulnerabilities are not yet fully exposed to help users make sound decisions**. It is subject to weaknesses of any new technology such as doubt and lack of regulations that affect adoption.   Conclusion **A consensus mechanism is vital in the blockchain**. **Consensus helps network peers to reach an agreement**. **It helps in keeping the network safe and active**. PoW, although powerful, has seen slow adoption given the high power requirements and slow processing speed. **PoS provides solutions to PoW challenges to attract the attention of networks as big as** **Ethereum**. https://cryptoadventure.org/the-beginners-guide-to-ethereum/ **LPoS is a more effective wing of PoS**. **LPoS enhances the functionalities of PoS to give users more benefits**, including **balance leasing**, **passive income generating**, and **secure transactions**. Implementation of LPoS in the Wave platform has unleashed a new capability of the decentralized ledger technology. **Just another push for blockchain**.   If you're looking for **general information & news about cryptocurrencies, tips, guides, strategies, fintech, new technologies, trading space, crypto investments** and many more? **MyCointainer Insight** is the place to go. https://www.mycointainer.com/insight Visit **MyCointainer Platform** also feel free to sign up for our **Community**. https://www.mycointainer.com/?partner=x8nxdVXGRPurgr3G13qK https://www.mycointainer.com/community/ **Take the control of your passive income now**, and opt for **MyCointainer's Power Plan**, to **earn 100% revenue on your crypto Staking**. https://www.mycointainer.com/power/x8nxdVXGRPurgr3G13qK   *Follow* ***MyCointainer*** *on* ***Twitter*** *or* ***Instagram*** *and check out our* ***Telegram*** *channel.* https://www.mycointainer.com/?partner=x8nxdVXGRPurgr3G13qK https://twitter.com/MyCointainerCom https://www.instagram.com/mycointainer_com/ https://t.me/mycointainer **MyCointainer community** **and I remain at your service if you have any questions** https://www.mycointainer.com/?partner=x8nxdVXGRPurgr3G13qK   See you soon Christophe WILHELM **https://www.mycointainer.com**   I am currently under contract with **MyCointainer**, which gives me the rights to publish, republish, on their behalf and add content to articles first posted to **MyCointainer Insight**. https://www.mycointainer.com/?partner=x8nxdVXGRPurgr3G13qK https://www.mycointainer.com/insight If you have any questions, or if you think there is copyright infringement, please contact **MyCointainer** **contact@mycointainer.com**. https://www.mycointainer.com/?partner=x8nxdVXGRPurgr3G13qK   Source: **Complete Guide LPoS** https://www.mycointainer.com/insight/a-complete-guide-to-leased-proof-of-stake-lpos/ Credits photo: **https://www.mycointainer.com/**     Resources https://www.mycointainer.com https://www.mycointainer.com/insight