Proof-of-Authority (PoA)

From CryptoWiki

"In PoA-based networks, transactions and blocks are validated by approved accounts, known as validators.[1] Validators run software allowing them to put transactions in blocks. The process is automated and does not require validators to be constantly monitoring their computers. It, however, does require maintaining the computer (the authority node) uncompromised. The term was coined by Gavin Wood, co-founder of Ethereum and Parity Technologies.[2]

With PoA, individuals earn the right to become validators, so there is an incentive to retain the position that they have gained. By attaching a reputation to identity, validators are incentivized to uphold the transaction process, as they do not wish to have their identities attached to a negative reputation. This is considered more robust than PoS (proof-of-stake) - PoS, while a stake between two parties may be even, it does not take into account each party’s total holdings. This means that incentives can be unbalanced. On the other hand, PoA only allows non-consecutive block approval from any one validator, meaning that the risk of serious damage is centralized to the authority node.

PoA is suited for both private networks and public networks, like POA Network, where trust is distributed."

"Proof of Authority (PoA) is a consensus mechanism that enables faster transactional throughput at the expense of decentralization trade-offs. With Proof of Authority, approved validators are tasked with verifying blocks. Because PoA is reputation-based, validators have incentives to act ethically and avoid having their reputation tarnished, which could result in them being replaced.

Ethereum Express is one project using Proof of Authority, and claims to have achieved 1,000 transactions per block and a network capacity of 200 transactions per second (TPS) in tests involving Mining Express and a gambling company whose business model requires a high volume of on chain transactions. Ethereum Express is aiming to woo businesses deterred from building on Ethereum due to bottlenecks that have prevented it from scaling."