Is IOTA using Proof of Stake?

This article is a translation of the German IOTA Beginner’s Guide by Schmucklos.

Is IOTA 2.0 a Proof of Stake consensus mechanism?

Many critics argue that IOTA’s upcoming consensus mechanism (Mana / Fast Probabilistic Consensus) is basically Proof of Stake (PoS).

It is not. While the effects are similar in securing the network, IOTA’s new consensus mechanism is actually superior to Proof of Stake (PoS) and has additional advantages:

  • No Leaders: PoS is used to determine a leader for one (or more) blocks. IOTA does not require a leader.
  • No actual staking: With IOTA, you don’t have to stake tokens. So there is no loss of opportunity cost. You can trade and use IOTA at will and at any time.
  • Everyone participates: Whereas with PoS, only those who make a stake in the form of coins / tokens vote, with IOTA, everyone who actually uses and ships IOTA participates in the consensus.
  • No further enrichment of the wealthy: With PoS, those who stake are rewarded. Those who stake are usually those who are already wealthier than other participants. So by staking rewards, the wealthy become wealthier. In IOTA, there are no rewards and therefore the wealthy do not get richer except by buying more IOTA tokens.
  • Voting only when there is conflict: With IOTA, there is no need to vote if there are no conflicts, while PoS votes on all transactions.
  • Updates: IOTA is modular. The individual modules can change or be replaced as additional benefits and effects are discovered / explored.

Aside from the additional benefits compared to PoS, the effects are similar to having an anti-sybil mechanism. Nodes will only vote if there are conflicting transactions and nodes will attach new transactions to what they think are honest transactions.

Original source

Last Updated on 17. February 2021