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glossary

Definitions and terminology related to cryptoeconomics, blockchain and distributed ledger technology.
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Hybrid PoW/PoS

Hybrid Proof of Work/Proof of Stake consensus mechanisms utilize elements of both PoW and PoS models when determining transaction validation rights. In doing so, they aim to mitigate the respective weaknesses of each. While the exact mechanisms of individual hybrid consensus algorithms vary, the following explanation is based on Decred, perhaps the most notable project using a hybrid system.

A hybrid consensus mechanism begins by having PoW miners create new blocks containing transactions to be added to the blockchain. Once these blocks have been created, PoS miners must vote on whether or not to confirm them. PoS miners purchase votes by staking a portion of their tokens; larger stakeholders greater voting power. However, rather than examining the total vote count, the hybrid consensus mechanism randomly chooses 5 ‘votes’ to determine the validity of the newly created block; if 3 of the 5 chosen votes are affirmative, the block is confirmed and added to the blockchain. In exchange for these services, PoW miners receive 60% of the block reward, PoS miners receive 30%, and the remaining 10% is dedicated to developmental efforts.

Such systems aim to defend themselves from a 51% attack by implementing PoS voting as an additional, independent layer of verification. That is, malicious collusion between the two types of miners is impossible because the 5 deciding votes are only announced after the block has been created (and the PoW miners’ control over the process has ceased).