What is the Consensus Mechanism used by Ethereum?
Ethereum primarily uses the Proof of Stake (PoS) consensus mechanism, which was fully implemented in September 2022 with the transition to Ethereum 2.0, also known as "The Merge." This significant upgrade shifted Ethereum from its original Proof of Work (PoW) mechanism to PoS, aimed at improving scalability, security, and energy efficiency.
Understanding Proof of Stake (PoS)
Under PoS, validators are chosen to create new blocks and confirm transactions based on the number of coins they hold and are willing to "stake" as collateral. This mechanism reduces the computational power required to validate transactions, leading to a more eco-friendly blockchain environment.
Benefits of PoS
- Energy Efficiency: PoS requires significantly less energy compared to PoW, making Ethereum more sustainable.
- Increased Security: By requiring validators to stake their cryptocurrency, PoS discourages malicious behavior, as acting dishonestly could result in the loss of staked assets.
- Scalability: PoS enables faster transaction times and increased throughput, addressing scalability issues that Ethereum faced under PoW.
Conclusion
The transition to Proof of Stake represents a critical evolution in Ethereum's infrastructure, ensuring that it remains a robust and forward-thinking platform for decentralized applications and smart contracts.