The main idea behind hybrid PoW and PoS systems is to combine the two consensus mechanisms to achieve a balance between the two. We thank Decred for creating perhaps the most successful example of a hybrid consensus in existence today.
In a hybrid system, miners can use either PoW or PoS as their mining algorithm so that they can switch back and forth depending on which one is most profitable at any given moment. Here's how it works;
- 1.PoW miners create new blocks with transactions to be added to the blockchain.
- 2.PoS ticketholders vote on whether or not to confirm these new blocks, purchasing votes by staking a portion of their currency.
- 3.Votes are chosen pseudorandomly to determine the validity of the newly created block.
- 4.The block is confirmed and added to the blockchain when a certain amount of the selected votes are affirmative.
- 5.PoW and PoS miners receive a percentage of the block reward in exchange for their services and the remainder is reserved for the DAO treasury.
The objective of hybrid PoW and PoS systems is to capture the benefits of the respective approaches and use them to balance each other's weaknesses. As a result of the dual-system in PoW/PoS, the cost of attacking the network is significantly higher. Not only do you need to contend with both technologies, but it's considerably more challenging to break into two systems than one.
Accessibility - Combining PoW and PoS consensus mechanisms creates a more significant community engagement across the network.
Fairness - all users, regardless of experience, have an equal ability to vote based on their stake in the currency.
Security - with PoS validating PoW, the ability for a 51% attack to be launched and the potential for fraudulent miner activity is reduced.
Stability - encouraging the community as a collective to vote on protocol changes increases the strength of the network and creates an opportunity for a Decentralized Autonomous Organisation (DAO).