The Waves protocol operates on a consensus mechanism called Leased Proof-of-Stake. LPoS enables ordinary users to participate in the block generation process by leasing their tokens to full nodes while retaining full control over their funds.

Understanding Proof-of-Stake (PoS)

Blockchains like Bitcoin rely on Proof-of-Work (PoW) for consensus. PoW requires significant computing power, making it energy-intensive. In contrast, PoS selects validators based on their stake in the network's native token (WAVES in Waves' case). This reduces energy consumption while maintaining security.

Leased Proof-of-Stake

LPoS builds upon PoS by allowing users who hold WAVES tokens to participate in block generation even if they lack the technical expertise to run a full node. Here's how it works:

Leasing WAVES: Token holders can lease their WAVES to validators (full nodes) who are responsible for creating new blocks.
Increased Stake, Higher Chance: The more WAVES a validator has access to (including leased tokens), the higher their chance of being chosen to generate the next block.
Reward Sharing: Validators typically share a portion of their block rewards with the users who leased them WAVES.

Benefits of Leased Proof-of-Stake

Increased Participation: LPoS allows anyone with WAVES to contribute to network security, not just those with powerful hardware.
Enhanced Security: Distributing the validation power across multiple validators makes the network more resistant to attacks.
Economic Incentive: Token holders can earn passive income by leasing their WAVES.

Key Concepts of Waves LPoS

Generating Balance: A validator's eligibility to generate blocks depends on their "generating balance," which considers both owned and leased WAVES.
Unpredictable Block Generation: The system uses Verifiable Random Functions (VRF) to ensure a fair and unpredictable selection of validators for block creation.
Adaptive Block Intervals: The targeted block generation time is 60 seconds, but the protocol adjusts the difficulty dynamically to maintain this target.

The Waves protocol offers a variety of features and functionalities beyond LPoS, including:

Smart contracts: For building decentralized applications (dApps).
Customizable tokens: For creating new digital assets with specific functionalities.
Decentralized Exchange (DEX): For secure and transparent trading of cryptocurrencies.

Leased Proof-of-Stake empowers the Waves protocol by enabling a wider range of users to participate in securing the network. This fosters a more decentralized and secure ecosystem while offering economic incentives for token holders.

Cover image by Waves