The Proof-of-Stake mechanism is a consensus algorithm used by blockchain networks to validate transactions and produce new blocks. Instead of computational work, participants “stake” their cryptocurrency as collateral to gain the right to validate. Those chosen to validate earn rewards, while malicious actors risk losing their staked assets. This method offers an energy-efficient alternative to Proof-of-Work.
Context
The transition of major blockchains to Proof-of-Stake has intensified discussions around its security, decentralization properties, and economic implications. Debates concern the potential for centralization of staked capital and the long-term sustainability of validator rewards. Regulatory bodies are also examining how to classify and oversee staking activities, influencing future policy and market structures.
SPARC introduces a non-linear, tier-based reward mechanism for Proof-of-Stake, strategically incentivizing smaller operators to enhance network decentralization and security.
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