Token Based Consensus

Definition ∞ Token based consensus refers to a class of decentralized agreement mechanisms where participants’ ability to influence network validation is directly proportional to their holdings of a specific native cryptocurrency or token. This includes proof-of-stake systems, where validators are chosen based on the amount of staked tokens. It aligns the economic interests of participants with the security and integrity of the network. This mechanism secures the blockchain.
Context ∞ Token based consensus models are central to the operation of many modern blockchains, with ongoing debates concerning their decentralization, security, and energy efficiency compared to proof-of-work. News frequently reports on protocol upgrades that adjust staking parameters, tokenomics, or governance mechanisms within these systems. The balance between economic incentives and network robustness remains a key area of research.