Blockchain: Consensus Algorithm Key Performance Indicators, Trade-Offs, Current Trends, Common Drawbacks, and Novel Solution Proposals

Abstract

Consensus protocols stand behind the success of blockchain technology. This is because parties that distrust each other can make secure transactions without the oversight of a central authority. The first consensus protocol emerged with Bitcoin. Since then, many others have appeared. Some of them have been implemented by official blockchain platforms, whereas others, for the time being, remain as proposals. A blockchain consensus is a trade-off. The new solutions promise to overcome the known drawbacks of blockchain, but they may also bring new vulnerabilities. Moreover, blockchain performance metrics are not clearly defined, as some metrics, such as delay and throughput, which are key factors for the efficiency of standard networks, are purposely constrained by most mainstream blockchain platforms. The main body of this paper consolidates knowledge of blockchains, focusing on the seminal consensus protocols in large-scale market capitalization platforms, and how consensus is achieved for large-scale, decentralized, blockchain architectures. The benefits, limitations, and tradeoffs, as well as the subsequent trend in current consensus development, and its limitations as a general paradigm, are highlighted. The paper also sheds light on overlooked potential performance metrics, and it proposes some novel solutions to some of the identified problems.

A Survey on Consensus Algorithms in Blockchain-Based Applications: Architecture, Taxonomy, and Operational Issues

“…For Blockchain technology, multiple consensus techniques are used. Consensus algorithms are classified into two types: proof-based consensus algorithms and votingbased consensus algorithms [28], [29]. The sections that follow examine and offer instances of these two categories in terms of permissioned and permissionless blockchains [30], [12], [31], [32], [33], [13] [34].…”

“…Normally, blockchain security is based on this concept and a transaction is only considered valid once the system obtains proof that enough computational work has been exerted by authorizing nodes. The miners (responsible for creating blocks) constantly try to solve cryptographically puzzles (named PoW) [29] in the form of hash computation. The process of adding new blocks to the blockchain is called mining.…”

“…As an alternative to computationally expensive puzzle solving, proof of stake aims to stake peers' economic share in the network. Here the term miners are replaced with the validators and similar to the proof of work algorithm, one of the validators is chosen to publish a block onto the blockchain [29]. The difference lies in how the validator is chosen.…”

“…DPoS [15], [37] has been proposed as an underlying consensus mechanism that outperforms its counterparts, such as PoW and PoS using a block generation procedure that leads to faster transactions. DPoS reduces energy consumption by incorporating a one vote per share mechanism that enhances the number of process coins [29]. Since stakeholders vote for randomly selected witnesses to preserve consensus, they are incentivized and penalized concerning their generated blocks and accomplishments, respectively.…”

“…Peers start with mining potential blocks, similar to the proof of work. Decred [29], [40] uses proof of activity to achieve distributed consensus. Computational puzzle solving in proof of activity only involves finding proof of work against the block header, without the transactions in the block.…”