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UCL Centre for Blockchain Technologies Discussion Paper

The increasing popularity of DLT systems since the invention of Bitcoin, and with it the energy-intensive Proof-of-Work (PoW) consensus mechanism, has produced a variety of alternative mechanisms. Proof-of-Stake (PoS) is a particularly popular alternative that is commonly assumed to be more energy-efficient than PoW. In this paper, the UCL Centre for Blockchain Technologies team tested this hypothesis using a mathematical consumption model that predicts expected energy consumption per transaction, as a function of network load.

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UCL Centre for Blockchain Technologies Discussion Paper

Key Findings

The UCL team used a mathematical consumption model that predicts expected energy consumption per transaction, as a function of network load. Applying this model to six different PoS-based DLT systems confirms that their energy consumption per transaction is indeed at least three orders of magnitude lower than that of Bitcoin. Furthermore, UCL discovered significant differences among the analyzed PoS-based systems themselves.

Current Transactions Per Second

This chart illustrates an estimated current number of transactions per each of the listed protocols (based on recent throughput measures).

Maximum Transactions Per Second

This chart illustrates an estimated maximum throughput of the protocols.

Current Energy Consumption

This chart illustrates an estimated energy consumption of the protocols considered under contemporary throughput (based on recent throughput measures).

Comparing Public Distributed Ledgers

The comparison set includes public distributed ledger (DLT) systems that share the critical common denominator of using proof-of-stake (PoS) based consensus. In PoS, validators are selected at random from the pool of users which staked the network’s native cryptocurrency above the minimum and with a probability of selection weighted by stake.

Algorand

Algorand uses a "pure-proof-of-stake" (PPoS) system where relay nodes store the entire ledger and non-relay nodes store up to approximately 1,000 blocks.

Cardano

Cardano is the only "unspent transaction output" (UTXO)-based system in the comparison set. In Cardano, nodes store every transaction ever made.

Ethereum 2.0

Ethereum is a commonly used blockchain undergoing its transition from proof-of-work (Ethereum 1.0) to proof-of-stake (Ethereum 2.0).

Hedera

In Hedera, “proof-of-stake” (PoS) is used to protect the network via a virtual-voting algorithm. Token holders stake Hedera’s native cryptocurrency to nodes, adding weight to a node’s voting power.

Polkadot

In Polkadot’s “nominated-proof-of-stake” (NPoS), each node delegates stake across 16 validators, among which the stake is divided equally.

Tezos

In Tezos’ “liquid-proof-of-stake” (LPoS) consensus mechanism, token holders delegate their validation rights to other token holders (called validators) without transferring ownership of their tokens.