Liquid proof of stake (LPoS) is an improvement over traditional proof of stake (PoS) that allows users to stake assets without fully locking them up.
What Is Liquid Proof of Stake (LPoS)?
Liquid proof of stake (LPoS) is an improvement over traditional proof of stake (PoS) that allows users to stake assets without fully locking them up. LPoS uses a trusted execution environment (TEE) that acts as a middleman.
Before jumping into the technicalities, let’s discuss some basics!
How Does Traditional Proof of Stake Work?
Proof of stake (PoS) is a validation method used by blockchains to verify transactions. It works by having users lock up or “stake” their coins to become validators. These validators then verify blocks of transactions and are rewarded for doing so with more coins. But traditional PoS has some drawbacks, like staked assets can’t be moved or traded.
How Does Liquid Proof of Stake Help?
Liquid proof of stake, often abbreviated LPoS, takes the core idea of PoS and levels it up. It lets users stake assets without fully locking them up. LPoS uses a trusted execution environment (TEE) that acts as a middleman. Users send their staked assets to the TEE, not directly to the blockchain. So their assets aren’t totally locked, but users also can’t access them during the staking period. In essence, LPoS lets you earn staking rewards while maintaining flexibility.
How Are Staked Assets Protected in Liquid PoS?
What Is Bounded Collateral in Liquid PoS?
What Are Trusted Execution Environments in Liquid PoS?
A TEE is like a black box algorithm that acts as a neutral intermediary between users, validators and the blockchain. It uses Intel SGX or other technology to create an enclave for secure computation. The TEE randomizes the selection of validators and relays info between parties. This enables the system to preserve privacy and validate transactions trustlessly.
What Is Optimistic Settlement in Liquid PoS?
Some LPoS networks use a concept called optimistic settlement. Validators submit proposed blocks to the TEE. The TEE verifies them optimistically, assuming they are valid. This speeds up validation time significantly. But there is still a finality period where the network can challenge and reject invalid blocks. This balances security and speed.