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POA Network: How To Stake Your Identity

POA Network: How To Stake Your Identity 101
Visualization by POA Network.

One of the most interesting things in the whole blockchain space is an increasing variety of available consensus mechanisms. They are used to validate transactions and secure blockchains.

Proof-of-Work, Proof-of-Stake, Delegated Proof-of-Stake, Proof-of-Activity, Proof-of-Importance, Proof-of-Capacity, Proof-of-Burn, to name a few examples of “proof-of-creativity” in the space.

However, this time we are looking at POA Network, an Ethereum-based platform that offers an open-source framework for smart contracts. It is an open Ethereum sidechain that reaches Proof-of-Authority (PoA) consensus through independent validators. If the previous sentence leaves you puzzled, let us help.

First, a sidechain is a separate blockchain that is linked to the main blockchain. It enables digital assets to be interchangeable between the two chains without jeopardizing their performance or speed. Sidechains are being developed first and foremost to address the issue of blockchain scalability but also to potentially add new functionalities to a blockchain.

In case of POA, it is independent from Ethereum itself while also compatible with most of Ethereum’s development tools, meaning that what can be done on Ethereum network, can also be done on POA Network.

Now, what Proof-of-Authority is? In short, PoA depends on nodes (validators) that are allowed to create new blocks and secure the blockchain.

We asked Siddig "Ziggy" Zeidan, a developer evangelist at POA, to explain the concept in more detail.

Cryptonews.com: Your website states that PoA means that validators stake their identity to secure the network. Also, their identity is subject to a number of verification requirements, including proof of address and no criminal record. What else can you add?

Siddig "Ziggy" Zeidan: PoA is similar to Proof-of-Stake algorithm, but instead of a stake with monetary value, a validator’s identity is used. In this context, identity means the correspondence between a validator’s personal identification on the platform with officially issued documentation for the same person, i.e. certainty that a validator is exactly who that person represents to be.

This consensus is usually reserved for private networks, so when we were designing POA Network, a few questions needed answers. How to make the network a public one? How do we make it trustless and how do we make it decentralized? We ended up solving these issues and innovating the network by implementing multiple new conditions such as:

  • Trusted Ceremony
  • On-Chain Governance
  • Independent validators

What about validators? What’s the incentive to become one?

They are “Keepers of consensus.” They are responsible for validating the blocks, securing the network, evaluating, voting and onboarding new validators and should always act in the best interest of the network.

As a validator you have the responsibility to secure the network by maintaining your node and to participate actively in all the ballots and onchain governance decisions. Validators get rewarded in POA tokens for each block they validate. The network emits 1 POA token [0.353069 USD at the time of writing] for each new block, with one block generated every 5 seconds.

There are 17 validators at the moment. What's your target for this year?

Our target for the year is 25 validators on the main network. Naturally, the more validators there are, the more secure and decentralized the network becomes.

What about security of validators, as their addresses are public?

One of the prerequisites of being a POA Network validator is having a US notary license. This is part of our “Identity at stake” consensus. US notary license holders have their names, addresses and phone numbers available in public domains. So becoming a validator, a notary public does not disclose more information than he or she already has disclosed. A separate matter is how comfortable they are with this information being public now that they have this new responsibility of securing a public blockchain. A public identity is a factor that needs to be taken seriously when making a decision whether to become a validator.

Do you intend to take validators from outside the US?

For the Core POA Network, there are some prerequisites, two most important ones being that a validator needs to be a US resident and also a US notary license holder. This setup allows a validator to stake his or her identity in order to obtain the right to secure the network.

One can use the open-source POA Network tools to create a POA Network clone with different parameters including how validators are chosen. That said, for the Core Network we do not intend to take validators from outside the US.

Does your focus on US notaries imply some sort of centralization and how do you intend to eliminate such a threat?

We focus on US notaries as it is one of the specifics for proof of identity of validators. While the validators are the US notaries, they represent a diverse group of individuals spread out across different states.


Zeidan also told us a bit more about the current status and near-term plans of the company with a team of around 50 people.

POA has recently launched the POA Bridge, a protocol that connects the POA Network and Ethereum network in both directions and lets to transform the original POA token into an ERC20 version called POA20 and vice versa. According to Zeidan, soon, the Open Source Blockchain Explorer is set to follow, and an Ethereum Client called Mana, to be released in the second half of this year.

Since launching the Bridge, over 3 million transformations have taken place from POA Native into POA20, Zeidan said. According to him, the current bridge is only one implementation of the protocol and the company is planning to create more use cases in the future.

Moreover, since May 10, the project’s POA20 tokens have been listed on multiple exchanges - meaning more liquidity for the POA Network.

POA price chart:

POA Network: How To Stake Your Identity 102
Source: Coinmarketcap.com

Also, the company is planning to build an ERC20 -> ERC20 transformation bridge, so a DApp (decentralized application) developer will get an access to POA Network and keep some of their tokens in the Ethereum network at the same time.

As for challenges, survival of the idea of a public permissioned blockchain with known validators was hailed as their primary problem, Zeidan said.

“After six months, we see that the concept is working and making ecosystem horizontally scalable with fast and efficient cross chain solutions,” he added.

Now, he says the new challenge is making sidechains the best option as opposed to the Ethereum mainnet.

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