How Does the PoA Model Address the Potential Centralization of Mining Pools in PoW?
PoA addresses PoW centralization by shifting the final block validation and reward distribution power to the PoS stakers. While mining pools can still centralize the PoW block creation, their power is limited because they cannot unilaterally validate the block or censor transactions without the cooperation of the PoS majority.
This separation of block creation and validation decentralizes the ultimate control.
Glossar
PoA
Mechanism ⎊ Proof of Authority (PoA) is a consensus mechanism where transactions are validated by a limited number of pre-approved, trusted validators rather than through competitive mining.
Mining Pools
Structure ⎊ These collaborative entities aggregate the hash power contributions of numerous individual miners to smooth out the probabilistic variance in block rewards.
Centralization
Architecture ⎊ Centralization, within cryptocurrency, options trading, and financial derivatives, denotes a concentration of control and decision-making power, often manifested through centralized exchanges or custodians.
PoW Centralization
Concentration ⎊ ⎊ Proof-of-Work centralization describes the increasing dominance of mining power within a limited number of entities, impacting network security and decentralization tenets inherent to cryptocurrency design.