Blockchain Without Waste: Proof-of-Stake

51 Pages Posted: 7 Jun 2018 Last revised: 18 May 2020

See all articles by Fahad Saleh

Fahad Saleh

McGill University - Desautels Faculty of Management

Date Written: May 14, 2020


Permissionless blockchains require a protocol to generate consensus. Many prominent permissionless blockchains employ Proof-of-Work (PoW) for that purpose, but PoW possesses significant shortcomings. Various alternatives have been proposed. This paper provides the first formal economic model of the most famous alternative, Proof-of-Stake (PoS), and establishes conditions under which PoS generates consensus. A sufficiently modest reward schedule not only implies existence of an equilibrium in which consensus obtains as soon as possible but also precludes a persistent forking equilibrium. The latter result arises because PoS, unlike PoW, requires that validators hold stake.

Keywords: Blockchain, Consensus, Proof-of-Stake, FinTech

JEL Classification: C70, G00

Suggested Citation

Saleh, Fahad, Blockchain Without Waste: Proof-of-Stake (May 14, 2020). Available at SSRN: or

Fahad Saleh (Contact Author)

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1

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