With a market capitalization over $10 billion, Cardano is one of the biggest blockchains utilizing the proof-of-stake mechanism to serve as the infrastructure for decentralized applications.
Cardano’s consensus mechanism, known as Ouroboros, is a proof-of-stake system, which is fundamentally different from the proof-of-work systems found in cryptocurrencies like Bitcoin. In proof of stake, the creation of new blocks is performed by validators who are chosen based on the number of coins they are willing to “stake” as collateral. Essentially, ADA holders can participate in staking to help validate transactions, add new blocks to the blockchain, and thereby keep the network secure.
The Shelley upgrade followed in mid-2020, decentralizing network consensus. This update transitioned the network to a state where most nodes were operated by the community rather than a centralized entity. The election of slot leaders is a key aspect of the Ouroboros protocol. The more ADA an account has staked, the higher the chance that it will be chosen as a slot leader. This system of proportional election aims to ensure a more democratic and decentralized mechanism of transaction validation. Ouroboros also incorporates multi-party computation to ensure that the election of slot leaders is both random and secure, eliminating any predictable patterns that could be exploited.
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