More than 2 years in the making, POSDAO (Proof-of-Stake Decentralized Autonomous Organization) provides a new decentralized framework for democratized blockchain consensus.
December 23, 2020. The xDai stable chain, an Ethereum compatible layer 2 sidechain, has completed a consensus upgrade to a delegated Proof-of-Stake architecture called POSDAO. The previous consensus model relied on a select group of validators to sign and order transactions. With POSDAO, public users who hold the STAKE governance token on the xDai chain can apply to become validators, and community members with less STAKE can also participate in the consensus process as delegators.
“POSDAO is a huge step forward for the xDai community” said xDai founder Igor Barinov. “POSDAO and decentralized governance with the STAKE token increases xDai security and gives users a chance to directly influence protocol parameters and functionality."
With the public rollout (POSDAO has been functional since April 2020 with select validators), users can place STAKE into the protocol using the BlockScout Block Explorer. This integration provides users with a seamless interface for becoming a validator or delegator, adding STAKE, moving STAKE, claiming rewards and other staking features.
Staking rewards are provided to validators and their delegators in exchange for providing STAKE to protect the protocol. Rewards accrue at a rate of 15% of the total amount staked in the protocol and are evenly distributed amongst the participating validator set. The validator set rotates weekly, and selection is based on how much STAKE is added to each pool (validator stake + delegator's stake). However, a random number is also used in the validator selection process, ensuring that the set cannot be predetermined solely by staking amount.
These processes create a fair system where pools with more STAKE have higher odds of selection to a validator set but are not guaranteed, and all pools receive equal rewards once they become validators.
The STAKE token is used to protect the protocol and also for governance through a snapshot integration. Here, STAKE holders can add and vote on proposals for protocol changes. Voting power is determined by the amount of STAKE a voter holds. A recent proposal will lower the amount required to delegate in the protocol from 1000 STAKE to 200 STAKE, opening up delegation to more participants.
“It’s great to see participants using STAKE to actively participate on xDai in a dynamic environment” said Barinov. “The xDai upgrade aligns with the Eth2 move to a POS infrastructure as we continue to help support and scale the ecosystem through all phases of this transition."
The xDai stable chain is a layer 2 blockchain designed to support and scale Ethereum. Developers can easily port entire applications from Ethereum to xDai, or utilize xDai for resource-intensive applications while maintaining a source of record on the Ethereum mainnet. This is accomplished through cross-chain compatibility and interoperability through the TokenBridge architecture.