How POA Works?

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Proof of Authority (PoA)

Proof of Authority (PoA) is a consensus method in which multiple blockchain validators within the ecosystem have the power to validate transactions and decide whether new blocks will be added to the blockchain or not. The PoA method is not suitable for public blockchains, as there is essentially a monopoly with a few validators that can confirm the transactions

In PoA-based networks, transactions and blocks are validated by approved accounts, known as validators. Validators run software allowing them to put transactions in blocks. The process is automated and does not require validators to be constantly monitoring their computers. It, however, does require maintaining the computer (the authority node) uncompromised. The term was coined by Gavin Wood, co-founder of Ethereum and Parity Technologies.

With PoA, individuals earn the right to become validators, so there is an incentive to retain the position that they have gained. By attaching a reputation to identity, validators are incentivized to uphold the transaction process, as they do not wish to have their identities attached to a negative reputation. This is considered more robust than PoS (proof-of-stake) - PoS, while a stake between two parties may be even, it does not take into account each party’s total holdings. This means that incentives can be unbalanced. On the other hand, PoA only allows non-consecutive block approval from any one validator, meaning that the risk of serious damage is centralized to the authority node.

PoA is suited for both private networks and public networks, like POA Network or Eurus, where trust is distributed.