Despite epic price rises since the start of the year and the fact that it’s the second-biggest cryptocurrency by total market capitalization, Eth2 lags behind competitors in the staking rankings. So, why isn’t Ether (ETH) the number one staking cryptocurrency?
A brief history of proof-of-stake
Back in 2012, Peercoin developers Sunny King and Scott Nadal proposed a PoS proposal as part of a hybrid consensus model. In 2013, the Nxt genesis block hailed the first pure proof-of-stake blockchain, which Blackcoin rapidly followed in early 2014. At that time, crypto was still relatively niche, and consensus models, in general, were still not necessarily the contentious issue they would become in subsequent years.
After Ethereum launched in 2015 and development activity rapidly gained momentum, many projects wanted to emulate its success. However, Ethereum’s scalability challenges — resulting from its dependence on proof-of-work — quickly became a known issue. Therefore, core development teams started examining other consensus models, attempting to put their own spin on their predecessors’ work.
Delegated proof-of-stake emerged as one variation on proof-of-stake, pioneered by Dan Larimer. EOS, Tron (TRX), Lisk and others continue to use DPoS to this day. However, the model has come under widespread criticism for introducing too much centralization of control into blockchains.
Tezos (XTZ), which launched on mainnet in September 2018, devised a PoS consensus model involving delegation that overcomes some of the most critical challenges of the EOS-style DPoS consensus. Dubbed “liquid proof-of-stake,” the model allows XTZ holders to delegate their validation rights to other token holders. Validating nodes, or bakers, on the Tezos network, can use delegated funds as a contribution toward the minimum 10,000 XTZ required to become a baker.
Liquid proof-of-stake varies from the EOS-style DPoS in that there is no fixed upper limit on the number of validating nodes…