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TON’s Proof-of-Stake Consensus Mechanism

TON relies on a proof-of-stake protocol that keeps the network democratized and functioning smoothly.

Written by Theo Papageorge

The TON blockchain employs a proof-of-stake consensus protocol. This means that the blockchain functions through a network of validators who stake a large amount of Toncoin and then receive rewards by processing transactions on the network.

How to Become a Validator

Anyone can become a validator on the TON Network. All that is required is a high-performance server running specific software. This is a much lesser requirement than proof-of-work networks, such as Bitcoin, that require large mining rigs and high amounts of electricity, though it must be made clear that it is not possible to be a TON validator on a home computer or smartphone.

Once these technical requirements have been met, the person must stake a large amount of Toncoin (TON) to create the validator node. As the network functions better with more validators, people are encouraged to become validators on TON.

Staking as a Validator

A validator stakes their Toncoin for a specific term. Staked coins function as part of the network, and unlocking them before the validation round will negate the benefits of acting as a validator. The stake is paid back at the completion of a validation round, plus the validator reward as interest. This way, validators make passive income by staking their Toncoin on TON.

Rewards are distributed proportionally to the effective stakes of the validators, meaning that the more Toncoin the validator stakes, the more rewards they’ll receive.

Validator Attempts at Cheating

Validators process transactions on the network. If all validators reach a consensus on the transaction, it is added to the blockchain, with invalid transactions excluded from the record.

The protocol creates receipts of any attempt to cheat, meaning that by design, any cheating attempt is instantly detected. Once a node has proven to be attempting to cheat, that node is immediately cut off from contact with any other node. Then, the rest of the validators hold an automated vote to assure that the cheater consequently loses a full or partial amount of its stake. Through these safeguards, the TON Network remains functioning properly and only rewards its validator nodes that make an honest contribution to the network.

Validator Performance

As the validators perform their necessary transactions, each validator keeps a record of the performance of all other validators. If one of them is shown to be processing their transactions slowly as compared to the rest of the network, it will also be fined in the same way that a cheating validator is. In this sense, it is crucial to make sure that your hardware and network connection is up to the task of being a TON validator and receiving the rewards.

Being a Nominator

If being a validator is too intensive, it is also possible to become a nominator. A nominator is someone who has a number of Toncoin to stake but does not have enough coins or the requisite hardware to become a validator. This person can lend their coins to a validator to increase their stake, receiving a percentage of the validator rewards at the end of the term for having assisted the validator with its task.

However, if the validator loses its stake in the ways detailed above, the nominator also loses their reward pool. Therefore, being a nominator holds some degree of risk, as the behavior of the validator, and therefore the nominator’s subsequent rewards, is essentially out of their hands.

Conclusion

The TON Network’s proof-of-stake protocol relies on the participation of its validator nodes to process and approve transactions. Through a number of safeguards, the network assures that validators act in good faith and TON continues to run smoothly. Users of TON are encouraged to become validators. However, it is important that they meet the hardware requirements and otherwise run the risk of not matching the network’s speed and being denied their rewards.

Disclaimer: The opinions expressed on this site are those of the authors who may be associated persons of the TON Community and who do not represent the views, opinions and positions of the TON Foundation. Information is provided for general education purposes only and is not investment advice.

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The official TON Community for the TON Network —a suite of blockchain products designed to onboard the world to Web3.