Proof of Staked Authority (PoSA) is a consensus mechanism used by the [[Binance Smart Chain (BSC)]] blockchain. In a PoSA system: - Validators are responsible for verifying transactions and adding new blocks to the blockchain. - To become a validator, an entity must stake a certain amount of the network's native cryptocurrency, in this case [[Binance Coin]] (BNB). - The more BNB a validator stakes, the more voting power they have in the consensus process. - Validators are elected to the validator set through a voting process where other BNB stakeholders can delegate their tokens to the validators of their choice. - The elected validators take turns producing new blocks, with the probability of being selected proportional to the amount of BNB they have staked. - Validators are incentivized to act honestly and reliably, as they can lose their staked BNB if they misbehave. The key advantages of PoSA are: 1. Improved scalability and transaction speed compared to [[Proof of Work (PoW)]] blockchains. 2. Lower energy consumption since there is no computationally-intensive mining process. 3. Economic incentives for validators to behave properly to protect their staked funds. However, critics argue that PoSA also introduces a higher degree of centralization, as [[Binance]] has significant influence over the validator set. This is a tradeoff the Binance Smart Chain has made to achieve better performance.