Blockchain Consensus Mechanisms

4 min readMay 18, 2023

In the world of blockchain and distributed ledgers, the consensus mechanism plays a pivotal role. It provides the basic logic that allows a distributed and decentralized ecosystem to coordinate without errors or failures. The consensus mechanism is supported by different types of proofs that underpin various consensus algorithms, this includes Proof of Work, Proof of Stake, etc.

At 5ire, we follow Sustainable Proof of Stake (SPoS). It is the world’s first ESG compliance-based reward distribution system that incentivizes network actors based primarily on their commitment to the 17 United Nations Sustainable Development Goals.

But before we get into SPoS, let’s understand what a consensus mechanism is and what are some of the popular proofs that enable blockchain consensus algorithms.

Understanding consensus mechanisms

Blockchain is a network of distributed and independent nodes. The nodes agree upon transactions and data recorded on the blockchain through a process called the consensus mechanism.

A consensus mechanism is a process through which the nodes in the network reach an agreement about the validity of the information recorded. Provided that there are more honest nodes in the network, the accuracy of the data is always assured. Transactions are recorded in blocks in a blockchain. Each block is mathematically linked to the next one, creating a chain of blocks. A block contains an index, the timestamp, a list of transactions, proof, and the previous block's hash.

There are different consensus mechanisms deployed in different blockchain networks. Let’s dive into them:

Proof of Work

Proof of Work (PoW) is the foremost consensus mechanism used in the Bitcoin network and proposed by Nakamoto Satoshi. In this consensus mechanism, nodes, referred to as miners, are required to perform a task– guess the nonce of the block to be validated. This mathematical puzzle is difficult to solve and involves a lot of energy expenditure.

However, it foolproofs the network because the task has to be repeated to effect any changes in the network. Interestingly, the chances of an attacker taking over the network decreases exponentially as more blocks are added. For a Bitcoin network to be hijacked, the attacker needs to control the more extensive computational power in the network. As this is hardly possible, the network is secured.

Proof of Stake

The Proof of Stake (PoS) consensus mechanism was developed as an alternative to PoW. The energy spent to validate a block in the PoW network increases as the task becomes more difficult. Miners are forced to upgrade to the latest hardware devices to increase their chances in the network, creating a high incidence of electronic waste due to use and discard. More so, more energy is spent in the course of mining a block in the network.

With PoS, the computational capacity of nodes, referred to as validators, is not a success factor. Instead, nodes are required to stake native tokens in the network. The stake serves as a pledge of honesty because any bad behavior is punished by slashing the stake. The downside of PoS is that it favors wealthy participants; they can afford to stake more coins, increasing their voting power.

In PoS networks, the algorithm selects a validator by permuting some factors like stake amount and age of the node. In PoS variants, the algorithm considers more factors while selecting a validator.

Nominated Proof of Stake

The Nominated Proof of Stake (NPoS) is a derivative of the traditional PoS. Since setting up a validator node comes with technical challenges; not everyone can afford or possess the technical knowledge to do so. In NPoS, coin holders who cannot afford (or are not skilled enough) to set up a node can stake their coins through an existing validator in the network. They are rewarded accordingly from the validator’s reward.

Sustainable Proof of Stake

Sustainable Proof of Stake (SPoS), is native to 5ireChain. The election process in 5ireChain is executed in an NPoS fashion. However, the SPoS algorithm calculates rewards by factoring in the ESG scores of nodes. Since validators with better ESG scores are favored by the algorithm, more nominators will back validators with good ratings.

Roles in Sustainable Proof of Stake


Validators are stakeholders in the 5ireChain network. They are responsible for producing new blocks and verifying transactions on the network. Their efforts are incentivized, and any misconduct attracts punishment.

  • Producing a canonical block
  • Producing a reference to a previously unreferenced valid non-canonical block
  • Producing a referenced valid non-canonical block
  • Holding a favorable ESG score (tied to the entity owning the validator)
  • Holding a reliability score (tied to the validator).


Coin holders who do meet the requirement or lack the knowledge to set up a validator node nominate other validators. In this way, they indirectly influence the outcome of the election process. Nominators get rewards in proportion to their stake, provided they are among the top 512 nominators backing the validator. However, if a validator is slashed, every nominator backing the validator will be slashed, too, whether they are eligible for rewards or not.

Parting Contemplation

5ireChain is a layer-one blockchain protocol developed with the substrate chain and secured with SPoS. The consensus mechanism of 5ireChain serves two purposes– to secure the network and facilitate the shift to a sustainable blockchain economy. As the pioneer of blockchain sustainability, 5ireChain offers a viable platform to ESG-conscious blockchain developers and builders.

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