Unlocking the Potential of Gato Chain: A Deep Dive into the Benefits of Proof of Stake and EVM Compatibility
Exploring the energy efficiency and scalability advantages of Gato Chain’s implementation of Proof of Stake and its compatibility with the Ethereum Virtual Machine.
Gato Chain And Proof of Stake Mechanism
Cryptocurrencies require a method of transaction verification because they do not rely on traditional financial institutions, such as banks, for validation and clearance of transactions. In order to do this, cryptocurrencies utilize a consensus mechanism based on a network of users to verify and validate transactions.
In the case of many cryptocurrencies, including Gato Chain, this mechanism is called Proof-of-stake (PoS)
What Is Proof of Stake?
Proof-of-stake reduces the computational work needed to verify blocks and transactions with a Proof-of-work (PoW) mechanism (the first consensus mechanism developed for cryptocurrencies). Proof-of-stake changes the way blocks are verified using the machines of coin owners, so there doesn’t need to be as much computational work done. The owners offer their coins as collateral — staking — for the chance to validate blocks and then become validators.
Validators are selected randomly to confirm transactions and validate block information. This system randomizes who gets to collect fees rather than using a competitive rewards-based mechanism like proof-of-work.
Goals of Proof-of-Stake
Proof-of-stake aims to lower network activity and energy consumption levels compared to proof-of-work by using a different mechanism for transaction validation.
Bitcoin miners acquire Bitcoin as a reward for verifying transactions and adding them to the blockchain; however, the expenses incurred during the process, such as electricity and rental fees, are paid using traditional currency rather than Bitcoin. This converts the mining process into an energy-intensive task, where miners essentially trade energy consumption for cryptocurrency. Consequently, the energy consumption required for proof-of-work mining can be substantial and comparable to that of small countries.
The PoS mechanism seeks to solve these problems by effectively substituting staking for computational power, whereby an individual’s mining ability is randomized by the network. This means there should be a drastic reduction in energy consumption since miners can no longer rely on massive farms of single-purpose hardware to gain an advantage.
What Is Staking?
In the context of blockchain and cryptocurrency, staking refers to holding and locking a certain amount of tokens as collateral to validate transactions on a proof-of-stake (PoS) network. By holding and freezing these tokens, stakers (also known as validators) effectively demonstrate their willingness to support the network and their belief in the token’s value. In return for this support, they can earn rewards for validating transactions.
Depending on how much cryptocurrency each validator has invested, the blockchain algorithm chooses validators to examine each new data block — the chances of being selected to perform the work increase as the stake increases. The validator receives newly created cryptocurrency as payment when the data they have cleared is recorded on the blockchain.
Staking can be thought of as a way to earn income by participating in the validation of transactions on a blockchain network. Similar to how one makes interest in assets in a traditional financial system, stakers earn rewards for their participation in validating legitimate transactions on a proof-of-stake network. However, adding fraudulent transactions can result in fines and potential loss of staked assets.
A validator in a proof-of-stake network may face penalties, known as “slashing,” if they submit inaccurate information or validate fraudulent transactions. This penalty is enforced to ensure the network’s integrity and prevent malicious activities. As a result of this penalty, a specific portion of the validator’s staked tokens will be taken away permanently and moved to a “burned” or inaccessible wallet address, rendering those tokens permanently unusable.
How Does Proof-of-Stake Work With Gato Chain?
One-sentence summaries can be a good place to start when trying to explain complex subjects. As a result:
Gato Chain achieves consensus using Proof-of-Stake algorithms. So users are required to stake a certain amount of their tokens to be eligible for selection to validate blocks of transactions and get rewards for doing so.
Gato’s goal is still to establish distributed consensus and build a secure system where users are motivated to verify other people’s transactions while retaining perfect security, just like any blockchain-based consensus method.
Gato utilizes a proof-of-stake consensus mechanism to incentivize a more sustainable industry, as compared to the proof-of-work consensus, that as demonstrated previously, consumes a significant amount of energy.
Gato Chain And EVM Compatible Blockchain
One of the most pressing issues the blockchain industry is working to address is making blockchains compatible. Gato Chain has demonstrated that by being compatible with the Ethereum Virtual Machine, it is taking a significant step towards addressing this matter.
What Is EVM?
The Ethereum Virtual Machine, or EVM, is a specialized system designed to run smart contracts on the Ethereum network. Unlike standard operating systems (such as Windows), it is specifically optimized for this purpose.
A virtual machine (VM) is an abstraction layer that uses the host operating system to create an environment that behaves like an actual machine. VMs are ideal for distributed networks like Ethereum because they enable the same platform to run on various hardware architectures and operating systems.
EVM is not only a virtual machine but also a “stack machine” and a “state machine.” The term “state machine” refers to a device that can read inputs and change its state based on those inputs. A virtual computer that organizes the memory structure into a stack and handles it as a stack is called a stack-based virtual machine.
The world state, machine state, and virtual ROM make up the bulk of the EVM. All accounts on the network are kept in the world state. The program counter, available gas, stack, and memory are all parts of the machine’s state.
Only EVM can interpret the immutable “EVM bytecode” that makes up the virtual read-only memory (ROM). With its excellent scalability, availability, and high performance, EVM is ideally suited to host smart contracts and ensure efficient operation across the blockchain ecosystem.
It’s crucial to realize that communication between the code running inside the EVM and the outside world is prohibited. In addition, the following limitations have been imposed for safety reasons:
● Preventing Denial-of-Service (DoS, Denial-of-Service) attacks requires that funds be set aside before any calculations in the program’s execution may begin.
● Programs cannot reach each other’s state; instead, they can only communicate by sending byte arrays of any length.
● The execution of the program is sandboxed; the EVM program is only allowed to access and alter its internal state and to start the running of other EVM programs.
● Beginning from the same state will inevitably result in the same transition since program execution is wholly deterministic and consistent in its manifestation.
Compatibility with the EVM can be important when developing a new smart contract platform to interface with other Ethereum projects and grow the DApp ecosystem. For instance, it can conduct cross-VM calls and more quickly satisfy the consistency needs of various VMs. This brings us to the following question.
What Is EVM compatibility?
EVM compatibility means that the smart contract platform can execute transactions using Ethereum’s code. Additionally, as they use the same standard, the tokens are the same even when used on a different network (ERC20). This makes interchain operability and bridging simple.
The chains will continue to differ in speed, transaction costs, and even consensus mechanisms. In addition, the chain may include extra features, such as storage or anonymity.
As a result, some projects have opted to fork the Ethereum code and possibly modify it.
What Makes EVM Compatibility Crucial?
It matters because EVM compatibility promotes interoperability and development effectiveness using Gato Chain.
Additionally, as the blockchain industry develops, the need for simple communication with other chains and access to their liquidity and functionality grows. This is how new initiatives can easily reach the most significant number of users.
It is simple to transfer the GATO token from one chain to another because, for example, the contract for a token will be almost the same on EVM-compatible chains. The user will also find it pretty simple because he can manage his tokens using the same wallet’s public key (address).
The user can keep using the same Gato wallet in many circumstances. One can use the same wallet address across all EVM networks with Gato Chain, and switching between them is as simple as pressing a button. The user experience will significantly benefit from this.
Because of the simple transfer of tokens between chains, a liquidity pool can be set up independently of the token’s main chain. Without further development work, this enables trading opportunities and access to liquidity on other chains.
The fact that the same code may be deployed to other chains with almost no changes is also crucial. And the same will apply. This is crucial in the event of a chain malfunction, downtime, or any other circumstance where altering the chain would be appropriate and necessary. It can be completed immediately and without spending additional money.
Gato Chain is embracing EVM’s code and offering alternatives to execute EVM code on them due to EVM being a fundamental factor in the blockchain sector.
