Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS) are the most common consensus mechanisms. Since the introduction of Proof of Work (PoW) enabling Bitcoin, many more consensus mechanisms have been developed. Some more successful than others, and all with their unique qualities. But how do we rank the most relevant protocols? We will rank them based on market capitalization.
Our ranking approach is simple. Proof of Work empowers Bitcoin. So, we link Bitcoin's market cap to Proof of Work. Proof of Work empowers Ethereum as well. So, we also link Ethereum's market cap to Proof of Work. But as soon as Ethereum switches to Proof of Stake (Casper), we will link Ethereum's value to Proof of Stake. And so on. We base ourselves on live data from CoinMarketCap and cover for their Top 100 ranking of cryptocurrencies (coins and tokens). Taking such a broad scope ensures that we will find more than just the typical consensus mechanisms.
We've chosen the Top 100 ranking because it covers most of the market value and ensures a broad scope of ranked mechanisms.
On 24 February 2021, the Top 100 ranking accounted for 96% of the total market cap, with market cap defined as price times circulating supply. If you would like to see the live version of this chart, please register on our website (free of charge) and go here. Several consensus mechanisms that are discussed online are not (yet?) included in this ranking. Our view is that their practical (market) value is not yet high enough to be included in our overview.
Proof of Work, Proof of Stake, and Delegated Proof of Stake-based cryptocurrencies account for 93% of the Top 100's market share. To account for Bitcoin's market dominance, we split the Proof of Work ranked crypto's (87%) into several smaller groups:
Byzantine Fault Tolerance (BFT) and Ripple Protocol Consensus Algorithm (RPCA) are the best of the rest. Together, they only account for about 4% of the market cap. All the others contribute about 2%. All the others include:
The ranking of protocols in the "Others" category typically changes due to the market's volatile nature.
To create this overview, we count the number of assets for each ranked consensus mechanism or group of ranked protocols. On 24 February 2021, 19 consensus mechanisms were applied for the Top 100 cryptocurrency projects.
We created a small list for each ranked consensus mechanism to highlight how many cryptocurrencies they represent and their collective market share.
We base ourselves on the Coinmarketcap Top 100, as explained earlier in this article. The Top 100 changes frequently due to the volatile nature of the market. We now list the assets included in the ranking of 24 February 2021 (in alphabetical order):
0x, 1inch, Aave, Algorand, Ampleforth, Avalanche, Bancor, Basic Attention Token, Binance Coin, Binance USD, Bitcoin, Bitcoin BEP2, Bitcoin Cash, Bitcoin SV, BitTorrent, Cardano, Celo, Celsius, Chainlink, Compound, Cosmos, Crypto.com Coin, Curve DAO Token, Dai, Dash, Decentraland, Decred, DigiByte, Dogecoin, Elrond, Enjin Coin, EOS, Ethereum, Ethereum Classic, Fantom, Filecoin, FTX Token, Hedera Hashgraph, HedgeTrade, Horizen, Huobi Token, HUSD, ICON, IOST, IOTA, Kusama, Kyber Network, Litecoin, Loopring, Maker, Monero, Nano, NEAR Protocol, NEM, Neo, Nexo, Ocean Protocol, OKB, OMG Network, Ontology, PancakeSwap, Paxos Standard, Polkadot, Polygon, Qtum, Quant, Ravencoin, Ren, renBTC, Reserve Rights, Revain, Siacoin, Solana, Stacks, Status, Stellar, SushiSwap, SwissBorg, Synthetix, Terra, TerraUSD, Tether, Tezos, The Graph, THETA, THORChain, TRON, UMA, Uniswap, UNUS SED LEO, USD Coin, VeChain, Verge, Voyager Token, Waves, Wrapped Bitcoin, XRP, yearn.finance, Zcash, Zilliqa.
The main ingredients to build and maintain this ranking of consensus mechanisms are:
We will explain a bit more about the first two items. As mentioned, this article contains ranking snapshots taken on 24 February 2021. If you would like to see the live charts, please register with Unblocktalent.com site and read this article.
Coinmarketcap provides an API service to obtain live data. As such, to get the Top 100 list is a no-brainer. It's relevant for those interested in details that the CoinMarketCap Top 100 deviates from the Top 100 cryptocurrencies with the highest market capitalization. The main reason is that CoinMarketCap sets their Top 200 based on market capitalization and other criteria. Two examples of these criteria: 1) The asset is traded on at least three exchanges, 2) CoinMarketCap's ability to verify the project's supply information with no contradictions. Go to this article to explore more criteria.
We create our ranking based on source information. In practice, this means going to the ranked asset's website and taking a deep dive into the posted white paper. This research is an ongoing effort because there are frequent changes to the Top 100 composition. Besides, now and then, cryptocurrency projects change their consensus protocol. For example, Ethereum is preparing to change its protocol into Proof of Stake. Once completed, this will impact the dominance of the Proof of Work protocol in the ranking.
We will continue to improve the quality of our research. We will approach each ranked cryptocurrency project and request the teams to confirm the consensus mechanism we are using in our ranking.
Consensus mechanisms are a crucial component of blockchain. They enable transactions between entities that do not need to trust one another. They also allow trade between parties without the need for an intermediary. A lot of innovation takes place to improve these protocols. Why?
As a consequence, the list of mechanisms described online is growing and growing. We quickly came across a set of protocols for which it was hard to find real live projects, for example, Proof of Elapsed Time, Proof of Burn, and Proof of Capacity. That triggered the questions: How to distinguish the wheat from the chaff? How to best identify promising new consensus mechanisms? We want to present the best-researched ranking of consensus protocols to create insight into the progress of innovation in this domain. We would appreciate it if you would support our ranking research. You can do so by becoming a paid member of Unblocktalent.com. At the moment, we have a lovely Earlybird offer for a lifetime subscription, for a very modest amount.