Proof of Authority (PoA)

In PoA the guarantee is neither computation (as in Proof of Work) nor locked capital (as in Proof of Stake), but the identity and reputation of an approved group of signers. The standard implementation on Ethereum is Clique (EIP-225): signers produce blocks in a deterministic round-robin order and the authority list lives in block headers, which allows verifying authority state from headers alone. A key parameter stops a minority from monopolizing the chain: a signer cannot sign more than one block within a window of N over 2 plus 1 blocks. Other variants are Aura (Authority Round), by Parity, and IBFT 2.0, which adds immediate finality.

PoA is the default consensus for permissioned and private networks, testnets and development environments. It offers high throughput, fast finality and trivial energy cost, with a validator set of known legal identity. That tradeoff, more trust placed in the signers, fits KYC and compliance requirements well, which makes it useful for enterprise and institutional tokenization.

In practice, several historical Ethereum testnets ran PoA (Clique and Aura), now deprecated. Gnosis Chain started with an Aura and PoA scheme before evolving, and VeChain operates its own PoA. Permissioned networks such as Quorum or Besu running PoA are a common choice for financial institutions that need validator traceability and a clear compliance framework under MiCA.