Like any blockchain, Aleo needs a way for all the computers in its network to agree on what transactions are valid. Most blockchains do this using a method called Proof of Work (PoW) or Proof of Stake (PoS). PoW is like a contest where computers compete to solve difficult puzzles to validate transactions, and PoS is like a voting system where the more currency you hold, the more your vote counts.

How Aleo Agrees on Transactions

Aleo combines the best of both worlds with something called Proof-of-Succinct Work (PoSW). It’s a clever blend of mining (competing to solve puzzles) and staking (locking up coins to earn the right to participate). This keeps the network safe and running smoothly.

The way Aleo decides on new transactions is through a system named AleoBFT, inspired by DiemBFT from the Diem blockchain by Meta (the company formerly known as Facebook). In this system, one member suggests a new block of transactions, and others vote on it. If enough members agree, they add a special proof to the block, making it official.

In Aleo, people who stake their coins do help decide on new blocks, but they don’t work on creating Zero-Knowledge (ZK) proofs. ZK proofs are a type of secret code that protects the privacy of transactions. Instead, Aleo handles these proofs in a separate system to keep the network fast and efficient.

Delegated Staking on Aleo

Delegated staking lets people who don’t have a lot of resources still take part in securing the network and earning rewards. It’s a way to make the system more inclusive.

Here’s how it works:

• Choosing a Validator: First, you pick a validator you trust. Validators check transactions and create new blocks. Picking a good one is key to making sure your stake is used well.
• Staking with a Validator: Next, you “stake” your Aleo credits with this validator’s node, sort of like investing in them. This is done securely through Aleo’s smart contracts. Your stake boosts the validator’s influence and potential rewards.
• Earning Rewards: You get a share of the rewards the validator earns, like transaction fees and block rewards. How much you get depends on how much you stake and the deal you have with your validator.
• Trust is Key: Since you’re trusting your validator with your investment, it’s important to pick one that’s reliable and has a good track record.
• Withdrawing Your Stake: If you want to take your stake back, Aleo has a system for that, but there’s a waiting period of about 3 hours. This is to keep the network stable.