Obelisk Consensus Algorithm: Definition, Features & Benefits

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The Obelisk Consensus Algorithm is an innovative approach to achieving distributed consensus in blockchain networks. Obelisk was developed to address some of the limitations of traditional Proof of Work (PoW) and Proof of Stake (PoS) systems. 

It introduces a novel mechanism that focuses on trust and reputation within the network. This guide covers what the Obelisk Consensus Algorithm is, its features, benefits, and more.

What Is the Obelisk Consensus Algorithm?

The Obelisk Consensus Algorithm is a pioneering consensus mechanism designed for blockchain networks used by the Skycoin ecosystem. Unlike traditional consensus algorithms such as Proof of Work (PoW) and Proof of Stake (PoS), Obelisk relies on a novel approach based on trust and reputation within the network.

The Obelisk algorithm assigns “trust scores” to network nodes based on their behavior and contribution to the network’s health and security. Nodes consistently acting in the network’s best interests earn higher trust scores, while those engaging in malicious or harmful activities receive lower scores.

How Does Obelisk Consensus Algorithm Work?

The Obelisk Consensus Algorithm is a unique approach to achieving consensus in a blockchain network. In Obelisk, every node on the web is assigned a “trust score” based on its behavior and contributions. Trust scores are dynamic and can change over time. Nodes continually monitor the actions of their peers, assessing factors like transaction validation accuracy and adherence to network rules.

Consensus is reached by considering the trust scores of nodes. Nodes with higher trust scores have more influence. This incentivizes positive behavior, as nodes that act responsibly and contribute positively receive higher trust scores and rewards. Nodes that behave maliciously risk losing trust and influence.

Obelisk’s approach promotes decentralization, ensuring power doesn’t centralize within a few nodes. It scales efficiently with network growth, accommodating more users and transactions. Crucially, Obelisk eliminates the need for energy-intensive mining, making it an eco-friendly alternative to traditional consensus mechanisms.

Features Of Obelisk Consensus 


A web-of-trust model underpins Obelisk. In this framework, nodes within the network vouch for the legitimacy and trustworthiness of other nodes. This decentralized trust model enhances security, as it’s difficult for malicious actors to infiltrate the network without the trust of other nodes. This fosters a more resilient and secure ecosystem.

Separation of Powers

Obelisk employs a separation of powers concept. It distinguishes between nodes that generate blocks (block-generating nodes) and nodes that verify the legitimacy of those blocks (consensus nodes). This separation promotes a checks-and-balances system, ensuring that no single entity can exert undue control over the network, contributing to its decentralization.

Two-Node Structure

The Obelisk algorithm operates with two main node types–block–generating and consensus nodes. Block-generating nodes are responsible for creating new blocks, while consensus nodes verify and confirm the legitimacy of these blocks before they are added to the blockchain. This duality streamlines the consensus process and aids in maintaining the network’s integrity.

A Triangle of Trust

Obelisk establishes a trust framework among nodes, forming what can be visualized as a “triangle of trust.” This triangle consists of nodes vouching for one another’s trustworthiness, thereby collectively maintaining the blockchain’s security. This interconnected trust structure contributes to the robustness and reliability of the consensus mechanism.

Understanding the Consensus Node

A consensus node within the Skycoin network, particularly in the context of the Obelisk consensus algorithm, plays a crucial role in validating and adding new blocks to the blockchain. It serves as the arbitrator among block-generating nodes, responsible for assessing and selecting the block produced by the most significant consensus of block generators. 

This selected block is then appended to the blockchain, ensuring a coherent and agreed-upon transaction history. In essence, the consensus node’s primary function is to establish consensus by identifying the majority-supported block, thereby maintaining the integrity and continuity of the blockchain. 

This mechanism is central to the operation and security of the Skycoin network, where consensus nodes act as the final arbiters of valid transactions.

What Is Proof of Authority?

Proof of Authority (PoA) is a consensus algorithm used in blockchain networks to achieve agreement on the validity of transactions and the addition of new blocks to the blockchain. Unlike other consensus mechanisms, such as Proof of Work (PoW) or Proof of Stake (PoS), PoA relies on a different set of principles.

In PoA, the network’s validators are known entities with established identities and reputations, often called authorities. These authorities are responsible for verifying and validating transactions. By leveraging their credibility and identity, they maintain the network’s security and integrity. Unlike PoW, where miners compete to solve complex mathematical puzzles, PoA eliminates the computational competition, making it more energy-efficient.

One key feature of PoA is that it allows for faster transaction processing and block generation. Since the network’s authorities are trusted entities, there is no need for extensive validation processes. As a result, PoA blockchains can achieve quicker consensus and high transaction throughput.

PoA is often used in private and consortium blockchains, where participants are known and trusted. It helps prevent malicious activities and ensures efficient transaction processing. While PoA provides benefits in terms of speed and security, it may also be criticized for its centralized nature since the authorities are typically a limited, known group.

How Blockchain Reaches Consensus?

Blockchain networks achieve consensus through various consensus algorithms, which ensure that all participants in the network agree on the state of the blockchain and validate transactions. These algorithms are designed to maintain the integrity and security of the distributed ledger. 

One common consensus mechanism is Proof of Work (PoW), where participants, called miners, compete to solve complex mathematical puzzles. The first miner to solve the puzzle adds a new block to the chain. PoW is known for its security but criticized for its energy consumption.

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Another method is Proof of Stake (PoS), which selects validators to create new blocks based on the amount of cryptocurrency they hold and are willing to “stake” as collateral. PoS is more energy-efficient than PoW.

Delegated Proof of Stake (DPoS) and Practical Byzantine Fault Tolerance (PBFT) are other consensus algorithms that prioritize speed and scalability while compromising on decentralization to some extent.

In each case, the consensus algorithm is crucial in maintaining trust and facilitating the agreement among distributed participants.

Benefits Of Obelisk Consensus

Improved Security

Obelisk prioritizes the security of the network. By relying on a web of trust where nodes vouch for each other’s legitimacy, it becomes challenging for malicious actors to disrupt the network. This enhances the overall security and integrity of the blockchain.

Energy Efficiency

Unlike energy-intensive algorithms like Proof of Work (PoW), Obelisk operates without resource-intensive mining processes. This significantly reduces the energy consumption of securing the network, making it an eco-friendly choice.

Speed and Scalability

Obelisk is designed for rapid transaction processing and scalability. This ensures the network can handle a high volume of transactions efficiently, making it suitable for applications requiring quick confirmations and high throughput.


While some consensus algorithms favor centralization due to the concentration of resources, Obelisk maintains a good balance between decentralization and efficiency. The web of trust concept allows for widespread participation while optimizing network performance.

Resistance to Centralization

The web of trust prevents centralization tendencies by ensuring no single entity can dominate the consensus process. This makes it more resilient against potential centralizing forces.

Incentive for Participation

Obelisk incentivizes node participation by rewarding them for their active role in maintaining network security. This can encourage more individuals to participate and contribute to the network’s success.

Community Building

The trust-based nature of the Obelisk algorithm fosters a sense of community and cooperation among participants. It encourages nodes to work together and maintain the blockchain’s integrity collectively.


Its reduced energy consumption and sustainable design align with the growing focus on eco-friendly blockchain technologies. This makes it a suitable choice for those concerned about the environmental impact of blockchain.


The Obelisk Consensus Algorithm is an innovative approach to achieving distributed consensus in blockchain networks. It introduces a novel mechanism based on trust and reputation within the network, ensuring enhanced security and sustainability. 

Obelisk promotes decentralization, resists centralization tendencies, and maintains optimal network performance by assigning trust scores to nodes. It eliminates the energy-intensive mining processes associated with other algorithms, making it an eco-friendly choice. 

Obelisk’s incentive structure and community-building aspects further enhance its appeal. This consensus algorithm is poised to play a pivotal role in the future of blockchain technology by combining security, efficiency, and collaboration.


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Judith Harvey is a seasoned finance editor with over two decades of experience in the financial journalism industry. Her analytical skills and keen insight into market trends quickly made her a sought-after expert in financial reporting.