Proof of authority (PoA) is a fast and energy-efficient consensus algorithm that can validate transactions within a blockchain network. The reputation-based consensus mechanism places importance on the reputation of each node, which is staked to allow them to participate in verifying transactions and creating new blocks.
The idea for a proof of authority consensus was the brainchild of Ethereum co-founder and former CTO Gavin Wood. A PoA blockchain requires a limited number of validators, making the network highly scalable.
Block production and transaction verification responsibilities are assigned to pre-approved network participants, who function as network moderators. Unlike proof-of-stake blockchains, where validators stake cryptocurrencies to become eligible for validating transactions and producing new blocks, PoA blockchains pre-select and assign the responsibility to select network participants.
One of the most famous examples of a blockchain network utilizing the PoA consensus mechanism is VeChain. The validators who stake their reputation receive crypto rewards for their contribution towards validation and block production.