PoAD: A Scalable and Energy-Efficient Consensus Algorithm for Smart Contract Execution in Decentralized Systems

Smart contracts, integral to decentralized applications (dApps), depend heavily on the efficiency and scalability of underlying consensus mechanisms. This study evaluated the runtime scalability of two dominant protocols—Proof-of-Work (PoW) and Proof-of-Stake (PoS). It proposes a novel hybrid consensus algorithm, Proof-of-Activity-and-Delegation (PoAD), to address performance and fairness limitations. PoAD combines validator activity scores, delegated stakes, and verifiable randomness into a composite eligibility function, with block finalization conducted via a PBFT-style mechanism. Experimental simulations were conducted across varying network sizes (10–60 nodes), where PoAD demonstrated significantly improved performance: execution time of 2.6 s at 50 nodes compared to 5.7 s for PoW and 4.3 s for PoS; transaction throughput reaching 125 tx/s; and finality latency reduced to 1.3 s, compared to 4.7 s in PoW. PoAD also maintained high proposer fairness (> 0.95), lower energy consumption (˜45% less than PoW), and lower algorithmic complexity (Formula presented.). These results were obtained using Python-based simulations with controlled validator pools and standardized workloads. The findings suggest that PoAD offers a viable, scalable, and energy-efficient alternative to existing protocols, especially in latency-sensitive and resource-constrained environments such as IoT and decentralized finance. Although promising, the effectiveness of PoAD under adversarial conditions and real-world deployments remains to be validated. Future studies should explore resilience under Byzantine faults, adaptive parameter tuning, and integration with asynchronous BFT frameworks to enhance their trustworthiness and applicability.