Not to be confused with Proof of Authority (also PoA), the Proof of Activity (PoA) consensus mechanism is a combination of Proof of Work (PoW) and Proof of Stake (PoS). In short, this hybrid algorithm uses a PoW mining process to generate new blocks and a PoS validator selection system to validate them.
The main advantage a Proof of Activity system brings is its reinforced security that greatly minimises the risk of a 51% attack. In this system, not only does an attacker need to overwhelm the PoW aspect of the distributed system, but also the PoS aspect. Case in point: the malicious agent needs to own over 51% of mining power and 51% of the total digital currency before they can launch a Proof of Activity-guarded system.
In Proof of Activity systems, the mining process begins like PoW, with miners competing to solve an elaborate mathematical problem using immense computing power. Once the block is mined, however, the system switches to resemble PoS, with the successfully generated block header broadcast to the PoA network.
At this point, a group of validators is randomly selected to sign off on the hash and validate the new block. Similar to the PoS system, the more tokens a network participant holds, the higher the chances of selection as a validator. This procedure continues until a block reaches the minimum required number of validators (or signers).
Once this process is completed, the block is marked as valid and added to the blockchain network. The rewards are then distributed amongst the miners and validators who contributed to the verification process.
An example of a Proof of Activity consensus algorithm is Decred (DCR).
