I have a local application running on a LAN. Sometimes a database gets shutdown. In such a scenario how can I keep the application working? Can I have two concurrent databases so that one picks up the work when the other becomes unavailable?
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First, "sometimes one of them gets shut down" isn't a good approach. You need controlled infrastructure or you won't get anything reliable.
You might want to look in to PgPool-II's statement-based replication, but it's got a lot of limitations.
A better solution for most applications is to use master/standby fail-over with heartbeat and HAProxy or similar. See the manual for more info. This wiki page might also be interesting, though it's more of a link catalogue.
repmgr can be a useful part of a HA setup, and the new version is being enhanced with some more HA-specific features.
Finally, the team I'm a minor part of is working on bi-directional logical replication for PostgreSQL, which would provide multi-master replication (not multi-master "clustering" since there's no global transaction manager, global lock manager, etc).