Comprehensive Overview of Delegated Proof-of-Stake (DPoS) Consensus Mechanism

Proof-of-Stake

Imagine you are part of a group of decision-makers. However, instead of everyone making the decision, you all select a few trusted people to do so. This is kind of what a delegated proof-of-stake (DPoS) consensus mechanism looks like. While proof-of-stake (PoS) still exists, DPoS was developed to make the validation process faster. In this article, we will present a comprehensive overview of the delegated proof-of-stake (DPoS) consensus mechanism. We will also examine why it is becoming a popular choice for blockchains today. Let us dive right in! 

KEY TAKEAWAYS:

  • Delegated proof-of-stake (DPoS) consensus mechanism involves selecting a group of delegates to be responsible for validating a blockchain’s transactions.
  • DPoS is different from PoS and PoW because it is faster, more efficient, and it consumes less energy.
  • Advantages of DPoS include scalability, energy efficiency, and flexible governance.
  • Blockchains like EOS, TRON, Lisk, and BitShares make use of delegated proof-of-stake (DPoS).

What Exactly is Delegated Proof of Stake (DPoS)?

DPoS was introduced in 2014 by Daniel Larimer as a way to make blockchain governance more efficient and democratic. Here, the network users vote a small group of people (called delegates or witnesses) to validate transactions to keep the blockchain running. In contrast to PoS, where anyone with a stake on the chain can verify transactions, DPoS leaves this responsibility to a chosen few. Since fewer nodes would need to reach a consensus, this mechanism makes the network faster and more scalable.

How DPoS Works

The process begins when coin or token holders on the network vote for delegates, where a token represents a vote. This means those with more tokens have greater influence in the selection procedure. Ultimately, the delegates with the most votes become active validators. 

Once elected, witnesses’ responsibilities involve verifying transactions, adding new blocks, and maintaining the integrity of the blockchain. They are rewarded with incentives like cryptocurrencies and transaction fees to encourage them. Conversely, they can face consequences like suspension or loss of block rewards if they are dishonest. 

To ensure flexibility, the voting process on a DPoS network is always ongoing. Voters can withdraw their votes from poorly performing validators and reassign them to other delegates. This possibility helps to keep the existing witness accountable and committed to the network’s best interest.

Advantages of delegated Proof-of-Stake 

Here is why delegated proof-of-stake is a popular choice for high-performance applications:

  • Scalable: With a reduced number of nodes, it processes a high volume of transactions quickly.
  • Energy-efficient: It is energy-efficient because it doesn’t need computational work or excessive staking requirements.
  • Low barrier of participation: You do not need extensive computational resources or large amounts of staked tokens to participate in the delegation process.

Disadvantages of delegated Proof-of-Stake 

Despite the benefits it provides, DPoS has faced criticism like:

  • Centralization: There are concerns that the centralization of power among a small group can expose the network to vulnerability if the majority of the delegates decide to connive against it.
  • Greater influence from wealthy stakeholders: Since those with more tokens have greater voting power, the blockchain’s power can be concentrated on a few wealthy individuals.
  • Dependence on voter engagement: DPoS relies strongly on voter participation. As such, low voter turnout can prevent fairness in the system, especially if the same witnesses are repeatedly chosen.

Efforts are ongoing to resolve the challenges that come with the delegated proof-of-stake consensus mechanism. For example, some projects are exploring the combination of DPoS with mechanisms like Byzantine Fault Tolerance (BFT) to improve security and decentralization. 

Differences Between DPoS, PoS, and PoW

When people hear consensus mechanisms, the first types that often come to mind are proof-of-stake (PoS) and proof-of-work (PoW). However, they are unique from one another. Here is a brief overview of how DPoS differs from PoS and PoW.

  1. Efficiency and speed: DPoS has limited validators, which makes it faster than PoW and PoS. With few nodes involved in consensus, the network records better scalability and higher transaction throughput.
  1. Level of decentralization: While PoW and PoS are believed to be more distributed than DPoS, some argue that it is still democratic because witnesses are chosen through voting.
  1. Energy consumption: delegated proof-of-stake uses less energy than PoW and PoS. This makes it more sustainable and cost-effective.
  1. Governance: The enforcement of accountability in DPoS is minimal in PoS and absent in PoW since miners cannot be easily removed. This makes the re-delegation and removal of witnesses much more seamless in delegated proof-of-stake. 

Read Also – What is Proof-of-Work (PoW)? And How Does It Work?

Examples of Blockchains Using DPoS

Some of the most popular blockchains using delegated proof-of-stake consensus mechanism include:

  • EOS: EOS is a high-performance network that is designed for dApps, and it is one of the fastest for enterprise applications. By using DPoS, it has low latency and high transaction throughput.
  • TRON: This was initially based on Ethereum, but it shifted to the delegated proof-of-stake model to achieve scalability and fast transactions. TRON’s focus is the creation of a decentralized internet that focuses on content sharing.
  • Lisk: Lisk allows users to build blockchain applications using JavaScript. It also uses DPoS for scalability and to ensure decentralization through community voting.

In Conclusion 

delegated proof-of-stake is a powerful consensus mechanism and is a promising alternative to PoW and PoS. While it still has its challenges, it stands out for its energy efficiency, scalability, and community involvement. As new projects are looking to experiment with hybrid consensus mechanisms, DPoS will remain a key player in decentralized technology.

Reference

  • komodoplatform.com – What is Delegated Proof of Stake? An Overview of DPoS Blockchains
  • ledger.com – What Is Delegated Proof-of-Stake (DPoS)?

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