Cryptocurrencies have completely transformed how we think about money, trust, and technology. However, behind all the hype around coins and tokens is the intricate workings of blockchain consensus mechanism. Two consensus mechanism that are increasingly gaining attention are proof-of-stake (PoS) and delegated proof-of-stake (DPoS),
While they sound similar, they actually work in different ways and cater to different needs. As such, we will be discussing proof-of-stake (PoS) vs delegated proof-of-stake (DPoS): exploring their differences, make sure you read till the end because I will break down these concepts in the most relatable way.
Let’s dive right in!
KEY TAKEAWAYS:
- In proof-of-stake (PoS), validators are selected based on the number of coins they hold and are willing to stake as collateral.
- For delegated proof-of-stake (DPoS), participants vote a small group of delegates to handle the validation of transactions on the network.
- DPoS is more efficient than PoS because it has fewer validators.
- On the other hand, PoS is more decentralised than DPoS because it allows more people to directly participate in the validation process.
What Is Proof-of-Stake (PoS)?
Imagine you are playing Monopoly with your friends. Instead of everyone rolling the dice in turns, players who have invested more money get a better chance at rolling. This is similar to how proof-of-stake (PoS) works.
This consensus mechanism selects validators based on the number of coins they hold and are willing to stake as collateral. The idea is this: the more you stake, the more committed you are to playing by the rules. If you do otherwise it would cost you your money. Here is how the whole process works:
- Staking: You lock up a certain amount of crypto to become qualified to validate transactions.
- Selection: Validators are chosen based on their stake size and other factors such as the duration of their stake.
- Validation: The chosen validators confirm transactions, create new blocks, and earn rewards (usually in the form of crypto).
What Is Delegated Proof-of-Stake (DPoS)?
Now, let’s say your Monopoly game is getting overcrowded and everyone cannot participate. To simplify things, the group chooses a few trusted players to roll the dice on their behalf. This is delegated proof-of-stake (PoS) in action.
DPoS is built on the principles of PoS, however, with an extra layer of democracy. So, instead of everyone staking directly, participants vote for a small group of representatives, called delegates or witnesses. The responsibility of this group of people is to validate transactions and secure the network.
Check out how it works:
- Voting: Coin holders stake their coins to vote for delegates. The weight of their votes depends on how much they stake.
- Delegates: The elected delegates become validators, earn rewards and share them with the voters.
- Validation: Delegates validate transactions to maintain the network’s integrity.
Read Also – Comprehensive Overview of Delegated Proof-of-Stake (DPoS) Consensus Mechanism
Differences Between PoS and DPoS
Let’s take a quick look at the differences between PoS and DPoS under the following headings:
- Consensus participation: In PoS, everyone who wants to validate transactions stake directly and the biggest stakeholders have a major say. For DPoS, only elected delegates can validate transactions.
- Speed and scalability: The validation process in PoS is slow, especially in large networks. This is because everyone with a stake can validate. With fewer validators or delegates in DPoS, the process is faster and more scalable.
- Decentralization: PoS is more decentralized than DPoS because anyone with enough stake can participate. Nonetheless, delegated proof-of-stake is more decentralised than your average traditional system.
- Governance and voting: Validators in PoS do not require election. On the other hand, voting is an integral part of DPoS, which gives the community more control over the network’s security.
- Energy efficiency: PoS and DPoS are generally more energy-efficient compared to proof-of-work (PoW). However, DPoS has proven to be more streamlined than PoS because of the fewer number of validators.
PoS Vs. DPoS: Which Is Right For You?
Deciding which of either PoS or DPoS is better for you depends on what you are looking for. If you want a project with broader decentralisation, PoS is the way to go. On the flip side, DPoS takes the lead when you want to create real-time applications that are fast and scalable.
Conclusion
As blockchain technology grows, we are likely to see new hybrid models that will combine both PoS and DPoS. For now, understanding the foundation of these mechanisms gives you a better view of how the decentralised world works. Moreover, you can easily decide your preferred projects to support, based on their consensus method.
Reference
- coinmarketcap.com – Proof-of-Stake (PoS) vs Delegated Proof-of-Stake (dPoS)
- 101blockchains.com – Proof of Stake vs Delegated Proof of Stake
- bitpanda.com – What is Delegated Proof of Stake (DPoS)?
