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What is Delegated Proof of Stake? Everything you need to know about DPoS

Not many people know what Delegated Proof of Stake (DPoS) is. It is one of the lesser known consensus algorithms. Yet it is a very easy algorithm to understand. It is comparable to a democracy, as we know it in the United States. That is why we are sure that after reading this article you will know all the ins and outs of Delegated Proof of Stake.

What is Delegated Proof of Stake?

It was just said. Delegated Proof of Stake is very similar to a democracy. It is a consensus algorithm in which participants can vote for who they think can validate and add blocks to the blockchain . Whoever, according to the voters, is most suitable for this task, may crown themselves as ‘delegate’, and add blocks to the blockchain.

This DPoS was developed in 2014 by Daniel Larimer. The intention was that the algorithm could be compared to a representative democracy. Because participants of the network are allowed to vote, a lot fewer delegates are needed. Not everyone can sign up to validate blocks.

If you want to add blocks as a node to a blockchain that uses Delegated Proof of Stake, you will have to stand for election. That also means that you have to set up an election program. In this you tell how you will do your work, and what your ideas about the blockchain are. When you get enough votes, you will be elected as one of the delegates.

However, it is also possible that someone does not keep the promises made in the election manifesto. If the network is not happy with one of the delegates, they have the right to vote the delegate away. You can therefore compare this with a Motion of No Confidence, as we also know it in the House of Representatives.

When a delegate is voted out, someone else’s place is filled. In this way, the network is led by people who have the best intentions for the network, and who do their utmost for this.

How does Delegated Proof of Stake work?

When we vote in a democracy, we do so by going to a voting booth, and ticking the politician and party we want to vote for. Of course, this does not work in the same way within a blockchain. A completely different system is used here. A system that connects much better to the blockchain and the consensus algorithm .

Anyone who wants to vote must be in possession of tokens. These are tokens from the blockchain itself. The token can then be used to vote for one of the electable nodes. Then the node that received the most tokens wins. After this, he becomes one of the delegates, and he can validate and add blocks to the blockchain.

The Pros and Cons of Proof of Stake

Above you can read how Delegated Proof of Stake works. Perhaps you have already figured out the advantages of this algorithm compared to algorithms such as Proof of Work and Proof of Stake. Below we tell you the well-known advantages of Delegated Proof of Stake. But we also discuss the disadvantages of this algorithm.

Very scalable and fast

A blockchain that uses Delegated Proof of Stake is incredibly fast and scalable. This is because there are a lot fewer miners. Proof of Work has the problem that it is not scalable. Anyone can participate, which makes it difficult to keep all of this under control. It is also almost impossible to intervene as a newcomer.

Delegated Proof of Stake ensures that anyone can become a delegate. All you need is a good election manifesto and enough votes.

Rewards are better distributed

With Proof of Work and Proof of Stake, rewards are paid to those who have invested the most money in hardware or in the stake. When you have little money, it is almost impossible to get a reward for your work.

Delegated Proof of Stake ensures that rewards go to those who do their best for the network. This ensures that people are judged on their commitment and quality of work. Not on the hardware or stake they deploy.

Energy efficient

Because there are a lot less delegates than with other consensus algorithms, a lot less energy is also used. And that’s nice, in a world that is starting to get greener.

Less hardware required

We already said it: at Proof of Work you are rewarded based on the hardware you use. It is therefore often only possible to earn money if you are in possession of a large mining farm. This is a large room full of servers that are mining .

With Delegated Proof of Stake, the hardware is not required. It is therefore easier to join as a newcomer.

Bad behavior can be punished

If someone does not keep to the agreements, participants can vote the delegate out. As a result, elected delegates are urged to do their best and to adhere to the agreements that have been made. Nobody wants to risk their role as a delegate, because the chance of becoming a delegate is often already very small.

The rich get even richer

When elected as a delegate, you have the right to validate many blocks. As a result, you get richer, while other participants stay behind. The differences between the participants are getting bigger and bigger.

Cartels and more vulnerable

Because there are fewer delegates than in a blockchain with Proof of Work, it is easier to collaborate with other delegates. This creates the risk that delegates form a cartel in order to be able to perform certain actions. This makes it much easier to organize an attack on the network. It is difficult to stop a large group of delegates when they have organized an attack together.

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