Delegated Proof of Stake (DPoS)

Delegated Proof of Stake (DPoS) is an additional layer of voting to the traditional Proof of Stake Consensus Mechanism. Let’s see how does it exactly work with the network governance.

Content

• Introduction
• Brief about Consensus mechanism and Proof of Stake (PoS)
• What is Delegated Proof-of-Stake (DPoS) in blockchain?
• How does the Delegated Proof of Stake Algorithm work?
• Proof of Stake (PoS) VS Delegated Proof of Stake (DPoS)
• Benefits of Delegated Proof of stake (DPoS)
• Limitations of Delegated Proof of Stake (DPoS)
• Conclusion

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Introduction

Delegated proof of stake (DPoS) in the blockchain is an addition or improvisation on the proof of stake (PoS) consensus mechanism. However, DPoS comes with its own methodology and functionalities. This article will cover Delegated Proof of Stake mechanism thoroughly along with its working. In addition, it goes through the benefits and limitations of the DPoS protocol.

Let’s begin by briefly understanding the consensus mechanism and the Proof of stake (PoS) protocol.

Brief about Consensus mechanism and Proof-of-Stake (PoS)

A consensus mechanism helps to keep the network synchronized. It’s a state of agreement where all the network participants come to a decision together. For instance, a group of friends agrees to go on a trip together. It’s hard to persuade each group member if it’s massive. Hence, we have several mechanisms to decide the next global change in the network together. Such as Proof of Work (PoW), Proof of stake (PoS), Proof of Elapsed Time (PoET), and many more.

Overcoming the limitations of the Proof of Work algorithm, such as massive energy consumption, Proof of Stake reinstates different standards for consensus mechanism. However, a lot of research is in progress to prove its robustness. 

The PoS mechanism uses stakes given by network participants who wish to append a new block to the network. Each participant who contributes his/her coins as a stake is the validator. Here, stake means to keep the funds submitted by the validator in a separate escrow account. Out of all the validators, one is randomly picked to add a new block of transactions to the decentralized network. The rest of the validators verify the block of transactions added by the chosen validator.

For more details, please visit proof of stake (PoS) in Blockchain

What is Delegated Proof-of-Stake (DPoS) in blockchain?

In Delegated Proof of Stake (DPoS) mechanism, the validators’ or delegates’ selection is based on voting. It’s an additional layer to PoS protocol. It works similarly to the real-life election and voting system.

DPoS was coined in 2014 by an American cryptocurrency entrepreneur and software developer, Daniel Larimer. The DPoS maintains an election process where a selected number of delegates (or validators) are chosen. Those delegates are responsible and trusted by the network participants for validating each new block added to the network.

Delegated Proof of Stake (DPoS) is a more democratic version of the Proof of Stake (PoS) mechanism. Both algorithms are used as an alternative to high energy-consuming PoW by Bitcoin. 

Since we understood the basics of DPoS, let’s see how it works?

How does the Delegated Proof-of-Stake Algorithm work?

This digital democratic consensus algorithm chooses a number of delegates (generally, between 21-101, depending on the network strength) by the process of election. Network participants (or network stakeholders) vote for their trusted delegate for the network. 

Role of Delegates (or Witness):

• The selected delegates (or witnesses) validates the transactions of the adding block.
• A delegate can also create his/her own block of transactions to add to the network.
• Delegates receive the rewards for effectively validating other blocks or adding a valid new block. 

Points to remember before Voting:

• Network participants vote using their coins or tokens.
• Each network participant (or stakeholder) gets the same number of votes as their owned number of coins. 
• The stakeholder can also transfer coins to another stakeholder to vote on his/her behalf.

Note: Giving votes using coins doesn’t mean voters are giving their coins to the delegates. They are just allotting funds to express their votes. They can reassign their token or coins to vote for some other delegate as well.

Let’s see the below diagram to understand the process of voting is DPoS.

Let’s see how to process goes among selected delegates. In the below case, we have 3 delegates Ross, Rachel, and Joey.

Under normal regulated conditions, each delegate produces a block after every few seconds by turns. Each delegate follows the scheduled time slot to submit their block. 

In case any delegate shows malicious behavior or fails to approve his block as valid, loses his reputation and stakes to the network. In addition, that delegate gets immediately replaced by another delegate to keep the process going on. Therefore, DPoS is way faster than the Proof of Work mechanism.

The blockchains using DPoS as their consensus mechanism are EOS and Steemit with 21 witnesses; Tron with 27 witnesses; Cosmos, Bitshare, and Lisk with around 100 witnesses.

Proof-of-Stake (PoS) VS Delegated Proof-of-Stake (DPoS)

Proof of stake (PoS) randomly selects the block producer among the validators. Unlike PoS, Delegated Proof of Stake first, choose the delegates by the voting system. Then, each delegate gets his/her turn in the process of submitting their block of transactions. Their role also includes verifying other blocks added to the network.

DPoS has a higher transaction volume than PoS. The process of transaction confirmation in DPoS is also faster than PoS.

Benefits of Delegated Proof-of-Stake (DPoS)

Following are the advantages of the DPoS consensus algorithm:

• It produces limited incentives for network witnesses as rewards.
• It has a higher transaction volume and way lesser confirmation time.
• Time and energy-efficient protocol.
• More scalable as it doesn’t rely on the computing powers of a node or system.
• It provides more power in the hands of network participants. Hence, it encourages a democratic model.
• Here, the delegates (or witnesses) are also the block producers and validators, which increases their interest in the process of verification.

Limitations of Delegated Proof-of-Stake (DPoS)

Following are the disadvantages of the DPoS consensus algorithm:

• It’s not applicable to the initial consensus system. It requires a significant amount of pre-existing participants in the network. 
• With a limited number of witnesses, DPoS can turn the network into centralized control.
• Delegates should be honest and well-informed about the network progress, which is hard to find and struggles with the risk of discrepancy.
• DPoS system can discourage beginner network participants with lower coins in the voting process. 

You can also read about Digital Signing in Blockchain using Cryptography.

Conclusion

In the above article, we’ve started with the basics of the consensus mechanism along with the limitations of Proof of Work. Then we covered a brief about the Proof of Stake (PoS) mechanism. Afterward, we jumped to our focused topic delegated proof of stake (DPoS) along with working. Moreover, we covered the differences between PoS and DPoS. At last, we covered the benefits and limitations of DPoS.

Hope you enjoyed reading the article and learned something new out of it. Please share your comments and feedback in the link below.

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