In the progressive environment of blockchain technology, consensus algorithms play a major role to keep the blockchains running efficiently by allowing all the nodes in the decentralized network to come to an agreement.
Delegated Proof-of-Stake (DPOS) is a consensus mechanism used in blockchain networks where the users elect delegates who further authenticate the upcoming blocks and transactions with an aim of securing the network. Similar to the classic proof of stake mechanism, delegated proof of stake uses a collateral staking process where the user has to stake some value in order to receive an outcome. DPOS also offers minimal power consumption along with lower costs and faster transactions with higher scalability.
There are several types of consensus mechanisms, the initial one Proof of Work got a better substitute – Proof of Stake as it consumes lower energy and cost. In proof of stake users confirm their transactions by staking their tokens and receive rewards in the manner of additional tokens which can be further used for any transactions. Although not every proof of stake blockchain functions this way the fundamentals might be similar whereas the protocols and procedures may differ. Here, comes the Delegated Proof of Stake in picture. Let’s have a closer look into how DPOS functions.
Learn more about Consensus Mechanism: How does Proof of Work and Proof of Stake Differ?
How Does Delegated Proof-of-Stake (DPOS) Work?
Delegated Proof of Stake (DPOS) is a consensus algorithm developed to sort out complications between the classic Proof of Work (POW) and Proof of Stake (POS). Delegated Proof of Stake is designed with an aim to offer enhanced efficiency.
The Delegates play a pivotal role in DPOS network, users vote for the delegates and elect the one who will get a preferential treatment along with the right to alter the reward shares for witnesses and recommend revisions to block sizes. Here, delegates put forward the proposals within the network and users vote on these proposals.
DPOS follows a distinctive voting system to elect the delegates. Only users that have DPOS tokens can vote for witnesses relying on their well established credibility.
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Pro’s and Con’s of Delegated Proof-of-Stake (DPOS)
Let’s discuss the pro’s and con’s that comes along with DPOS:
Pro’s of Delegated Proof of Stake
Instant Transactions
DPOS provides faster transactions in contrast with Proof of Work and Proof of Stake, helping the users to cut corners.
Sovereignty
Delegated Proof of Stake empowers its users that hold DPOS coins with the decision to vote for the delegates.
Incentive System
In DPOS, users and delegates both receive rewards making it an equitable process.
Robust Security
Since Delegated Proof of Stake is an enhanced version of Proof of Stake and Proof of Work it provides advanced security measures ensuring safety above all.
Limited Validators
DPOS has finite elected delegates numbering from 20 to 100 whereas Proof of stake chooses its validators on the basis of the amount of crypto staked.
Pro’s of Delegated Proof-of-Stake
Limited Collaboration
Since the delegates are elected and the number of delegates to be appointed are predetermined only these members will be a part of decision making.
Solicit Votes
Users that hold DPOS coins get an opportunity to vote for the delegates, in this case there are high chances that the delegates can buy the votes from the users.
Discrimination
Since all the users are known to each other there are chances of favouritism and biases towards their personal favourites and a genuine member can missout in this case.
Prolonged Learning
Some users may require more than usual time to understand the entire process to consciously engage.
Operational Complexity
DPOS is an enhanced consensus algorithm which comes with enhanced features as compared to the classic POS and POW this increases the continuous need for maintenance and operations which might become more challenging.
Features of Delegated Proof-of-Stake (DPOS)
Now let’s get to know more about the features of DPOS:
- Sustainable: Delegated Proof of Stake requires very less power consumption to run its network this makes it more environment friendly.
- Staking Mechanism: In order to get selected for becoming a part of the voting system the users need to store a particular amount of their crypto in the staking wallet, the users that have staked higher amount have a higher chance to get selected.
- Reward system: Delegated Proof of Stake follows a reward system where the voters get a chance to earn reward in the form of DPOS coins, which are further divided on the basis of their amount staked.
- Decentralized process: DPOS follows a decentralized process as only the users that hold DPOS coins will be eligible for voting and choosing the delegates, which minimizes risks of unwanted engagement and makes the entire process decentralized.
- Democratic: DPOS is democratic as this process involves a lot of governance, voting, electing and giving rights to users to make decisions.
Final Words
In conclusion, Delegated Proof-of-Stake is an advanced version of the traditional Proof of Stake and Proof of Work. While there were certain limitations in the Proof of Work and Proof-of-Stake, development of Delegated Proof of Stake came into picture. DPOS is much faster than the classic Poof of Work and Proof of Stake, with higher sustainability and democratic nature that makes the entire process of Delegated Proof of Stake more secure.
With enhanced features such as decentralized process, staking mechanism and reward system this also makes Delegated Proof-of-Stake (DPOS) more complex. However, it aims at providing better consensus for its users by bridging the gap between Proof-of-Stake and Proof of Work. This article consists of all the details required to know about Delegated Proof-of-Stake along with its Pro’s, Con’s and primary features, however, doing your own research before coming to a conclusion is must.
