What Is Delegated Proof-of-Stake (DPoS)?

The consensus mechanism is the blockchain's core. It coordinates the work of all nodes and ensures a secure workflow within a decentralized network.

Delegated Proof-of-Stake (DPoS) is one of the consensus mechanisms that includes several algorithmic processes at once. In today's article, we will talk about it in detail, discuss the pros and cons of DPoS, and analyze practical examples of cryptocurrencies that work on this algorithm.

What Is Delegated Proof-of-Stake?

Delegated Proof-of-Stake (DPoS) is a consensus mechanism where network users vote and select delegates to verify the next block. It emerged in 2013 from the classic Proof-of-Stake (PoS) algorithm to increase its efficiency and ensure a more democratic block verification process. It has its own operating principles, which you can learn more about below.

How Does the DPoS Algorithm Work?

Some experts criticize Proof-of-Stake (PoS) for the power centralization among users who hold the most tokens. DPoS attempts to solve this problem. Delegated Proof-of-Stake, like PoS, has a stake system, but DPoS works in a more democratic manner: users themselves vote on the network and select delegates (validators) who will verify and generate the next block. Only a limited number of such validators are permitted, and they are later replaced by others. This requirement is necessary to ensure the democratic aspect of the process.

If a delegate correctly confirms a block while confirming a transaction, they receive a reward, which they can then distribute among people who voted for them. Users, staked more tokens, can receive a larger share from the validator.

It is important to note that in order to comply with the democracy principle, voters will retain control over the system. Users can both appoint a validator and remove them from work if they notice any dishonest actions on their part. Therefore, a good reputation and positive reviews are significant in order to be elected as a delegate many times.

Pros And Cons Of DPoS

DPoS has its advantages and disadvantages. Let's talk about them in more detail.

Advantages:

• Low entry threshold: you don't need to buy expensive equipment like for the PoW algorithm to participate in transaction confirmation and block creation, so anyone can become a delegate.

• Democracy: users independently control the work of validators through voting, which ensures the transparency of the process.

• Scalability: a limited number of delegates participate in the network, and they are quickly replaced, which ensures high-speed and uninterrupted work of DPoS.

• Eco-friendliness: validators do not require specialized equipment or large amounts of energy to operate, which has a positive impact on the environment.

Disadvantages:

• Dependence on delegates: the system requires a large number of interested and well-informed validators who remain active. If there are not many validators or they work slowly, users suffer. This dependency can be an obstacle for new users when choosing the right delegate to confirm a transaction.

• Malicious delegates: a limited number of delegates makes it possible to collude, which means that the DPoS network can be vulnerable to a 51% attack, where the majority of participants act maliciously for their own purposes.

Cryptocurrencies On The DPoS Mechanism

Currently, DPoS is not widely used for a number of reasons, including high competition with PoW and PoS. Still, there are many successful crypto cases that work well on the Delegated Proof-of-Stake mechanism. Let's discuss them in more depth:

• Tron: it is a blockchain-based digital platform primarily designed to host entertainment applications, where delegates are called super representatives (SR). The work essence is that users vote for five SRs in each election. The 27 candidates who receive the most votes are appointed SRs.

• Sui: this is a decentralized network that offers high speed and low fees. The principle of DPoS in this case is that SUI holders independently select delegates proposed by the platform. Usually, this is a small group of people who do not change over time.

• Solana: this is a blockchain that offers high speed and low fees. In this instance, DPoS is used as follows: first, validators vote, then the network aggregates the vote data, taking into account each validator's share, and reaches consensus.

As you can see, DPoS systems can be implemented in different ways, depending on the developers' goals. As a result, the basis of DPoS operation differs based on the network.

DPoS Vs. PoS and PoW

Let's take a closer look at the differences between DPoS and the most popular consensus mechanisms, namely Proof-of-Stake (PoS) and Proof-of-Work (PoW). In fact, it's quite simple: unlike PoS and PoW, Delegated Proof-of-Stake was developed with the aim of increasing efficiency and ensuring democracy.

• Proof-of-Work requires significant computing power and energy consumption, which has a negative impact on the environment. This method also provides low speed due to miners (validators) solving complex mathematical puzzles.

• Proof-of-Stake requires staking your own tokens on the network, which validators then receive rewards. The downside of this mechanism is that it potentially favors those who have the largest number of staked tokens.

Delegated Proof-of-Stake, in turn, seeks to solve the problem of efficiency and democracy in order to combine high speed and a fair approach.

Thus, in today's article, we told you about one of the most efficient consensus mechanisms, Delegated Proof-of-Stake (DPoS). Like any system, it has its pros and cons, but the widespread attention from developers indicates the promising nature of this method. In the future, DPoS may become a powerful competitor to today's popular consensus mechanisms, such as PoS and PoW.

Was this article helpful to you? Let us know in the comments.