Despite the fact that delegated proof of stake (DPoS) is not the original Bitcoin (BTC) protocol, some argue that it is the most true to the original definition of decentralization. Here's what you need to hear about this revolutionary way of finding blockchain consensus.
Review of Proof of Stake (PoS)
What is proof of stake (PoS)?
It's a way of achieving blockchain consensus and adding transactions to the ledger.
Proof of Stake employs an algorithm to pick delegates to perform functions similar to Bitcoin "mining" (BTC). Your “stake,” or the amount of cryptocurrency you own, affects the chances of being a delegate.
PoS delegates are compensated for their efforts in the form of transaction fees collected from users. However, since this scheme is prone to the rich getting richer, various solutions such as randomization, age-based filtering, and other workarounds have been proposed.
What is Delegated Proof of Stake (DPoS)?
Delegated Proof of Stake (DPoS) is a tool for validating and attaching transactions to a blockchain network's shared ledger. Unlike other approaches, DPoS networks elect a pool of delegates using both real-time voting and algorithms. This is why it's referred to as "delegated" evidence of stake.
Delegates' Roles
Delegates can verify transactions and build blocks, or they can't. As a reward for their efforts, they are charged transaction fees. Users can easily exclude bad actors and sanction bad conduct by competing for votes, which are still ongoing.
Furthermore, as compared to proof of work (PoW), delegated proof of stake consumes significantly less resources. It can also process transactions at a faster rate. However, one of the most distinguishing characteristics of DPoS is its ability to boost decentralization at a fraction of the cost. As a result, inflation is reduced and the value of the asset continues to rise.
Who Created It?
Delegated evidence of stake was invented by Dan Larimer. This was inspired by an article he wrote on decentralized companies.
Larimer was also the founder of the first Decentralized Autonomous Organization (DAO) (DAO). From the technological leap that spawned the DAC idea to today's DPoS systems, there is a direct line. This latest consensus framework was introduced in 2014 by BitShares, one of Larimer's first projects.
Step-by-Step DPos
Delegate Elections: Users build a panel of small, trusted parties, known as "delegates," using reputation algorithms and real-time voting.
Adding Blocks to the Blockchain: Delegates have the ability to add blocks to the blockchain. They may also refuse to accept untrustworthy parties. The blocks are validated in a random order by the delegates. If no one responds, the option is made by the next delegate selected at random.
Delegate Acts The following what was published on the blockchain: This allows the society to keep track of the activities of elected delegates at all times. The group will vote a delegate out if they don't like what they see.
DPoS vs PoS
It is both less expensive and quicker. The algorithms used in Delegated Proof of Stake (DPoS) are more powerful than those used in PoS. Efficient transactions use less resources and are thus less expensive and quicker.
It distributes staking prizes to a larger number of individuals. More users on the network have a better chance of earning block rewards because the pool of delegates is continuously expanding. To put it another way, owning a stake in a DPoS coin pays off better than owning a stake in a PoS coin.
This protocol addresses the dilemma of the "rich getting richer." Stake isn't the only factor that determines who validates a block and receives the reward. Instead, delegates are chosen based on who can better meet the needs of all users, as determined by real-time voting and credibility. So, if anyone is just hoarding fees, they will be quickly voted out by the government.
DPoS encourages the growth of networks. Since delegates compete for work, those who reinvest their incentives in the platform are more likely to keep their jobs.
The degree of decentralization can be selected by the user. Unlike PoS, DPoS networks have the ability to vote on whether to increase or decrease the number of delegates. However, in order for this platform to succeed, users must be able to make well-informed decisions.
