What is Delegated Proof of Stake (DPoS)?

In recent years, it has been abundantly clear how powerful blockchain technology is in transforming technological systems and infrastructures all around the world. However, there has been significant debate regarding the energy efficiency of Proof of Work (PoW)-based blockchains due to the environmental impact of blockchain networks. As a result, Proof of Stake (PoS) blockchains became a practical solution. What does a blockchain network's delegated proof of stake entail?

 

A sort of blockchain consensus technique called delegated proof of stake enables users to use their currencies to cast votes for different delegates. Once elected, these delegates have the power to decide important matters that affect the entire network. For example, the chosen delegates can establish protocol guidelines or verify transactions.

 

Delegated proof of stake has generally been found to be the most efficient consensus mechanism, which has contributed to the sustainability and scalability of the Blockchain system. With proof of work procedures, the stake consensus can do away with the energy-intensive mining process. The guide that follows examines delegated proof of stake and all the advantages it offers as a consensus mechanism.

 

Also Read | Major Types of Blockchain Protocols

 

What are Proof-of-Stake (PoS) and the Consensus Mechanism?

 

The network is kept in sync with the help of a consensus mechanism. It is a state of agreement where all members of the network reach a consensus. An example would be when a group of friends decides to travel together. 

 

If the group is large, convincing every person is challenging. As a result, we have many tools to jointly decide on the next major update to the network. for instance, Proof of Work (PoW), Proof of Stake (PoS), Proof of Elapsed Time (PoET), and numerous others.

 

Blockchain networks employ Delegated Proof of Stake as one particular type of consensus mechanism (also known as a consensus protocol) to decide which transactions should be accepted and which should be rejected. Delegated Proof of Stake has grown in popularity recently although Proof of Work and Proof of Stake is more often utilized in consensus algorithms.

 

Proof of Stake reinstates alternative standards for consensus processes, overcoming the drawbacks of the Proof of Work algorithm, such as its enormous energy consumption. However, a tonne of study is being done to demonstrate its robustness.

 

The PoS mechanism makes use of stakes provided by network users who want to add a fresh block to the system. The validator is each player who places a stake with their currency. Stake in this context refers to holding the monies provided by the validator in an additional escrow account. One validator is chosen at random from among all of them to add a fresh block of transactions to the distributed network. The block of transactions added by the selected validator is checked by the other validators.

 

Also Read | Types of Blockchain Networks

 

History of PoS: 

 

In PoS, network nodes who have staked, or locked, their tokens as collateral, do data verification instead of thousands of computers competing and using energy to check network data as is the case with PoW. As decentralized technology advances, the idea has been improved upon by the world's blockchain developers and is largely seen as PoW's replacement.

 

In its Ethereum 2.0 version, scheduled to debut in 2021, the Ethereum network is working to switch from PoW to PoS processes. Some of the blockchains that currently use PoS are Tezos, Cosmos, Cardano, EOS, Algorand, and Synthetix Network.

 

PoS networks don't require mining that uses a lot of energy. Instead, where the cost of an intentional malicious error is larger than the block reward, the PoS process randomly selects a validator to validate the block of data.

 

How DPoS operates?

 

The delegated Proof of Stake algorithm can best be understood by taking a close look at how it operates. Delegated PoS has a notification requirement, which makes it a more effective consensus algorithm than others. 

 

The Proof of Work and Proof of Stake algorithms are currently used by the majority of blockchain networks. Stake-delegated proof consensus, on the other hand, has been designed to address the issues with Proof of Work and Proof of Stake consensus procedures.

 

Here is a thorough explanation of how the delegated PoS consensus method functions in many areas:

 

1. Voting: 

 

The voting process would be the key difference between a proof of stake and a delegated proof of stake comparison. The voting process used by delegated PoS is used to choose witnesses for transaction verification. Each delegated PoS network has a unique voting structure. On the majority of delegated PoS blockchains, users can vote directly or assign another user to act as their proxy.

 

In a delegated proof of stake consensus, the nodes that users vote for are referred to as witnesses. Block creation and transaction validation are the responsibilities of the witnesses. The witnesses are given extra prizes after all transactions in a block have been successfully verified. The users who cast their votes for the witnesses are then given incentives.

 

2. Block construction: 

 

The generation of the blocks takes place during the second stage of DPoS. Delegates now can add new blocks to the blockchain. Right now, the process is straightforward. Each delegate has the power to create a block at any time during the generation cycle.

 

The generation capacity is transferred to a new delegate after it has been generated, and so on until the cycle is finished. Transactions can be approved or rejected while they are being generated. Delegates are compensated for each created block and verified transaction.

 

Also Read | Difference between On Chain and Off-Chain Transactions

 

3. Delegates:

 

Delegates are a crucial component of every blockchain network using a delegated proof of stake, as is commonly mentioned. In essence, they are users in charge of running the blockchain network. The delegates are chosen by other network users. 

 

Delegates have additional privileges, one of which is the ability to suggest changes to a specific block's size. Delegates can also change the proportion of incentives given to witnesses that validate blocks. On the proposals put forth by delegates, users on the blockchain network cast ballots.

 

4. Time of Transaction: 

 

Another significant aspect of the operation of delegated proof of stake consensus is the transaction time. Only if stake-delegated proof consensus gives more efficiency can it be considered a superior algorithm to those now in use. In comparison to Proof of Stake and Proof of Work consensus algorithms, Delegated PoS has been developed as a more effective method. Transaction times differ from one delegated PoS network to another, it is significant to notice.

 

What Differentiates Delegated Proof of Stake?

 

In general, descriptions of DPoS portray it as a superior substitute for the Proof of Stake consensus mechanism. Before drawing any conclusions, it's crucial to understand the distinctions between PoS and delegated PoS. Your fears can be dispelled by reading an overview of a PoS vs. DPoS comparison and an explanation of the benefits of delegated PoS over proof of stake consensus.

 

You must first recognize that stake-delegated evidence provides a more effective and democratic alternative to Proof of Stake. Blocks are created by Proof of Stake blockchain users based on their stakes in the network and how long they commit to participating. 

 

On the other hand, delegated proof of stake enlists the assistance of elected witnesses and delegates. In delegated PoS methods, there are notable value advantages in the democratic selection of witnesses and delegates as well as the incentive-based approach to transaction verification.

 

Also Read | Types of Distributed Ledger Technologies (DLT)

 

Why Consensus Mechanisms Are Needed for Blockchain?

 

Stake-delegated proof's potential benefits must first be understood in the context of blockchain technology's need for consensus. Blockchain is a type of distributed ledger that may capture every transaction that takes place within a network. It has become clear that decentralization is a crucial aspect of all blockchain technology. This implies that a single entity tracks not all transactions. Instead, these transactions are dispersed throughout many network nodes.

 

Transaction validation using cryptographic hash functions is still achievable even though transactions are dispersed over numerous distinct nodes. For a variety of unique inputs, these functions provide unique results. The record with the most nodes is thought to be more reliable than the others. Consensus procedures are necessary for the correct operation of blockchain technology. These protocols enable the network's various nodes to correctly validate valid transactions.

 

With regard to Bitcoin particularly, it employs the proof-of-work (PoW) consensus protocol, which produces impressive results but is regarded as time- and energy-intensive. The transaction speed is thus slow when compared to the common networking protocols used by organizations like Visa and MasterCard.

 

Regardless of the protocols that various cryptocurrencies employ, they are required to make sure that every node inside a server can agree on every transaction. The nodes can agree to approve or reject a transaction when there is a consensus mechanism in place. Double-spending—the practice of using one coin for two different transactions—is also prevented by this system.

 

Also Read | Everything you need to know about Ethereum Virtual Machine (EVM)

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Different Proofs in Cryptocurrency

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Benefits of DPoS:

 

1. Voting by "delegates" happens quickly. Block producers may be swiftly set up in each round. The blockchain's scalability has significantly improved as a direct result of this.

 

2. Decentralize network participation. This is made possible through DPoS, which associates a user's participation in the network with the number of tokens they own. it promotes user involvement.

 

3. High performance and scalability are made possible by the parallelization that DPoS achieves. For instance, each turn produces 0.5 blocks on the EOS blockchain (126 seconds). We can see from this how many transactions per second certain blockchains can handle.

 

4. It enables token holders to optimize their profits. This is because they accumulate more tokens, become more active users on the network, and can produce more blocks.

 

5. The price of keeping networks secure goes down. This is a result of the fact that high-power equipment is not required for the network to function properly.

 

6. Make the best use of the network's resources, including CPU and bandwidth. 

 

Also Read |  Role of Blockchain Technology in Secured Payments

 

Drawbacks of DPoS:

 

The following are the DPoS consensus algorithm's drawbacks:

 

1. The original consensus system is not affected. It needs a substantial number of network participants who are already there.

 

2. DPoS can transform the network into a centralized control with a small number of witnesses.

 

3. Delegates need to be forthright and knowledgeable about the network's development, which is difficult to discover, and battle with the possibility of disagreement.

 

4. The DPoS mechanism may dissuade novice network users from participating in the voting process with fewer coins.

 

Also Read | What is a Consortium Blockchain?

 

Final Note:

 

DPoS, a stake-delegated proof method, is one of the most powerful consensus systems available. DPoS is faster than PoS systems and consumes less energy than PoW systems. Every blockchain network is built around consensus algorithms. 

 

It is ensured that transactions are validated fast and securely by using the appropriate algorithm. At a time when all blockchain protocols are making quicker transaction speeds, lower energy consumption, and network security their primary concerns, DPoS offers workable networking options.