Delegated Proof of Stake: Speed, scalability, democracy

Consensus mechanisms are fundamental to the operation of blockchain and cryptocurrency. It forms the foundation of all blockchains. That's why everyone's always arguing about proof of stake and proof of work. These mechanisms are wide-ranging and diverse, and there are more than just two. Today, we're exploring a lesser-known variation, delegated proof of stake.

Kyle Turnbull

March 12, 2021 · 3 min read

Delegated proof of stake

Delegated Proof Of Stake

Today we’re discussing delegated proof of stake, how it differs from traditional proof of stake, and why this matters at all!

Like all of our articles, we will endeavor to make this easily digestible. Not everyone has the time or patience to read an entire academic paper on delegated proof of stake (DPoS). We get it. This will be quick!

In this blog:

  • Delegated proof of stake defined
  • Stake slashing
  • DPoS Benefits
  • DPos Concerns
  • POS vs DPoS
  • Divi and dual-key staking

Delegated Proof of Stake

Delegated Proof of Stake (DPoS) is a consensus mechanism that appeared as a variant of definitive proof of stake consensus. In DPoS, elected delegates are responsible for the validation of blocks and keeping the network secure. You can think of this as pooled staking, whereby all members of the network choose delegates and commit their stake to that delegate. DPoS was developed in 2014 and remains popular, being used by plenty of top cryptocurrencies, with Cardano and Tezos being great delegated proof of stake examples.

Stake slashing

If a delegator breaks the blockchain rules, a proportion of their stake is burned, and the delegator is removed. This process is called ‘slashing’ and presents a financial cost. Slashing exists to incentivize good behavior, leading to greater security. The specifics of the slashing rules vary depending on the blockchain. In some protocols (blockchain rules), slashing occurs at the delegate and voter level.

Why DPoS?

Advocates of DPoS assert that it is a more inclusive version of Proof of Stake. It’s easy for people to join and provides more security as reputation plays a more prominent role in delegate selection than just the delegate’s wealth. To help, we’ve collected some of the main strengths and weaknesses of DPoS, so you can make your mind up.

Benefits of Delegated Proof of Stake

  • Financially inclusive: Due to the lower barrier to entry of DPoS (and PoS), it becomes viable for smaller holders to join the network.
  • The promotion of democratic selection: Thanks to this financial inclusivity, the DPoS provides greater decentralization and fosters a more democratic ecosystem as more people can participate in consensus.
  • Scalable: The validation of transactions on a DPoS blockchain is detached from computing power, making them more scalable than PoW.
  • Sustainable: DPoS doesn’t require lots of power to run the network, which makes it more sustainable from an environmental perspective.

Proof of work vs proof of stake vs proof of authority

Delegated Proof of Stakes helps lower the barrier to entry for newcomers

Problems with Delegated Proof of Stake

  • The selection of delegates: To pick representatives who care for the blockchain, the currency users must be well informed. If not, unsuitable or malicious delegates could be chosen, compromising the blockchain.
  • Centralization: If there are a small number of suitable delegates, voting power centralization becomes a concern.
  • Issues with voting weight: Even though it’s easier for smaller members to participate, users can stop staking as they perceive their vote or stake to be insignificant compared to the bigger delegates.

Delegated proof of stake alternatives:

  • Liquid Proof of Stake (LPoS): With liquid proof of stake, delegation is optional. LPoS introduces on-chain voting, allowing direct changes to the blockchain.
  • Bonded Proof of Stake (BPoS): BPoS is similar to LPoS due to non-custodial, optional delegation of stake. However, the difference here is that the voters stand to lose their stake if slashing occurs. So, voters are required to do more due diligence in BPoS than other DPoS variants.

How this relates to Divi

The Divi Project’s dual-key solution creates an ecosystem that allows informal delegates to eventuate. The ability of smaller users to delegate their stake to another staker achieves many of the benefits of DPoS (ease of use, low barrier to entry) without the need to be a strict DPoS coin.

In this way, Divi can create the most intuitive and welcoming staking environment for newcomers without sacrificing decentralization, security, or scalability.

To continue your journey with DPoS, you can check out some of the following delegated proof of stake coins:

  • Tezos
  • Cardano
  • Lisk
  • Elastos
  • Ark

If you’re interested in learning more about proof of stake security and how you can start, or proof of work explained simply, our blogs make it easy.

If you want slightly more technical information, check out this more advanced delegated proof of stake medium article, or our complete guide to proof of stake!

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    Kyle Turnbull

    March 12, 2021 · 3 min read