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Delegated proof-of-stake (DPoS) Meaning

Jul 20, 2023 | Updated Jul 20, 2023
Delegated proof-of-stake is a consensus mechanism which allows users of a network to vote and elect delegates who will validate transactions on that network.

What is Delegated proof-of-stake (DPoS)?

Proof-of-stake (PoS) consensus mechanism uses validators to verify transactions and create the next block in the network. This technique is viewed as a cheaper and more efficient alternative to proof-of-work (PoW) consensus mechanism. The latter requires high computing power, large amounts of electricity, and technical know-how. The PoS mechanism does not require validators to mine, instead they stake the required number of coins on the network and are randomly selected to create the next block and earn rewards. 

The criteria for choosing validators differ but users with the largest number of staked coins have a higher chance of being selected for each block. This system reduces the risk of a compromise as it would require a hacker to control 51% of the staked coins on the network to launch an attack.  

A delegated proof-of-stake (DPoS) system allows users to stake their coins but instead of becoming validators, they elect a delegate to perform this task. Delegates are also known as ‘witnesses’ or ‘block producers’. The number of delegates for every new block is limited (20-100) and they are elected based on their reputation. New delegates are elected for each block and they receive the reward for validating that block which is distributed to users who staked their coins in that delegate’s pool.

The DPoS system solves most of the constraints associated with PoW and PoS blockchains like democratically electing delegates and a shorter transaction per second (TPS) time. The consensus mechanism uses a voting system to select witnesses who validate transactions and create new blocks. Delegates oversee governance in the DPoS system and they are voted in by other users. They can propose changes like altering the size of a block or which witnesses will receive block rewards. Another component of this consensus mechanism are validators who validate the blocks created by witnesses. Validators receive no rewards for this task. 

The DPoS consensus mechanism evolved from the PoS system with variations that add more value to consensus mechanisms. The system allows users to select delegates based on reputation and not wealth allowing for more diversity and trust. The small pool of validators allows for a faster transaction time. 

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