Delegated Proof-of-Stake (DPoS) Explained

wood to represent Delegated Proof-of-Stake

Delegated Proof-of-Stake

Invented by Daniel Larimer, Delegated Proof-of-Stake (DPoS) is an alternative consensus mechanism that requires coin holders to vote for “delegates”, who are then responsible for validating transactions and maintaining the blockchain. DPoS is an alternative to the more commonly known, Proof-of-Stake (PoS) model which requires miners to put up a stake in a cryptocurrency in-order for them to be able to validate transactions.

Process of Delegated Proof-of-Stake
The process of Delegated Proof-of-Stake is quite a bit different from more traditional consensus mechanisms. In DPoS, stakeholders elect what are known as witnesses. Witnesses are responsible and rewarded for generating blocks which are then added to the blockchain. Stakeholders can vote for as many witnesses as they wish, so long as, at least 50% of the stakeholders believe sufficient decentralization has been achieved through the number of elected witnesses. The voting for witnesses is a continuous process, therefore, witnesses have an incentive to carry out their function to the highest standard or they risk losing their position.

In addition, there are also what are known as delegates. Delegates are elected in a similar manner to witnesses, however, delegates are responsible for maintaining the network and can even propose changes to the network. Changes such as: Block sizes, the amount that witnesses should be paid and transaction fees. Once these changes have been submitted, it is then up to the stakeholders to decide whether or not the proposed changes should be implemented.

Advantages of Delegated Proof-of-Stake
Delegated Proof-of-Stake offers advantages over the most well-known consensus algorithm, Proof-of-Work (PoW). These advantages include:

  • Saving on energy costs
  • Promotes decentralization

Savings on energy costs: In contrast to PoW, which requires large amounts of energy in-order to decide who gets to add the next block to the blockchain, with DPoS, witnesses are given a specific time schedule to add the next block to the blockchain. Therefore, specialised computers are not needed in-order to solve the complex mathematical problems needed for PoW.

Promotes decentralization: In-order to be a successful miner of a cryptocurrency that uses the PoW mechanism, you are required to build large mining rigs that better increase your chances of adding the next block. This promotes centralization because, only those that can afford large mining rigs will be able to mine for a cryptocurrency. Contrast this with a DPoS consensus mechanism, that allows stakeholders to choose who gets to validate transactions, therefore promoting greater decentralization.

The use of Delegated Proof-of-Stake as consensus mechanism is growing. Whilst this is not an exhaustive list, the cryptocurrencies that currently use DPoS includes:

  • BitShares
  • Lisk
  • EOS
  • Steem
  • Ark

Delegated Proof-of-Stake is meant to solve a few of the issues that more traditional consensus mechanism have. As the cryptocurrency space continues to go grow, it is likely that other consensus mechanisms will emerge in an attempt to further better the current system.





My name is Bisola Asolo and I am a crypto enthusiast. I love reading and writing about anything and everything related to cryptocurrency and blockchain technology!Make sure to follow me on Twitter: @BisolaOTAsolo, to get my thoughts on recent cryptocurrency developments.
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  • thomas

    Bisola – thank you for this article, i found it very helpful. Your article was written ~2 months ago and I am curious if there are new coins that are utilizing DPOS? if so can you please add them to the comments field?