Delegated Proof of Stake (DPoS) Guide
Prominent cryptocurrencies using Delegated Proof of Stake (DPoS):
Delegated Proof of Stake (or in short known as DPoS) is a consensus protocol invented by blockchain scientist and EOS founder, Daniel Larimer. DPoS is used by various cryptocurrencies and blockchains to validate transactions and establish distributed consensus via a social reputation system working with real-time voting of every token holder. Hence, DPoS is regarded by many to be the most democratic and least centralized protocol since everyone that owns the DPoS based cryptocurrency token can exercise an amount of influence on changes and what happens on the network.
DPoS Voting Mechanism
Token holders have the power to vote in any number of active delegates into their roles. Voting power of a token holder is determined by the number of based token the token holder owns, with more owned tokens resulting in more voting power. It is recommended for voters to select delegates for the best interest of the blockchain network because the delegates will be in-charge of securing the network by validating transactions and running the blockchain by producing blocks after being voted in.
Key responsibilities of delegates:
1. Ensure their node is always running and functioning.
2. Validating transactions.
3. Collect transactions across network and placing them into blocks.
4. Signing and broadcasting blocks.
DPoS Block Productions & Rewards
The slate of delegates is updated once every day or every maintenance interval when the votes are confirmed and tallied. All voted in delegates will then get shuffled with every delegate given a turn to produce a block at a fixed rate of 2 seconds per block. Delegates will get paid for the blocks that they produced. If a delegate is unable to produce a block in time, they will not get paid, their allocated turn will be skipped and the next delegate will produce the next block. After every delegates have produced a block, they will be shuffled again.
DPoS Transaction Validation
Delegates have no power to change transaction details, but they can in theory exclude transactions in a block since they are the validators. But this has only a temporary effect because those transactions will eventually be included in the following block by other delegates and the dishonest delegate will likely get voted out by the network after that.
PoW Vs DPoS
DPoS is by far more superior in terms of transaction speed with the selection and voting of a fixed number of block producers, allowing transactions to be validated within seconds while Proof of Work (PoW) protocol used by Bitcoin takes on average 10 mins for every transaction, consumed huge amount of energy and is not environmental friendly.
In another DPoS version, called the Deposit Based Proof of Stake, the delegate will need to deposit funds into a security account which will only be unlocked after certain period of time to prove his or her commitment. If the delegate misbehaved maliciously, the funds can be confiscated by the network.