Delegated Proof of Stake: A Refined Consensus

A blockchain is a decentralized peer-to-peer system with no central authority figure. While this creates a system that is devoid of corruption from a single source, it still needs all of the nodes to arrive on a common consensus. For the same, blockchain uses “consensus mechanisms”.

Consensus Mechanism is a group decision making process in which each member from the group needs to develop and agree to support a decision in the best interest of the system. It is the best way of reaching an agreement in a group. There are a lot of consensus mechanisms being used in many of the blockchains. We know the famous ones Proof of Work (PoW) and Proof of Stake (PoS), but there are many more mechanisms now. And, one of them is Delegated Proof of Stake.

Delegated Proof of Stake (otherwise known as DPoS) is a consensus algorithm maintaining irrefutable agreement on the truth across the network, validating transactions and acting as a form of digital democracy. Delegated proof of stake uses real-time voting combined with a social system of reputation to achieve consensus. It can be seen to be the least centralized consensus protocol compared to all others as it is the most inclusive. Every token holder can exercise a degree of influence about what happens on the network.

Active delegates are voted into their roles by token holders. The voting power that the token holder has, otherwise known as voting weight, is determined by how many of the base token the account is holding. The roles of delegates revolve around:

  1. Ensuring their node is always up and running
  2. Collecting the transactions across the network into blocks
  3. Signing and broadcasting those blocks, validating the transactions
  4. If there are issues in regard to consensus, DPoS allows these to be resolved in a fair and democratic way

Delegates do not have the power to change any transaction details. However, as they are validators they could theoretically exclude certain transactions in a block. Nevertheless, this has very little effect as the next created block will include these transactions, giving the next delegate the fees associated with validating them. DPoS is a more democratic system, and more efficient and effective. The selection of block producers allows for the transactions to be validated in a matter of seconds.

Blocks are produced in the rounds of 21. At the start of every round 21 block producers are chosen. Top 20 are automatically chosen while the 21st one is chosen proportional to the number of their votes relative to the other producers. The producers are then shuffled around using a pseudorandom number derived from the block time. This is done to ensure that a balance connectivity to all other producers is maintained. Block producers are punished (in terms of incentives or being removed from consideration) if they fail to participate in the validations.

That’s how DPoS is able to achieve faster transaction speed and maintain the security in blockchain. There are newer mechanisms coming up every now and then. The important part to remember is that there is no “perfect” consensus mechanism. Each consensus mechanism tries to achieve a certain way of validation for each blockchain.

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