Understanding Blockchain Fundamentals, Part 3: Delegated Proof of Stake

Articles in this Understanding Blockchain Fundamentals series:

  1. Part 1: Byzantine Fault Tolerance
  2. Part 2: Proof of Work & Proof of Stake
  3. Part 3: Delegated Proof of Stake 👈

What is Delegated Proof of Stake?

DPoS is a system in which a fixed number of elected entities (called block producers or witnesses) are selected to create blocks in a round-robin order. Block producers are voted into power by the users of the network, who each get a number of votes proportional to the number of tokens they own on the network (their stake).

  • Block validators in DPoS refer to full nodes who verify that the blocks created by block producers follow the consensus rules. Any user is able run a block validator and verify the network. (This can be confusing, since in Casper’s PoS, the word “validators” refers to those who create blocks).
  • BitShares: 101
  • Steemit: 21
  • Lisk: 101
  • Ark: 51
  1. The ith block producer signs the ith block, until i=N.

Too Good to Be True?

As we have written previously, DPoS is a protocol that sacrifices decentralization for throughput due to the low number of block producers.

The base layer of a blockchain that can transfer financial value must be fully decentralized and secure. The base layer must not be compromised.

Interestingly enough, despite heavy marketing from certain projects promoting DPoS as being “superior” to PoW blockchains like Ethereum, even 50% of 880 users in a recent Twitter poll realized that this comes at the expense of decentralization:

What about Using DPoS for Specific Use Cases?

We are not the first to think of this. As Myles Snider explains:

Hard Forks on Layer 2 Chains vs. Layer 1 Chains

On a DPoS chain, if an adversary gained control of the network through acquiring a lot of stake, then the blockchain would be forced to hard fork in order to censor that adversary.

In the case of an app or game running on Layer 2, as long as the integrity of the underlying data is maintained, hard-forking is a viable solution.

Increasing Layer 2 Security Further With Plasma Cash

Conclusion

In order to run large-scale games and DApps on a blockchain, it’s necessary to sacrifice some decentralization in exchange for higher performance and cost efficiency — and DPoS seems to be a perfect match for these use cases.

References:

[1] Response to Cosmos white paper’s claims on DPOS security

Loom Network

The Production-ready, Multichain Interop Platform for Serious Dapp Developers

Loom Network

Loom Network provides developers the scalability and usability they need to build high-performance user-facing dapps today. With seamless integrations to Bitcoin, Ethereum, Binance Chain, and all major blockchains, deploying once to Loom lets you future-proof your dapp

Georgios Konstantopoulos

Written by

Research @paradigm. prev: independent consultant

Loom Network

Loom Network provides developers the scalability and usability they need to build high-performance user-facing dapps today. With seamless integrations to Bitcoin, Ethereum, Binance Chain, and all major blockchains, deploying once to Loom lets you future-proof your dapp