PoS, DPoS, and PoF: Three Different Ways To See The World of dApps.

By Dj on ALTCOIN MAGAZINE

The world of decentralized applications is on the rise. According to the DappReview.com website, the amount of Dapps in the last two months has had a substantial growth of 6.3% per month, increasing the offer to 3093 applications formally registered on its popular page.

The vast majority, of course, are hosted by Ethereum, the leading platform by tradition with 62.10% of the total registered, followed by EOS and Tron strictly in that order.

However, these three popular platforms are not the only ones that have the ability to host decentralized applications. From the problems that arose with CryptoKitties in Ethereum, the need for several technological improvements in terms of scalability of blockchains became a fundamental point to solve in order to avoid similar situations.

Consequently, the needs to update the consensus mechanisms by then, Proof of Work, on which Ethereum and Bitcoin mainly work, became hours of study for many developers who saw the future in the applicability of blockchain technology in a world increasingly focused on Dapps.

As a result, three important protocols have emerged since then, among the most notable for platforms that are capable of hosting decentralized applications: Proof of Stake (PoS), delegated Proof of Stake (dPoS) and Proof of Formulation (PoF).

1st Generation: Proof of Stake (PoS).

The Proof of Stake (PoS) system is born as an alternative due to the discordant voices with the energy use of cryptocurrencies such as Bitcoin, which are based on proof of work (PoW) and the high costs of mining equipment. The Stake Proof system generally uses transaction fees as a reward.

In the PoS algorithm with having cryptocurrencies in your possession, you are rewarded. That is, having cryptocurrencies in your wallet is the proof that reflects that you participate in the cryptocurrency. User wallets are responsible for storing and validating blocks.

The blocks are generated semi-randomly, taking priority, who have more coins stored and for longer. Everyone who has coins in their wallet will receive a reward, but those who have more coins will receive a larger reward. So that the process does not favor only the richest nodes in the network, more unique methods are added to the node selection process. The two most commonly used methods are “Random block selection” and “Currency age selection”.

This algorithm was developed by Sunny King and Scott Nadal in 2011 and the first time it was implemented in a cryptocurrency was in 2012, when they launched PeerCoin (PPC), the first cryptocurrency based on Proof of Stake (PoS). Nxt and Blackcoin soon followed suit.

However, not everyone likes Proof of Stake. Its detractors believe that it is a model that enhances hoarding. The more coins a user has, the more reward he receives and therefore the hoarding of cryptocurrencies is encouraged. This causes the number of circulating coins to drop and the price to increase artificially.

Cryptocurrencies like Ethereum are considering adopting a mixed model. Proof of work in the first years, and then migrate to Participation Test, defending that this would allow them to keep the best of both models since the problem is not the models if they are not used in excess and at the wrong time.

Platforms with Dapps in PoS genuinely have Qtum with more than a dozen decentralized applications under its belt generated under the Solidity language, the same as Ethereum.

Others to a lesser extent are Wanchain with three outstanding Dapps under its belt under Solidity, and Cardano, with its outstanding Traxia application developed on its particular Haskell language, in addition to the recent Matic Network platform under development, a Layer 2 scaling solution of Ethereum.

It is worth noting that platforms that do not use dPoS use a variant of PoS to host decentralized applications, but whose rationale is similar with some variants. In general, we could say that 80% of Dapps are under this first-generation protocol.

2nd Generation: Delegated Proof of Stake (DPoS)

Delegated Proof of Stake, is a consensus protocol designed for highly scalable blockchains. This algorithm was created by Daniel Larimer in 2014. The implementation of this protocol offers Byzantine Failure Tolerance (BFT). This means that it provides high levels of security for public blockchain use. In addition, its operating model guarantees high levels of scalability.

To make this possible, all network participants choose to vote a series of “delegates”. Once chosen, they form a group that allows the BFT protocol to be implemented. This is because their quantity is defined and limited, and there is partial confidence in them.

Delegates define a rotation of leaders. This means that each delegate has a turn within the rotation to produce a block. Thanks to this action, said delegate can generate a block and collect a reward for it. If the delegate is not available when your turn comes, you must wait for a new one.

The voting power of each participant in the network is proportional to their participation in it. This feature is part of its relationship with the Participation Test consensus protocol. To favor decentralization, it is common for DPoS-based networks to vote on decisions related to their operation. Topics such as rewards, the number of delegates the behavior before bifurcations of the network and others. In addition to allowing delegates to be penalized if they do not behave as expected.

DPoS partially solves one of the most relevant problems that blockchain has, scalability. All this without having to use high power equipment, and high energy consumption. However, to achieve this, it makes a sacrifice in decentralization. This is because block processing depends on a limited number of delegates. This approach could allow such delegates to behave as a central entity.

DPoS exposes the blockchain to failures related to the voting system. For example, DPoS users with small bets may decide that their vote does not matter compared to the votes of the largest stakeholders, in addition to promoting centralization as we mentioned earlier.

The first blockchain that made use of this consensus algorithm is that of the BitShare platform. BitShare is a project created by Daniel Larimer himself and works as a decentralized exchange (DEX).

Other projects that make use of DPoS for the use of Dapps are: EOS, Lisk, Loom and Tron. All these blockchains have one characteristic in common: better scalability compared to their PoS competitors.

EOS and Tron are perhaps the most prominent protocols of this protocol and those that currently dominate the spectrum of Dapps in terms of transaction per second, users and daily volume in millions of dollars, followed by Loom with eight outstanding applications and Lisk with just three developments to his credit.

However, despite the publicity that the owners of EOS and Tron spend to try to capture the Dapps market, a recent survey showed that most developers were in favor of offering their knowledge to generate applications on Ethereum and innovative platforms Third generation, with high scalability and less centralization than EOS for example, with its 21 Block Producers.

3rd Generation: Proof of Formulation (PoF).

An improvement of the previous protocols that try to solve next to the PoW energy expenditure is the novel consensus algorithm proposed by the Korean FLETA platform called Proof of Formulation (PoF), that prevents forks by providing real-time confirmation of blocks and transactions.

The platform with its proposal tries to solve the shortcomings of PoW (energy expenditure), PoS (security failure) and the dPoS (centralization) combining the best of each in a single consensus mechanism.

In Proof-of-Formulation (PoF), mining and block generation is done differently compared with existing blockchain platforms. Formulators act as the block generators on the FLETA platform. Observers allow for real-time confirmation of the blocks that are generated and prevent double-spending.

Formulators serve as the backbone of the PoF algorithm. Their ranking is based on a score, which is calculated by the following formula:

Score: uint64(Phase) << 32 + uint64(binary.LittenEndian.Uint32(hash[:4]))

In the PoF algorithm, it differs from the PoW in that it does not require enormous computing power and also differs from the DpoS, where only elected delegates can participate in mining.

In the algorithm proposed by FLETA, mining tries to be more decentralized. A Formulator is a node and everyone participates in mining once per phase according to the designated ranking. The rank is set randomly and there is no rule in the setting of the rank and the formula changes in every phase, so it is actually impossible to predict the rank. This ensures avoiding failures shown on the platforms under the PoS scheme.

Due to the short time of the block of only 0.5 seconds, mining is high-speed, with just four seconds per mining. Moreover, in the FLETA’s mining ecosystem, blocks are instantly confirmed through Observer Nodes. Among five Observer Nodes, three of them should validate the blocks immediately after generating the blocks, which enables the blocks to be disseminated quickly.

As 3 out of 5 observer nodes are required to sign off on a block in order to confirm it, forks are simply not possible because the first block with 3 out of 5 signatures will be confirmed as the next block in the chain.

PoF is a new consensus algorithm that does not only maintain the outstanding performance of the chain but also improves the vulnerability of its security.

FLETA currently has a month of being with its mainnet on the air, and thanks to its high scalability through the use of sharding parallel technology and an independent multi-chain structure, the platform promises to be an excellent environment for unlimited Dapps development by separating the performance of the main-chain and the data domain, allowing each Dapp to be operated independently resulting in a reduction in the excessive costs of developing and executing decentralized applications.

Thanks to Sharding, FLETA can be operated in parallel, without double-spending, as each shard is separated so that the data is not shared among them. Additionally, the enhancement of TPS is achieved with the increase in the number of shards, along with the enhancement of TPS in each shard, making FLETA process 20,000 transactions per second in beta testnet and an average so far of 15,000 transactions per second on its mainnet.

Currently the platform is in the development phase of some Dapps based on gaming with blockchain technology that already promise to generate noise within the space dominated by traditional platforms and compete with some similar developments based on PoS (and derivations) such as Matic , Harmony and Cosmos that according to their official website will be focused on the Dapp Gaming industry.