Hello. In this post we’ll take a look at Delegated Proof-of-Stake consensus model in action.

Public blockchains often face scalability issues. To tackle these issues, some blockchains (i.e., EOS) have adopted the Delegated Proof of Stake (DPoS) consensus mechanism. DPoS seeks to speed up transactions and block creation, while not compromising the decentralized incentive structure at the heart of the blockchain.

What is Delegated Proof-of-Stake consensus?

Delegated Proof-of-Stake (DPoS) consensus is a fast, efficient, decentralized, and highly flexible blockchain design. It was invented and built because Bitcoin mining system (Proof of Work) was too wasteful of energy and too slow. DPoS includes: A cryptocurrency, a blockchain, community of people, computers and rules.

How does it work?

DPoS leverages the power of delegated stakeholder approval voting to resolve consensus issues and validate the blockchain in a model with similar designs to democratic systems. Essentially, stakeholders who own any amount of tokens in their wallet are capable of voting to elect block producers who are chosen based on which block producers have the most votes at the end of each voting round. An important distinction of DPoS from PoS is that in DPoS, there is no minimum stakeholder token requirement to participate and instead of stakeholder tokens proportionately representing their ability to produce blocks, users cast votes proportional to their stake to select block producers.

DPoS is intended to be a more efficient form of PoS consensus. Specifically focusing on scalability, it can provide reliably confirmed transactions on the network in seconds and is capable of scaling to levels among the highest of any current consensus mechanisms. The system is built around a reputation and real-time voting process in order to achieve consensus.

The process for reaching consensus in a round can be broken down into the following basic steps:

Block producers are elected by the stakeholders in a round of voting.

Once the producers are selected, they are deterministically given a round-robin rotation for a round of blocks equivalent to the number of producers selected. This creates a competitive market within the round, ensuring reliability.

Block producers validate and broadcast blocks to the network.

Consensus is reached and the next round begins.

Advantages of DPoS systems:

· They are much faster than traditional Proof-of-Work and Proof-of-Stake systems.

· Their incentives and structures enhance the security and integrity of their blockchains, and each user has an incentive to perform their role honestly.

· No specialized equipment is required to become a user, witness, or delegate. A normal computer is enough.

· They are energy efficient compared to power-hungry Proof of Work hashing algorithms.

DPoS in action

EOS is the world’s seventh-largest blockchain by market cap as of this writing. It went live in June 2018, after a yearlong initial coin offering (ICO) that raised $4.1 billion in crypto for Block.One and a tumultuous process following the release of EOSIO software, the code that powers EOS and its forks.

The chief feature of EOS was always its most controversial: EOS uses a consensus model called delegated proof-of-stake (DPoS), where higher throughput is achieved by decreasing the number of nodes that participate in consensus.

Before EOS launched, the configuration was widely panned by crypto investors as too centralized. Blockchain Capital’s Spencer Bogart shared an opinion held by many in April 2018 when he wrote that blockchains that compromise on permissionless-ness “will end up as less efficient varieties of today’s centralized platforms.”

DPoS can take many forms, but on EOS, 21 nodes have all the power over the chain. These 21 nodes are chosen by token holders, who stake EOS coins in a vote for up to 30 BPs. The ones with the most votes serve in the top 21, and the vote is effectively continuous. That means BPs can move in and out of the top 21 at almost any time.

A majority of the BPs indicate their locations as within China. Sources tell CoinDesk that multiple others are also located in China despite outward appearances. CoinDesk surveyed all the top BPs as of Sept. 6, with questions about what they viewed their role on the blockchain to be and how they were supporting its users. Six sent back detailed answers. CoinDesk found no way to contact three others.