Delegated Proof of Stake

DPoS (Delegated Proof-of-Stake) blockchains achieve consensus from their delegates coming to agreement on the current state of the network. Dan Larimer created the concept for the EOS blockchain to make the network more easily scalable than traditional POS networks.

Instead of staking their tokens directly to the network to validate blocks and participate in the on-chain governance process like a traditional POS network. Token holders vote their tokens to elect delegates who validate blocks and direct the governance of the chain on their behalf.

The reason this approach is easier to scale is that delegates are limited in number, 24 in the case of EOS. 24 delegates coming to consensus on the state of a network is much more efficient than a traditional POS blockchain were anyone can set up a node, stake tokens to it, and start participating in the validation of blocks.

The downside is it is much easier to form cartels and engage in malicious behavior on DPOS blockchains. Coordinating collusion amongst 24 delegates vs. the 1000’s of nodes on a traditional POS chain is a significantly easier attack vector.

Bribery and price fixing are also concerns given achieving delegate status often entails additional monetary awards vs. standard voters in the delegation process. Delegates can commit to returning a portion of these rewards to those who vote for them.

Downsides to using DPoS include:

• Potential for voter apathy where token holders simply do not vote.
• Cartels where delegates collaborate to act in their own self-interest.
• centralizes the network to a few key delegates validating transactions and making decisions.  

A real world analog to DPoS would be the US House of Representatives. US citizens (stakeholders) vote to choose their elected representatives delegating power to the winners to act on their behalf.

Further Reading Delegated Proof of Stake

Proof of Stake vs. Delegated Proof of Stake