This content originally appeared on Level Up Coding - Medium and was authored by Henrique Centieiro
Should we have democracy in blockchains? Do we trust DPoS blockchains?
“Democracy is the worst form of government, except for all the others.”
Winston S. Churchill
There’s a number of consensus mechanisms that I will be covering in a series of articles. You can check some of them in the links below:
- What’s Proof of Elapsed Time
- Bitcoin Proof of Work — The Only Article You Will Ever Have to Read
- Proof of Stake — What is and how does it work? (by the way, DPoS was created to deal with Proof of Stake limitations)
- Proof of Importance Consensus Mechanism
What is a Consensus Mechanism
A consensus mechanism allows distributed systems and blockchains to work together and stay secure. Blockchains, being huge distributed databases, need to have a mechanism where nodes agree on how to establish consensus among all the peer nodes.
Different consensus mechanisms have different trade-offs between security, scalability and decentralization. Bitcoin uses proof of work and it is very decentralized and secure but not very scalable.
DPoS blockchains are usually highly scalable because they reply on a small number of nodes that don’t need to perform proof of work. Let’s get into the details!
Okay, enough BS! Let’s talk about DPoS!
Delegated Proof of Stake is something very similar to democracy. Let’s call it only DPoS because “Delegated Proof of Stake” is way too long, and my fingers start to hurt from typing so much.
DPoS is a consensus mechanism where the stakeholders or hodlers of that cryptocurrency can elect a limited number of validating nodes in an election process. The validating nodes, also called witnesses or block producer in DPoS, validate transactions/blocks and are rewarded for the work.
Typically, elections for the validating nodes are real-time and ongoing, i.e. users/delegates can vote anytime. Stakeholders can vote on who they want to be delegates and block validators/witnesses. The voting power is defined according to the number of coins they own, i.e. more coins translate into more votes (just like a corporation’s shareholder voting power). Stakeholders can also delegate their votes to other stakeholders who will vote on their behalf (again, very similar to a corporation shareholder proxy voting). DPoS is, therefore, a democratic process.
Similarly to proof of stake, block validators receive a reward for validating transactions. They may also be required to have a stake that may be forfeited in case of bad behaviour. Blocks with new transactions can be appended to the blockchain every few minutes. Because DPoS is more centralized in a small number of nodes — EOS, for example, has 21 block producers/witnesses — the network broadcasting is much faster and allows a much better throughput.
If a validating node fails to produce a block or shows some bad behaviour, he can lose his stake and be kicked out of the network. The stakeholders would then vote for a new validating node.
EOS, Steem and BitShares are some of the examples of DPoS blockchains. No, Dogecoin is not DPoS. Dogecoin is proof of work ?☠️ like most first-generation blockchains such as Bitcoin.
The Mechanics Behind DPoS
Typically, to be a candidate as a validating node, node managers will present their proposal to the network and try to convince the community that they have all the requirements to be a validating node. Usually, some criteria such as the team behind the node, the hardware capacity, location, third-party audits, budget and community engagement are factors that favour a node being elected.
Similarly to proof of stake, in DPoS, the higher the stake, the higher the voting weight. Depending on the blockchain, users (or stakeholders) can usually delegate their vote in proxies or vote directly for witnesses. Delegates are active members in the community who improve the blockchain, develop new features, improve governance, and sometimes promote blockchain adoption.
The witnesses or block validators will be the “miners” in the network. Their work is to validate transactions, append blocks to the blockchains, maintain the consensus mechanism and preserve the network healthy. They are required to allocate computing resources (either on-premise servers or cloud-based) and must ensure high availability, data integrity and high throughput. If a witness fails to keep the standards or acts in a malevolent way, she can easily be removed from the network.
EOS block producers or witnesses need to invest in some infrastructure and architect the node in order to provide the necessary security, scalability and network requirements. In the above diagram, we can see a high-level diagram of the node architecture.
Although any person can be a candidate to be a block producer, some players in the market may have more advantage considering their engagement in the community and hardware capacity. As one of the biggest DPoS blockchains, EOS has partnered with Google Cloud to become an EOS blockchain block producer.
Cloud-based witnesses take advantage of cloud scalability, security, reliability and cost-efficiency. Cloud providers such as Google Cloud or AWS are in a great position to contribute as a witness.
Pros and cons of DPoS
Pros
- Witnesses are motivated to be honest and to provide the necessary computing capacity to the network
- High performance and better scalability with a good TPS — transactions per second
- Malevolent witnesses or delegates can be voted out almost real-time
- Witnesses can validate transactions in seconds
- Transactions fees are usually very low or inexistent
- Energy-efficient and cost-efficient because it doesn’t require proof of work, and it can be cloud-based
- Semi-decentralized with a more robust governance system
Cons
- It can create some degree of centralization when big “whales” gain much power in the network and can vote for their cronies
- More susceptible to a 51% attack
- Stakeholders with small stakes may not have an incentive to vote
What are your thoughts? Is DPoS somehow centralized? Can we tolerate this degree of centralization? Would you trust 100% in this kind of blockchain?
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Delegated Proof of Stake of DPoS was originally published in Level Up Coding on Medium, where people are continuing the conversation by highlighting and responding to this story.
This content originally appeared on Level Up Coding - Medium and was authored by Henrique Centieiro
Henrique Centieiro | Sciencx (2021-05-25T14:55:10+00:00) Delegated Proof of Stake of DPoS. Retrieved from https://www.scien.cx/2021/05/25/delegated-proof-of-stake-of-dpos/
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