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Delegated proof of stake (DPoS) is a network-based proof of stake (PoS) system where users vote and elect delegates to validate blocks. It involves pooling tokens into a staking pool and linking them to a delegate. Developed in 2014 by Dan Larimer, it is now used on various blockchains.
Blockchain technology has transformed the way we think about currencies, transactions, and digital ownership. As this innovative space continues to evolve, new consensus mechanisms are being developed to further improve security, efficiency, and the user experience.
One such mechanism gaining popularity is delegated proof of stake, or DPoS for short. Join us in this article as we explore what DPoS is, how it works, examples of DPoS blockchains, and why it offers advantages over traditional proof-of-stake systems.
By the end, you will have a solid grasp of this important consensus mechanism powering some of the leading blockchains today. Let’s start by exploring how DPoS works!
DPoS is a consensus algorithm that delegates block production to a set of delegates or validators elected by those who hold the blockchain's native tokens.
Token holders vote for the witnesses they trust the most to validate blocks and secure the network. The top witnesses who receive the most votes have the right to produce new blocks and earn rewards for their work.
Unlike proof-of-work, where anyone can participate in crypto mining, in DPoS only those with significant stakes and votes can participate in block production. You can check the “proof-of-work vs. proof-of stake” guide for more detailed analysis.
For each new block, a limited number of delegates—typically between 20 and 100—is selected. Delegates receive a portion of the transaction fees from the validated block and redistribute them among the users that contributed to the token pool.
Each user receives 5% of the block reward, which increases correspondingly with the size of their stake. Therefore, the higher the stake, the higher the block reward protocol used in delegated proof of stake.
This decreases waste, and democratic selection means only the most trusted delegates get elected. The voting process allows stakeholders to monitor delegates and replace them if they act maliciously or against the network's best interests. Therefore, it provides more security.
Some of the earliest and largest DPoS blockchains include EOS, Lisk, Steem, and BitShares. EOS is one of the highest-capacity blockchains that uses DPoS. The EOS token holders who power its network elect 21 block producers on an annual basis.
Lisk is another prominent example; it elects 101 delegates to produce blocks and maintain the network in exchange for rewards. Steem and BitShares are early pioneers of the DPoS model and have helped prove its efficiency and security.
A newer example is the euro stablecoin EURK, which utilizes an innovative hybrid of PoS and DPoS to securely issue and audit its tokens. As a 1:1 euro-backed stablecoin, EURK offers transparent transactions that are fast and secure, empowering innovation with reliability and efficiency.
EURK's reserves are securely held in Switzerland and the Dominican Republic, providing additional assurances for its users. You can check “transparency for stablecoin” and “stablecoin liquidity” for more information about their importance and how EURK can benefit your business with these features.
DPoS can provide a decentralized network while maintaining high performance. However, the level of decentralization depends on how spread out the stakeholding and voting power are among participants.
In theory, as long as no single entity controls over 50% of the voting power, the system remains decentralized. In practice, blockchains using DPoS have achieved reasonable decentralization, with the top 20–30 witnesses collectively securing the network.
Maintenance of full decentralization does require ongoing stakeholder participation and vigilance to avoid cartel-like behaviors. Overall, though, DPoS retains decentralization better than proof-of-work systems reliant on just a handful of large crypto mining pools. You can check “DeFi” for more detail.
Some of the largest and most popular blockchains supporting the DPoS consensus mechanism include:
Newer DPoS systems also gaining traction include Oasis, WAX, and Telos. Overall, DPoS has proven itself to be a highly effective consensus mechanism method, powering some of the largest and most advanced blockchain networks today.
While PoS and DPoS are both alternatives to energy-intensive proof of work (PoW), there are some key differences:
In PoS, anyone with a sufficient stake can participate directly in block validation and earn block rewards. In DPoS, stakeholders elect a smaller set of delegates to perform this role.
Due to limiting active participants, DPoS networks are generally faster, offering near-instant confirmation times compared to minutes in PoS. However, DPoS decentralization depends more on voter participation.
DPoS does not require millions of dollars in hardware, as in PoW. The barrier to participation is simply owning the blockchain's native tokens and voting, versus in PoS, where stakeholders still need significant system resources for direct validation.
Cartel resistance is higher in the DPoS, as voters can replace witnesses not acting in their interests. In POS, large stakeholder validators have more influence if they organize as a group.
Both PoW and DPoS are better than PoW, but DPoS is faster, easier to use, and more resistant to cartels than PoS. As a type of PoS, DPoS can be thought of as its upgraded model.
DPoS provides a wide range of advantages over traditional blockchain proof-of-stake consensus mechanisms, including:
However, DPoS also faces potential downsides around decentralization, as discussed earlier, if voter participation wanes over time. Overall, both PoS and DPoS are better than PoW.
DPoS is better than proof of stake for use cases that need faster transaction times, lower costs, and fewer barriers to participation because it depends on throughput.
A key advantage of blockchain DPoS is its ability to offer near-instant block times, often under 1 second, compared to the minutes required by PoS networks. This speed comes from limiting block production to a smaller set of specialized delegates rather than all stakeholders.
In PoS, every validator must process every transaction to reach consensus, increasing overhead as the number of stakeholders grows. In DPoS, however, the streamlined group of witnesses can distribute workload, share data redundantly, and reach consensus quicker through optimized voting.
By delegating block signing responsibilities, DPoS networks are faster, more scalable, and allow transaction fees to be low enough for broad adoption.
This positioning of DPoS makes it well suited for applications where speed, low cost, and scalability are top priorities, opening opportunities that continuous improvement in PoS protocols still works to address.
Delegated proof of stake presents an effective consensus algorithm aimed at addressing scalability and high-throughput challenges. By electing specialized witnesses to produce blocks, DPoS achieves near-instant confirmations suitable for applications where speed and low fees matter most.
Examples include social platforms, gaming tokens, crypto exchanges, and blockchain payment solutions with a euro stablecoin like EURK. While decentralization remains an ongoing discussion, leaders in the DPoS space have demonstrated the model's practical decentralization.
Overall, DPoS is a new way that makes it possible for new kinds of decentralized apps that would not be possible with just PoS or PoW networks. With continuous development, DPoS and the blockchain technology supporting it are set to push the boundaries of what decentralized technologies can achieve.
If you want to benefit from one of the most secure stablecoins with blockchain solutions such as DPoS, you can trust EURK and its efficiency, reliability, transparency, and decentralization. Become a partner and start to use crypto for your business growth with EURK!
