Last updated on April 10th, 2019 at 02:07 am
Delegated Proof of Stake (DPoS) is a mechanism adapted to secure a crypto-currency’s network. It implements a layer of democracy to mitigate the negative effects of centralization. Bitcoin’s system was too slow due to the Proof of Work (PoW) on which it was designed. Bitcoin’s mining was also consuming a lot of energy and it would become centralized in the future, with giant mining pools taking control of Bitcoin network.
Therefore, Daniel Larimer, a blockchain engineer, decided to create a new system that was energy-efficient, lightning fast and very secure. He named this new system, Delegated Proof of Stake (DPoS). DPoS algorithm is not just more democratic than the other consensus systems but it is more efficient, more secure and more cost-effective. Let’s have a look at rationale working behind DPoS, making it a preferred choice over other consensus algorithms.
Rationale of DPoS
- Maximize the dividend share of stakeholders
- Minimize the cost required to make a network secure
- Maximize the performance of network members
- Minimize the cost of running a network by being cost and energy-efficient
Shareholders Remain in Control
It is not wrong if we say that the fundamental feature of DPoS is that shareholders (or stakeholders) remain in control, which is essential to keep the network decentralized. No matter, voting process can be flawed but when it comes to shared ownership of a network, voting proves to be the best choice.
In DDK, every coin holder on the platform staking DDKoin in their account is a stakeholder. They can show their participation by voting for choosing the delegates. A delegate is a democratically elected stakeholder, who is given trusted position to manage the transactions on the platform.
In return to voting, stakeholders are rewarded with the DDKoin because their participation helps make the network secure. In return of processing transactions, delegates are also rewarded with DDKoins because like stakeholders, their participation also provides security to the network. Delegates digitally sign the transactions on the network.
On DDK platform, any stakeholder, who wants to be a delegate, has to register by submitting a fee of 10DDkoins. Once the voting process is completed and a stakeholder becomes a delegate, he sets up a personnel PC node and he has to start validating the transactions. On validating the transactions, the delegates get rewards in form of DDKoins.
However, if a delegate fails to manage the transactions or prove functional for the network, stakeholders can switch their votes away from them.