Everstake - Learning Center

DPoS

What is DPoS and how does it work?

The Delegated Proof of Stake, or DPoS, is a further development of the Proof of Stake consensus algorithm, where the staking balance, by which the block producers are selected, is formed by other wallets, instead of the block producer’s own balance. Users, who want to take part in staking, delegate their stakes to a block producer of their choice in return for the share of rewards from verification of new transactions.

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DPoS vs PoS

In a nutshell, DPoS is much more reliable in terms of decentralization and trust, than PoS.

There are many staking services to choose from based on various factors such as the block producer’s stability, correctness of the rewards, transparency, successful staking history, positive feedback of the community, diversity of staking coins and features, etc.

To further improve the decentralization, the block producers that are selected for the transaction verification process for the next period called epoch, are working in turns, and are allowed to verify all the waiting transactions within a very short timespan, down to a second. This approach makes the possibility of jeopardizing the whole network by gathering 51% of its voting power practically impossible. In addition, all block producers have limits on their maximum staking balance.

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What blockchains use DPoS?

DPoS is a comparably new consensus protocol, which has gained much popularity thanks to its achievements in capacity, performance, and decentralization. First used by EOS, the DPoS is now picked up by Cardano, TRON, Tezos, Ark, EDC, etc. Ethereum is also planning to switch to DPoS in the close time, which will make DPoS the most used and important consensus protocol.

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How does DPoS staking work?

In DPoS, users delegate parts of their balances to a block producer of their choice. These delegations (stakes) form the staking balances, by which the top block producers are selected for transaction verification and collection of rewards.

In return for delegations, the block producers share the corresponding amount of rewards with the stakers. All in all, the stakers are collecting yields, which makes participation in the DPoS process profitable for them and beneficial compared to simple holding the assets.

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Is DPoS secure?

Although the stakers are delegating a part of their balance to block producers, physically it remains on their wallet and can be recalled (un-staked) at any time. The block producers have no access to their staking balances, and can’t spend them or send anywhere. This makes DPoS completely secure for all users as they remain in full control of their assets.

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