Crypto Academy season 4 Beginners course-Task 6: Different types of consensus mechanisms by @sapwood
what is the difference between poS&Dpos? Advantages &Disadvantages? Name a few Blockchain projects which use the Dpos consensus mechanism and indicate the scaling capacity?
What is the difference between PoS & DPoS?
Proof of Stake (PoS) VS Deligated Proof of Stake (DPos)
Before going into details about the differences between PoS and DPoS, here is a quick explanation of how these two consensus mechanisms operate.
PoS
Proof-of-Stake (PoS) is an algorithm that drives the blockchain to reach consensus efficiently. Here, the block creator/Validator is algorithmically chosen to substantiate transactions with computer hardware based on the underlying token staked or locked up in the network as a form of reward.
In PoS, there is an increased efficiency because data verification is assigned to network nodes that have been staked, or locked their tokens as collateral. These nodes validate blocks of data. The more tokens are staked, the higher the chance of being chosen to validate, and the longer the token, the higher the chance of being chosen to validate. This form of mechanism randomly selects users to validate the next block. It also allows more users to participate in the creation of new blocks.
Few blockchains are currently utilizing the PoS mechanism. Examples are; Cosmos, EOS, Cardano, and Tezos Network.
DPoS
DPoS is an alternative to the Proof-of-Stake (PoS) consensus mechanism. This mechanism allows users of the network to vote and delegate a validator. Validators are chosen based on earned reputation and trustworthiness. DPoS also allows a diverse group to participate in staking their tokens because the higher you stake, the higher the share of block reward you receive. Here, tokens are staked in a staking pool.
In the Delegated Proof-of-Stake (DPoS) network, the number of validators is limited so as to enable the network to reach consensus more efficiently and to carry out transactions more quickly. Steemit is a good example of a DPoS.
Having explored the two concepts, PoS and DPoS, here are some notable differences between these two
| Factor | PoS | DPoS |
|---|---|---|
| Operation | Solely computer-based algorithmic selection | Human-based selections |
| Efforts | Compared to DPoS, PoS requires less effort as human input is minimal. | DPoS needs more human input, thus, more manpower |
| Hardware requirements | Requires more computer hardware and software (though not as much as other mechanisms) | Less energy and hardware requirements (especially when compared to PoS) |
| Delegations | No delegation is possible | Delegation is possible |
| Scalability | High | Low |
Advantages & Disadvantages?
Advantages and Disadvantages of PoS
Advantages
- There is a reward for participating in the network.
- Compared to Proof-of-Work, PoS is more energy efficient as powerful hardware (like GPUs) is not required here.
- PoS systems are more secure.
- PoS encourages HODL-ing of tokens as the more tokens held by a person translates to their likelihood of becoming stakeholders.
Disadvantages
- Individuals that do not have a lot of tokens have very little or no power to take part in decision making in a PoS system, and consequently, they miss out on the benefits of this system.
- Individuals with a very high number of coins could easily manipulate the PoS system to their advantage.
- There is no effective democratization, as PoS always results in a lop-sided distribution of coins. The more coins one has, the more likely one can accumulate more.
Advantages and Disadvantages of DPoS
Advantages
- DPoS is more democratic. Everyone in the network is presented with almost an equal chance of taking part in the system through a voting system through which delegates are elected.
- Compared to PoS, DPoS requires less energy and hardware for operation.
- DPoS encourages more social interaction.
- Compared to other consensus mechanisms, DPoS is more scalable.
Disadvantages
- Lower stakeholders are handicapped as they can make very little input into the system, and consequently, earn very little reward.
- It requires more manpower and human efforts.
General Advantages and Disadvantages of PoS and DPoS
ADVANTAGES of PoS and DPoS
- Less energy is required in mining blocks: validators are not expected to solve highly complex calculations, thereby reducing the amount of energy spent on verifying transactions.
- Increased efficiency: Data verification is assigned to network nodes and stakeholders
- Secure network: Stakeholders are rewarded and this helps to secure the network.
DISADVANTAGES of PoS and DPoS
- Individuals with higher stakes hold more influence than those with smaller stakes.
- Staked coins can not be traded.
- More coins need to be saved in order to obtain more rewards.
Name a few Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity?
The Blockchain projects which use the DPoS mechanism today include:
- EOS
- LSK
- ARK
- TRON
- STEEM
EOS (Electro-Optical System): EOS is a decentralized token that uses the Delegated Proof-of-Stake (DPoS) consensus algorithm. Holders of EOS tokens are allowed to vote and elect a nose to validate the next block. The number of validators in the network is usually limited to 21. The Validator convinces other users of the blockchain network to trust them to secure the network by delegating their share of the overall tokens on the network to them, which acts as a vote. EOS Delegated Proof-of-Stake is scalable because it does not require sophisticated computers to confirm network data. Users are given a chance to choose their validators or block producers. EOS scales millions of transactions per second with no transaction fee. This blockchain is designed to support the addition of more computing power and memory to be added into the system, as well as adding new nodes to the system. EOS enables the development of business applications or dApps.
LSK is a decentralized token that adopts a Delegated Proof-of-Stake (DPoS) consensus mechanism. Users of this token can vote for 101 delegates. These delegates are responsible for validating all LISK transactions and for creating blocks. New blocks are created every 10 seconds. This enhances its greater scalability.
ARK: ARK is a decentralized token that adopts a Delegated Proof-of-Stake consensus mechanism. Holders of this token can democratically elect delegates that serve as representatives for other stakeholders. Delegates have the power to create and forge new blocks. Users receive more ARK from newly forged blocks by staking and voting for their preferred delegates. ARK aims to be a web of interconnected blockchains which enables easy value transfer across all blockchains connected to the system.
TRON (TRX): TRON is sort of an operating system (OS) based on blockchain technology, designed with the goal of making blockchain technology safe and suitable for everyday use. The block time is 3 seconds, while the transaction time is 1 minute.
STEEM: Steem is the currency of the decentralized social media Steemit.com. The Steem project boasts of a blocktime of about 3 seconds and 63 seconds of mining.
Cc;
@sapwood
@awesononso
@imagen
@stream4u
@reminiscence01
@nane15
@dilchamo
Hi @viviandaniella, it's good that you are striving for knowledge and taking part in the SteemCryptoAcademy project.
But you need to increase your SteemPower to 150 SP. You have 7 Steem in your wallet make a power up and you will have 150 SP.
Thank you very much I have done that. I sincerely appreciate.
ok, good for you @viviandaniella.