Crypto Academy Season 3 Beginners' course - Task 4 [Different types of Consensus Mechanisms]
Hello everyone. We still have a week left in the season 4 of the CryptoAcademy and I thought I should prepare myself for it. So what better way to get in practice than to finish the Fixed courses. So here I am.
In this Post we'll learn about Proof of Stake and Delegated Proof of Stake.
Before we jump in to the differences between the two lets first Briefly talk about what Staking is.
Staking is holding in your tokens in a crypto wallet to facilitate the operations of a blockchain network.
You get rewarded for staking coins as well. When you stake any token on a blockchain, you get some amount of power on the network as well. By staking coins, you get the capacity to cast a vote and earn some for yourself. It is like how somebody would get revenue for holding cash in a bank or offering it to the bank to contribute.
- There are two ways of staking your assets
a) SOFT STAKING( as a service provider)
Soft staking is a method in which a user does not lock their coin while still getting staking rewards. This means you will simply get rewards by holding your coing in an Exchange wallet.
b) CRO STAKING:
in this type of staking you'll bound as you have to lock your assets for a period of 180 days.
You cannot take out your staked CRO before 180 days. In this type of staking you also get rewarded.
source
The Proof of Stake consensus Algorithm is as alternative of Prof Of Work and it consumes comparatively less energy.
In the Proof of Stake Consensus Algorithm, the miner gets the authority of validating and mining transactions established on the fact that how many coins they have staked. So this means the more asset a user stakes, the more power/authority he gets in mining and validating transactions.
Delegated Proof of stake (DPoS) is the alternative version of Proof of stake in which a miner carries out their token balance as votes. The voting power in the DPoS is directly proportional to the number of tokens held.
The validation of the transactions on the blockchain network is done by the delegates who have been voted by the users who have the tokens of that network. Now a question arises how a delegate is chosen? The delegates are chosen by the users. They are voted by the users and as mentioned above the voting power of the user increases if they've more coins held on the network.
It is a complete democratic option of reaching a consensus.
DIFFERENCES BETWEEN POS AND DPOS
| PoS | DPoS |
|---|---|
| Stands of Proof of Stake | Stands for Delegated Proof of Stake |
| Security is brought about through Collateral Staking | Alongside Collateral Staking, Delegation and Voting mechanisms are also used. |
| delegates are chosen randomly on the basis of their stakes | delegates are chosen by voting from the users. |
| Lower validation speed | Higher validation speed |
| Every coin holder can participate in validation | Exclusively the delegates are chosen to validate a transaction |
| Any changes brought could fork the PoS | The delegates put present the changes to the protocol and cannot implement them untill and unless they are approved by the users. |
| Comparatively more energy consumed than DPoS | Less energy Consumed comparative to POS |
ADVANTAGES OF POS
- Users who have Staked tokens recieve staking rewards from the Blockchain network
- Can be done in your wallet. Which means you can stake coins in your wallet to get rewards.
- Very Environmental friendly.
- Does not require high Energy consumption.
- a more effective method in the blockchain networks which works in the favour of both; the users and the network.
DISADVANTAGES OF POS
- We've read about the Blockchain attacks in the last season. POS is vulnerable to the 51% attack as if someone accumulates 51% of the token he can launch an attack.
- in my opinion the true essence of decentralization is lost as few users can have control over a large anount of token by hoarding it
ADVANTAGES OF DPoS
- Comparatively more environmental friendly than POS
- its faster than the POS as the block producers can validate transactions in seconds.
- true essence of democracy as the Delegates are chosen through voting
- consumes less energy
- quality control is excellent in the DPoS as the delegates can be voted out if they are not up to the mark.
DISADVANTAGES OF DPoS
- there are a few selected witnesses in the DPoS which takes it towards Centralizon thus losing the rral essence of Decentralization.
- need the witnesses to be in their best form as even slight mistakes from them can lead to system dysfunction.
Blockchains using DpOS
a) CARDANO: It's rather impossible to not talk about Cardano in this topic. Cardano has evolved significantly in the last few years. It uses the DPoS consensus Algorithm which also improved it scalability. The speed is so fast that it has a block creation time of 20 seconds and the transaction can carry out within 20 seconds
b) EOS: EOS is another big project using the DPoS consensus Algorithm. The blocktime of Eos is 0.5 seconds with nearly 2-3 minutes in transaction.
c) STEEM: Steem uses the DPoS consensus Algorithm as well which improved its Scalability significantly. It has a blocktime of 3 seconds and the mining of blocks is done within 70 seconds
We get a complete idea of the POS and the DPoS. The users reading this will have a complete analysis on these two consensus Algorithms.
The DPoS consensus Algorithm improves the areas in which the POS lags and the POS improves the areas in which POW lags. Which means we're only evolving in the forward direction and who knows what we might have in the upcoming future.
So this is. My input on the lecture.
Thank you
Regards,
@huzaifanaveed1
Hi @huzaifanaveed1, Thank you for taking interest in the 4th Task of the Beginners Fixed Class. Your grades are as follows:
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