What is DPoS?
In a simplified way, DPoS is a consensus algorithm that maintains an irrefutable agreement on the truth on the network, validating transactions and acting as a form of digital democracy. Who allegedly created this model was Daniel Larimer, CTO of the company Block. one, which developed EOS in its beginning.
To achieve this democracy, DPoS uses real-time voting combined with a reputation system to achieve consensus. It is perhaps the least centralized consensus algorithm, compared to proof of stake (PoS) and proof of work (PoW), since it is the most inclusive – each token holder can have a degree of influence on what happens with the network.
Voting power, among other things, is used to delegate figures to certain roles – which are usually two, witnesses and delegates. In this case, it’s simple: the more tokens an account has, the greater its voting power to influence the network.
DPoS allows everyone with tokens to participate in the voting process, and that’s great. The problem is that they must depend on the “good faith” of the elected witnesses, who are responsible for keeping the network operating.
What is the difference between DPoS and PoS?
In the matter of stakeholding, both are the same. DPoS presents a new democratic voting method with which block producers are selected. DPoS system is managed by the voters, the delegate is motivated to be efficient and honest or they will be out.
To properly analyze the relationship between DPoS and PoS, we need to describe the proof of stake (PoS). Unlike proof of work (PoW), in the PoS model, the blocks are not mined and they are forged, in the sense of being produced. The “forger” deposits several tokens and processes the transactions, receiving transaction fees as a reward.
This is the first difference between both models: the creation of blocks. In DPoS, and elected witness is responsible for creating new blocks and validating transactions.
Bearing in mind that a DPoS network generally has a maximum of 20 witnesses to perform this task, it ends up being more effective and faster and also more scalable.
Another aspect of differentiation is governance. Since users of a Proof of Stake network place their tokens to process transactions, this means that there must already be right at the creation of the network. This is why most of the tokens that follow this model originate from ICOs. This means that the rules and parameters of the blockchain are already programmed in the genesis block consequently, any change implies a fork. In the case of DPoS, they can propose changes to the network, which will be approved (or not) by users.
Thus, a DPoS network, despite the controversies regarding decentralization, ends up being faster and more scalable than a traditional PoS network.
1. EOS (EOS):
EOS is a new cryptocurrency, based on blockchain technology. It was created to assist in decentralized business applications. The cryptocurrency EOS algorithm will maintain asynchronous communication and parallel processing to be able to perform millions of transactions per second. Each staked token can vote for up to 30 different Block Producers. Each staked token will count as 1 vote for every chosen candidate.
Presently, there are 2 options to stake rewards and earn passive income with EOS investment, run a block producer or run a standby block producer.
2. Tezos (XTZ):
Tezos (XTZ) is one of these platforms and gives governance power to the holders of its XTZ cryptocurrency. Tezos is a blockchain that can evolve by updating itself. Holders vote for improvements to the protocol, including amendments to the voting procedure to achieve social consensus on the proposals. Tezos supports smart contracts and offers a platform to create decentralized applications.
Tezos uses the delegated Proof-of-Stake (DPoS) algorithm to achieve consensus on its platform and allowing virtual extraction of high energy efficiency.
Anyone holding Tezos tokens can participate in the mining process, either as a voter for delegates or as a delegate, as each user can vote their choice of both proposals. This voting process has been created to make it more efficient and put more pressure on the community of delegates, in such a way that if a delegate improperly uses his power he would lose his votes. Another curiosity is that there is no delegate limit.
There are 2 options to stake Tezos, run a block producer or run a standby block producer.
3. Cardano (ADA):
Cardano is a decentralized public blockchain and cryptocurrency project and is completely open-source. Cardano is developing a smart contract platform that seeks to offer more advanced features than any previously developed protocol.
The Cardano platform uses a new algorithm for its Proof of Stake, which it has called Ouroboros. This algorithm determines how individual nodes reach a consensus on the Blockchain network. Presently, only one option to stake Cardano (ADA), delegating your coins with an annually return rate of 3.7%.
4. TRON (TRX):
The Tron platform cryptocurrency offers an exchange environment for creators of digital content and online training. For this, the project is based on decentralized and open-source software that uses blockchain technology and P2P networks to promote direct interaction between creators and their users.
Tron is a distributed storage infrastructure that allows its users to access entertainment content from anywhere in the world without resorting to third parties and, therefore, without “selling” their personal data.
To stake Tron (TRX), there are 3 options to earn passive income and staking rewards, Vote a super representative, run a super representative candidate node, or run a super representative node.
5. LISK (LSK):
This platform is specially designed to develop blockchain solutions. It is specifically aimed at the business world. The good thing is that it has its own blockchain, known as the mainchain. The corresponding token is LSK.
Lisk plans to provide that infrastructure. Rather than having to write the core blockchain code themselves, programmers will be able to develop custom, industry-specific applications that run on the Lisk blockchain framework.
If you are interested in stake and want to earn passive income from Lisk, you have 2 options. Vote for delegates or run a delegate node.
6. ICON (ICX):
ICON (ICX) is building one of the world’s largest decentralized networks for dApps and smart contracts, which will allow different blockchains to interact with each other through smart contracts.
It is a massive and ambitious project that aims to unify blockchains of all kinds of industries, entities and individuals in a single network.
Presently, there are 3 options to stake rewards with ICON – stake Icon, run a sub-P-Rep node, or run the main P-Rep node.
7. Steem (STEEM):
STEEM is the blockchain that powers the platform. It is, in fact, the basic unit that determines the value of all the other units in Steemit.
STEEM is not really a currency, although it is more or less the gateway between Steemit (the platform) and the platform currency (Steem Dollar) and even the general currency (Steem Power). Steem uses Smart Media Tokens, which are native digital assets on the Steem blockchain
If you are interested to stake Steem, KuCoin has launched the ELA Soft Staking Program. They adjust the stake proportion based on the total amount of tokens value and also, they consider the withdrawal records of the platform wallet.
8. BitShares (BTS):
Bitshares is much more than a digital currency, it is a decentralized exchange house based on blockchain technology, where users can make transactions and trade with cryptocurrencies and other securities.
This technology breaks with the way traditional and centralized exchange houses operate. When you buy or sell any currency in an Exchange, your data and the transaction data remain recorded on the company’s servers.
In order to stake BitShares, you can achieve via Delegated Proof of Stake. Presently, there is only 1 option with your BitShares investment by casting votes.
9. Terra (LUNA):
Terra (LUNA) is an algorithmic stable coin which is aiming to become the first mass-adopted cryptocurrency. They focus on empowering the next generation of the payment network.
Presently, there are 2 options to stake Terra, delegate LUNA or run a validator node.
10. Elastos (ELA):
Elastos (ELA) is a very ambitious project consisting of three fundamental parts: an operating system, an environment to run apps, and a Blockchain-powered Internet.
The operating system that the Elastos team is developing is aimed at the Internet of Things (IoT) devices, mobile devices, and Raspberry Pi. The environment for running dApps is intended to allow Elastos-based applications to run on any device, even if they do not use their own operating system.
In this way, we can run the applications on iOS, Android, Windows, etc. On the other hand, the Blockchain-powered Internet aims to guarantee the copyright of digital content and protect the network from viruses and malware.
To stake Elastos you can either vote for 36 supernodes or host a supernode.