What are the factors that differentiate the types of blockchains?
Business models, types of mining, and mass adoption of ideas can be some of these factors. But one of the most valuable is it’s a kind of consensus. Consensus is a way a decentralized trust system works, helping everybody put their trust in the blockchain as a whole.
There are several advantages in the consensus mechanism. The traditional blockchain relies on PoW (Proof of Work). To reduce the mining costs and to increase the speed in the blockchain the PoS (Proof of Stake) was introduced later. The Delegated Proof of Stake (DPoS) consensus algorithm is considered as a more efficient and democratic version of the preceding PoS mechanism.
The Proof of Work algorithm makes use of a large amount of computational work to secure an immutable, decentralized, and transparent distributed ledger. Conversely, PoS and DPoS require fewer resources and are, by design, faster and more sustainable.
In terms of performance, DPoS blockchains are more scalable, being able to process more transactions per second (TPS) compared to PoW and PoS.
A DPoS-based blockchain includes a voting system where stakeholders outsource their work to a third-party. In other words, they’re able to vote for a few delegates that will secure the network on their behalf.
The delegates may also be referred to as witnesses, and they’re responsible for achieving consensus during the generation and validation of new blocks. The voting power is proportional to the number of coins each user holds. Usually, the rewards collected by the delegates are proportionally shared with each elector.
The DPoS algorithm creates a voting system that’s directly dependent on the delegates’ reputation. If an elected node misbehaves or does not work efficiently, it will be quickly expelled and replaced by another one.
The voting system can also be effectively used for any decisions on project development. Thus, any decision affecting the coin future can be voted on by the representatives, which represents the interests of the majority of stakeholders. Voting within the DPoS blockchain can also be used for any form of development and improvement.
Like in real life, delegates vote for their representatives, who are also called validators. These voters elect their representatives into the House of Representatives. But in a DPoS blockchain, delegators delegate the voter to the verifier. Validators then validate the block and make major decisions in the blockchain. Thus, the DPoS blockchain implements a real solution for a democratic voting system that results in a true consensus.
One of the interesting use cases for using the voting system is the token/coin creation, which offers some changes in the important parameters of “tokenomics.” Listing a token on an exchange is a difficult moment for any post-ICO project. The price of the token often falls fast due to an extreme supply peak from the earlier investors and advisors who wish to sell their assets at the first opportunity and also due to the lack of new demand from the new supporters.
To manage these spikes, the community can vote for a gradual token release schedule, which will not negatively impact the price. The voting mechanism is crucial for achieving a general consensus on any sensitive topics regarding the blockchain project.
The fast development of the DPoS consensus mechanism opens a whole new world of opportunities for new projects. DPoS blockchains will become more popular due to their flexibility, speed, reliability, and the native voting mechanism. The voting mechanics allow blockchain to adopt technology changes quickly while protecting the interests of stakeholders. Essentially, DPoS introduces real democracy into the crypto world.