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Delegated Proof of Stake (DPoS) is a consensus algorithm in which the power to confirm transactions rests in the hands of a selected group of users that they trust to act as nodes on the network.
DPos is considered by many as a more efficient and democratic version of the preceding PoS mechanism.
In regards to performance, DPoS blockchains are more scalable, being able to process more transactions per second (TPS), when compared to Proof-of-Work (PoW) and Proof-of-Stake (PoS).
How Does DPoS Work?
A DPoS-based blockchain counts with a voting system where stakeholders outsource their work to a third-party.
In essence, they are 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 are 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.
The voting system varies from project to project, but in general, each delegate presents an individual proposal when asking for votes.
The more coins that a particular user owns, the more voting power they get. In Most DPoS networks, the number of masternodes is limited to a fixed number.
The rewards collected by the delegates are proportionally shared with their respective electors.
As such, the DPoS algorithm creates a voting system that is 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.