What is delegated proof of stake?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
Delegated proof of stake has holders vote to elect a small set of block producers who then take turns producing blocks. Limiting the producer set raises throughput. Unlike proof of authority, the producers are chosen by token holders and can be voted out, and staked assets back their behaviour.
Key points
- Holders elect a small set of block producers
- A small producer set means high throughput
- Unlike proof of authority, producers can be voted out
- Concentrated voting tends to produce de facto oligopoly
Definition
A form of proof of stake in which token holders vote, weighted by holdings, to elect a limited set of block producers who then produce blocks in turn.
Standard proof of stake gives any staker a chance to propose blocks. Delegated proof of stake narrows that to a few dozen elected producers. Fewer participants mean less communication to reach agreement, which allows shorter block intervals.
Votes are normally weighted by holdings, and holders delegate to candidates rather than producing blocks themselves. The top vote-getters become producers while the rest wait as standbys. Poor performers drop out at the next tally, so rotation is built into the system.
The difference from proof of authority lies in where a producer's mandate comes from. Under proof of authority an operator appoints validators and their identity is the collateral. Under delegated proof of stake the mandate comes from holder votes, backed by the economic penalty of losing staked assets.
Watch out for
- · When large holders or exchanges dominate the vote, the producer set tends to freeze
- · Where producers pay for votes, ballots follow payouts rather than policy
- · If your chosen producer goes offline or misbehaves, your own rewards or stake can suffer