What Is Delegated Proof of Stake?

  • Crypto Guru
    November 9, 2022, 12:54

Delegated Proof of Stake (DPoS) has become an increasingly popular consensus mechanism used in a range of crypto projects such as BitShares, Steem, and Lisk.

While the blockchain community can be hesitant about adopting new technologies, the growing number of successful DPoS projects indicates that it may be here to stay. So, what exactly is delegated proof of stake?

Read on to learn more about this emerging consensus mechanism that could replace Proof of Work in the near future.

What Is Delegated Proof of Stake (DPoS)?

DPoS is an alternative consensus algorithm to PoW. With PoW, miners compete with each other to solve a cryptographic puzzle.

The first miner to solve the puzzle broadcasts the answer to the rest of the network and earns a financial reward from transaction fees for that block. With DPoS, token holders vote for delegates who are responsible for signing blocks on their behalf.

The more stake one has in a system, the more voting power that person has in electing delegates. In essence, users do not have to be actively involved in the process of mining new blocks because their delegate does all the work for them.

For example, Lisk users can select 101 delegates from 1-101 when deploying a node.

The main advantage of DPoS is that it requires less computing power than PoW because there is no need for expensive mining hardware as it doesn’t involve solving any computational puzzles or hashing functions like PoW does.

The Problem DPOS Solves

PoS requires an immense amount of energy expenditure in order to validate transactions. On the other hand, PoS validates transactions based on how many coins they own.

For example, if Alice has 10 coins and wants to send three coins to Bob, then Alice must prove that she owns 10 or more coins. If she does not have 10 or more but instead has only nine coins, then Alice will be denied permission to make the transaction because she doesn’t meet the required stake.

PoW vs. PoS/DPoS

Unlike Proof of Work which consumes huge amounts of energy, delegated proof of stake only needs enough computer power from delegates.

DPoS systems are also highly scalablesince new blocks are created every three seconds with 2 out of 21 nodes; these two nodes can be any combination as long as there are at least ten thousand people using the system at once.

Furthermore, DPoS systems reduce the risks associated with mining pools where one entity can control 51% of all mining power and launch attacks against others on the network.

How Do I Buy Bitshares?

If you want to get started with Bitshares, the first thing you need to do is purchase some. You can buy Bitshares on many different exchanges such as Grapharex. If you’re going to buy from an exchange, it’s best to use Bitcoin as your funding currency.

The reason for this is that most other cryptocurrencies (like Litecoin) have lower values per unit than Bitcoin does. That means that when you convert those coins into Bitshares, you’ll end up spending more money than if you were using Bitcoin in the first place.

Always Backup Your Wallet

It’s always important to make sure you have a backup of your wallet in case anything happens to it. Fortunately, with some wallets, this is very easy to do. Just select the Backup option from the main menu and enter a password. The wallet will then make an encrypted copy of your private key (and store it in a text file called wallet.dat).


To summarise how DPos works, Delegated Proof of Stake (DPoS) is an alternative to the more common proof of work and proof of stake algorithms that are commonly found in blockchain projects today.

With proof of work, transactions are verified by miners who solve difficult cryptographic puzzles, and with proof of stake, transactions are verified by coin holders who stake their coins to earn rewards based on their proportionate holdings.

DPoS systems require coin holders to vote for delegates, who then verify the network’s transactions.