Homework Task 6

Subject: What is the difference between PoS & DPoS? Advantages & Disadvantages? Name a few Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity?

HOMEWORK

Preliminary Information

Before moving on to homework, I would like to start by giving some information about PoS and DPoS;

What is PoS? PoS (Proof of Stake) emerged as an alternative to Bitcoin's Proof of Work protocol and Proof of Stake (PoS - Proof of Stake) is a digital asset ownership protocol. The PoS protocol was presented by blockchain developers Sunny King and Scott Nadal in a paper published in 2012. The purpose of PoS is to eliminate the energy consumption required for Bitcoin mining. Peercoin was the first to use the PoS protocol.

The Proof of Work protocol used in the Bitcoin network is a system in which miners, who are strong thanks to its processing power, get more income more actively on the network. Even though Bitcoin mining requires high energy consumption, the Proof of Stake protocol does not dissipate network power based on processor power. In PoS, the generation of the next block can be performed by operators who execute several combinations simultaneously. There are many Proof of Stake protocols.

In the Proof of Stake protocol, users lock their crypto assets used to verify transactions and get a share of the revenue. In this locking process called "Stake", the amount required for this transaction in the wallet cannot be withdrawn until the wallet is unlocked and is marked as "Stake" on the network.

In the blockchain using the proof-of-stake protocol, users share block verification rewards and paid transfer fees according to their stake. We can compare this process to owning the shares of a publicly traded company. Users who spend more crypto on "Stake" get a higher revenue share.

The most important feature of Proof of Stake is that it emphasizes capital power instead of computational power. Therefore, it is useless to start trading by purchasing equipment. But having a stackable asset is convenient. In the PoS protocol, a user with more crypto assets has more power in the network. The verification process has its own rules. Users with more assets in their wallets are closer to being validators. The concept of "stake" first came from here. The basis of the PoS protocol is wallet holders who earn by confirming transactions. The user with a lot of wealth will also have a lot of income. So the more capital, the more profit. However, this isn't working the same for all PoS types.

What is DPoS? DPoS (Delegated Proof of Stake) is a relatively new consensus structure compared to other consensus structures today. In the Proof of Stake protocol based on cryptocurrency ownership, the user can keep their crypto assets tied to the equivalent blockchain in their wallet, verify or block transactions. DPoS, on the other hand, comes with some additional features and uses the power of stakeholders to resolve consensus through fair voting.

Delegated Proof-of-Stake (dPoS) uses a social reputation system to drive consensus across the blockchain network. DPoS is referred to as the least decentralized protocol compared to the others and aims to give cryptocurrency holders a say in the management of the network.

Users can transfer their crypto assets in their wallets to another user. Cryptocurrency asset is not transferred elsewhere but is the presence of the authorized user and increases the power of the authorized user in the network. The person delegating from other users gets a larger share of the revenues in the network and the revenue is shared with the delegates.

What is the difference between PoS & DPoS?

We can see the differences between PoS and DPoS, which I have explained in detail in the preliminary information section, with the following table:

PoS	DPoS
PoS is a protocol that deals with digital asset ownership rather than a computationally powered system.	DPoS aims to give cryptocurrency holders a say in the management of the network.
Users cannot delegate cryptocurrencies to another user.	Users can transfer their crypto assets in their wallets to another user if they wish.
A transaction fee is charged.	No transaction fee is charged.
The goal is for all cryptocurrency holders to have a say on the network.	Cryptocurrency holders with high capital strength have more say on the network.
Users with more assets in their wallet are more likely to be validators.	A social reputation system is used to reach consensus.
It is a decentralized system.	It is known as the semi-decentralized protocol.

Advantages and Disadvantages of PoS

Advantages:

• PoS transactions are faster and more efficient. At the same time, it satisfies PoS users in terms of security.
• No equipment investment is required for PoS.
• It can be used from any phone or computer that can connect to the Internet.
• Validators are randomly selected and do not require a reward.
• Since energy consumption is minimal in PoS, it saves energy and does not pollute the environment.

Disadvantages:

• If you start an irreversible high-cost PoS chain like mining, wealthy people who have already bought the coins can control the network.

Advantages and Disadvantages of DPoS

Advantages:

• Decentralization system facilitates the selection of delegates.
• No expensive equipment investments are required.
• Witnessing or voting in the DPoS system is equal for all.
• DPOS counts everyone who makes a transaction as a delegate and delegates have the authority to approve transactions.
• There is no minimum investment limit.
• It is less costly as the transaction fees are very low.
• Thanks to the use of less energy, it does not pollute the environment and saves money.
• Anyone can vote for whoever they want to elect a witness.
• It can be used on social platforms such as Steem.
• Because it is decentralized, it distributes blocks evenly to many people when generating blocks, which makes it fast.

Disadvantages:

• If a person or a group controls 51% of the network, they can attack the network if they want.
• It cannot be used in financial systems as it is at least a decentralized system.
• Participants do not win many prizes at first, they have to work a little for this.
• It is a grouping system and this can sometimes have bad consequences for other users.
• Those who have more crypto assets can affect the system more than those who have less.

Name a few Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity?

Some of the Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity are:

• Tezos: Tezos is a self-governing decentralized blockchain that has built a new digital community. Thanks to this blockchain, the security of financially weighted smart contracts increases and official verification becomes easier. Tezos can process 40 transactions per second.

• Tron: Without any central control, users can upload, store and distribute their desired content on the platform. Eliminating the intermediaries, the platform aims to ensure sustainability by giving all of its content revenues to the producer. It is aimed to optimize data sharing for users by using ICO technology. TRON, which has an advanced infrastructure, aims to compete with platforms such as Steam, EpicGame, Apple Store and Google Play, as well as trade done in-house. With its distributed infrastructure system, the platform offers its users various trading options such as trading and autonomous gaming. The Tron network has no transaction fees and processes around 2,000 transactions per second.

• Eos: Decentralized enables horizontal scaling of applications. It is a cryptocurrency designed to support large-scale applications, used to process seamless and free transactions. Developers can create high-performance distributed applications thanks to the Eos blockchain. Eos gives an average confirmation time of 0.5 seconds and processes 2800 transactions per second.

• Icon: Icon is an interconnected blockchain network. Icon can connect blockchains without using any third party intermediaries. Many blockchains can communicate with each other thanks to the Icon platform. Icon's goal is to become the largest blockchain in existence. Icon can make 500 transactions per second.

Conclusion

As a result;

• PoS emerged as an alternative to PoW and has a protocol for digital asset ownership.
• There is no delegation in PoS, but delegation can be made in DPos.
• In PoS, all cryptocurrency holders have a say, but in DPoS, the say varies according to the capital strength.
• PoS provides convenience, security and speed to its users in many aspects.
• In DPoS, transaction fees are very low and there is no minimum investment limit. In this way, users' profits in transactions will be higher.
• Along with the DPoS consensus mechanism, the overall transaction per second of platforms using DPoS is high.

CC: @sapwood

by @theoxl