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

Blockchains operate by validating transactions using consensus mechanisms. Different blockchains have different consensus mechanisms. The PoS and DPoS are 2 of the common consensus mechanisms used by blockchains to reach consensus.

PoS

PoS is short for Proof of Stake. The PoS consensus mechanism was created as an alternate consensus mechanism for the PoW consensus of Bitcoin which uses high amounts of energy. Compared to PoW, PoS is low-cost and requires less energy or power. It also manages to tackle some flaws of the PoW consensus mechanism like slow transaction speed, poor scalability and inefficient energy consumption.

At the moment, PoS is only used by altcoins, the first of which to adopt the PoS consensus mechanism being the peercoin in 2012, followed by Nxt, Blackcoin and then Shadowcoin. On market cap basis, the biggest blockchains using PoS in 2021 are Cardano, Polkadot and Solana. Ethereum originally forked the PoW Blockchain of Bitcoin is migrating to a PoS blockchain soon.

With the PoS consensus mechanism, a person depending on the number of coins they hold can participate in mining or block validation. The influence a person has on the blockchain is proportional to how many coins they hold. All coin holders on the network depending on how much coin a user holds directly participate in decision-making through staking.

To earn a right to mine and be eligible to be selected to validate transactions, you simply have to stake some of your coins. Chances of being selected are random, but to some extent can be influenced by variables like how many coins you have staked. The coins you stake serves as collateral and motivates validators to protect the integrity of the blockchain to protect their investments. The blockchain kind of leverages validators to keep the network secure by requiring that you stake some of your coins. . In turn, you are rewarded with network transaction fees as a validator.

Advantages Of PoS

• Coin holders earn stake rewards by staking coins
• Energy and cost-efficient as it neither costs as much as PoW does, nor uses as much as energy.
• The energy-efficient nature of PoS makes it more eco-friendly eliminating the need for high power
• Increased security, efficiency, transaction speeds and resistance to attacks by blockchains.

Disadvantages of PoS

• The blockchain is more susceptible to attacks as attackers will simply need to possess more than half (so 51% or more) of the blockchain coins.
• Long term sustainability problems
• Some PoS coins require you to lock or freeze coins as stake and coins locked can not be traded until unfrozen in a set time

DPoS

DPoS was introduced 7 years ago in 2014 by Daniel Larimer. With the DPoS, instead of validating blocks personally, coin holders delegate their validation power to delegates called witnesses, who validate blocks by reaching a consensus. The witnesses make a proposal mostly involving sharing rewards among voters based on voters' stake, and are voted by coin holders to validate blocks and confirm transactions. The highest coin holders have the highest vote influence.

DPoS improves the scalability speed of PoS. However, some believe that since the highest coin holders have the highest decision influence, a DPoS system is not completely decentralized as this introduces a level of centralization in the system where decision-making is majorly done by the rich. The fact that coin holders vote delegates (witnesses) kind of leverages and humbles them to perform their duties well as they can be voted out of power if they don’t live up to the task.

Advantages of DPoS

• Higher Transaction speed
• Witnesses that don’t live upto reputation can be voted out.
• Minimal-to-zero transaction fees

Disadvantages of DPoS

• Since witness voting is influenced by numbers of coins a user holds, whales can control decisions by instating and voting for their witnesses, creating a bit of centralization.
• The existence of whales and people holding more than 50% of coins makes the blockchain more susceptible to attacks.
• It is not exactly fair and stakeholders with few coins are discouraged to vote.

Differences between PoS and DPoS

PoS	DPoS
All coin holders directly participate in decision making	Coin holders delegate block validating power to delegates
No worry of highest coin holders controlling decision making	High Coin holders influence witness selection more and so in a way makes people question 100% decentralization
Coin holders can not be voted out as all coin holders participate in decision making	Witnesses can be voted out by coin holders if they don’t live upto reputation.
Slow consensus speed because all coin holders are validators	Fast consensus speed because of small number of witnesses that validate blocks

Blockchain projects which use the DPoS consensus mechanism and Their Scaling Capabilities

STEEMIT DPoS consensus

Here on steemit, we can see a DPoS consensus where we, coin holders of the steemit community vote a total of 21 witnesses as nodes for validation instead of the entire steemit community doing validation. This gives us a very fast transaction speed of around 10,000 transactions per second with no transaction fees. They receive rewards which they share with their voters for blocks created.

Tron DPoS Consensus

In the Tron blockchain, 21 super representatives are selected to validate blocks and maintain security of the blockchain. The super representatives are voted by coin holders of the Tron blockchain. They receive rewards for every block created and share to their voters in proportion to their voting power.

EOS DPoS Consensus

Also in the EOS blockchain, 21 supernodes are elected by EOS coin holders to run the EOS blockchain and maintain its security. Just like in the steem and tron blockchain, they share rewards for blocks created with their voters.

Other coins that use the DPoS consensus include Lisk(LSK), EOS, Steem, Ark, Golos, Cardano(ADA), and Tezos(XTZ).

Conclusion
Blockchains need to have consensus mechanisms that protect the blockchain and secures it against attacks. The DPoS mechanism is not used by many blockchains at the moment, but definitely has a promising future in crypto world as it improves transaction speed and offers better scalability than the PoW consensus. It is also energy efficient and more eco-friendly.