Delegated Proof of Stake (DPoS)

Delegated Proof of Stake (DPoS) is a governance mechanism of a cryptocurrency where stakeholders vote to elect delegates, who then validate blocks on behalf of stakeholders. Some cryptocurrencies use Proof of Work (Bitcoin) and some use Proof of Stake (Dash) to validate transactions. Delegated Proof of Stake is the third kind of consensus algorithm that is currently being used in EOS, Bitshares, Lisk and Steemit. In Proof of Work (PoW) anyone can join the network as a block validator if they have mining rigs. In Proof of Stake (PoS) anyone can be a block producer if they hold a large amount of a given cryptocurrency. Delegated Proof of Stake is a bit different from PoW and PoS. Only elected block validators can produce a new block. They are called witnesses, who secure the network and make sure no one is double spending. Anyone who owns any amount of a stake can vote to elect witnesses. There is no minimum coin requirement to vote, stakeholders have proportional voting right to choose the next witnesses. In EOS’s case there are 21 witnesses (delegates) who are elected by the EOS holders to validate transactions. If witnesses misbehave, they will be removed by the voters (stakeholders). Users are incentivized to become witnesses as witnesses are paid for their service. Cryptocurrencies that have DPoS consensus algorithm can process thousands of transactions per second.