Delegated Proof of Stake (DPoS)
Operates on the principle that everyone can win the chance to add a block to the blockchain, by using an election followed by a lottery. Used by: BitShares
- DPoS is similar to LPoS, but differs on one important aspect: with DPoS, coin holders use their balances to elect a list of nodes, regardless of their balance, that will have the opportunity to take part in the ‘lottery’. This engages all coin holders, though it does not reward them directly in the same way as LPoS does.
- All nodes in the network elect a group of nodes to partake in a ‘lottery’. Votes from nodes with a higher balance will have more weight in the election.
- Holders can also vote on changes to network parameters, giving them greater influence and ownership over the network.
- The elected nodes partake in the ‘lottery’, on equal chances.
- The lottery’s prize is the rights to collect waiting transactions into a block and collect the transaction fees.
- Just as in regular Proof of Stake, the winning node provides the new block with a reference to the preceding block and then broadcasts it to all other nodes, which will then verify the transactions inside and add the block to their copy of the blockchain.
- A re-election is held for the next block.