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X. Liu et al.
needs to have a specific amount of assets stored in its wallet. Furthermore, a node
needs to deposit some assets as stake in order to qualify as a miner. Although every
node is entitled to validate and mine new blocks based on their asset possession,
actual miners are randomly chosen by the blockchain based on the assets stored in
their wallets. The blockchain will examine all nodes with their stakes and choose
some of them as miners based on the ratio of their stakes with respect to the overall
system stakes. That is, if a node owns 10% of the total stakes, then it has 10% of the
chance to be selected as a miner. A node with only 1% of the total stakes will only
be selected 1% of the time. The next new block will be voted for by all users with
stakes. However, in PoS-based blockchains, although the nodes with more initial
stakes can potentially accumulate more and more digital assets, the blockchain is
designed in such a way that it is extremely difficult for several nodes to acquire
the majority of assets within the blockchain. This way, no nodes will be able to
dominantly manipulate the blockchain as they wish.
Comparing to PoW-based blockchains, PoS-based blockchains do not need
powerful computing hardware. A functional computer with a stable Internet connection is all that is needed to work as a node. PoS-based blockchains are much
more energy efficient than PoW-based blockchains because they do not use much
electric power in their operations. Not having mining operations also enables PoSbased blockchains to run much faster than PoW-based blockchain. A PoS-based
blockchain has very little chance of having a 51% attack because of its design.
The main disadvantage of PoS-based blockchains is that it is impossible to
achieve full decentralization. The reason is that in a PoS-based blockchain, only
limited numbers of nodes are participating in creating new blocks.
8.3.4.3 Delegated Proof-of-Stake (DPoS)
Another well-known consensus algorithm is the Delegated Proof-of-Stake (DPoS)
[12] invented by Daniel Larimer. In DPoS, there are three groups of entities:
stakeholders, witnesses, and delegates. The responsibilities of stakeholders are the
election of witnesses. The responsibilities of witnesses are the creation and addition
of blocks to the blockchain. The responsibilities of delegates are maintaining the
blockchain and suggesting changes to the blockchain.
Witnesses are elected by the stakeholders. Each stakeholder has one vote for one
witness. Witnesses with the highest number of votes are elected. Stakeholders vote
to increase the number of witnesses until at least 50% of the stakeholders consider
the blockchain has achieved sufficient decentralization.
Elected witnesses take turns to produce new blocks in given timeframes. However, the quality of their work is monitored by stakeholders via a reputation scoring
system. Poorly performing witnesses will lose scores or their titles. Stakeholders
will continuously vote for the witnesses. Part of the witnesses is replaced at regular
intervals as well.
X. Liu et al.
needs to have a specific amount of assets stored in its wallet. Furthermore, a node
needs to deposit some assets as stake in order to qualify as a miner. Although every
node is entitled to validate and mine new blocks based on their asset possession,
actual miners are randomly chosen by the blockchain based on the assets stored in
their wallets. The blockchain will examine all nodes with their stakes and choose
some of them as miners based on the ratio of their stakes with respect to the overall
system stakes. That is, if a node owns 10% of the total stakes, then it has 10% of the
chance to be selected as a miner. A node with only 1% of the total stakes will only
be selected 1% of the time. The next new block will be voted for by all users with
stakes. However, in PoS-based blockchains, although the nodes with more initial
stakes can potentially accumulate more and more digital assets, the blockchain is
designed in such a way that it is extremely difficult for several nodes to acquire
the majority of assets within the blockchain. This way, no nodes will be able to
dominantly manipulate the blockchain as they wish.
Comparing to PoW-based blockchains, PoS-based blockchains do not need
powerful computing hardware. A functional computer with a stable Internet connection is all that is needed to work as a node. PoS-based blockchains are much
more energy efficient than PoW-based blockchains because they do not use much
electric power in their operations. Not having mining operations also enables PoSbased blockchains to run much faster than PoW-based blockchain. A PoS-based
blockchain has very little chance of having a 51% attack because of its design.
The main disadvantage of PoS-based blockchains is that it is impossible to
achieve full decentralization. The reason is that in a PoS-based blockchain, only
limited numbers of nodes are participating in creating new blocks.
8.3.4.3 Delegated Proof-of-Stake (DPoS)
Another well-known consensus algorithm is the Delegated Proof-of-Stake (DPoS)
[12] invented by Daniel Larimer. In DPoS, there are three groups of entities:
stakeholders, witnesses, and delegates. The responsibilities of stakeholders are the
election of witnesses. The responsibilities of witnesses are the creation and addition
of blocks to the blockchain. The responsibilities of delegates are maintaining the
blockchain and suggesting changes to the blockchain.
Witnesses are elected by the stakeholders. Each stakeholder has one vote for one
witness. Witnesses with the highest number of votes are elected. Stakeholders vote
to increase the number of witnesses until at least 50% of the stakeholders consider
the blockchain has achieved sufficient decentralization.
Elected witnesses take turns to produce new blocks in given timeframes. However, the quality of their work is monitored by stakeholders via a reputation scoring
system. Poorly performing witnesses will lose scores or their titles. Stakeholders
will continuously vote for the witnesses. Part of the witnesses is replaced at regular
intervals as well.