Delegated Proof of Stake : Dan Larimer’s remedy to the “nothing at stake” matter.
After introducing the proof of stake, we saw its advantages and disadvantages. This allowed us to note that the “nothing at stake” problem is yet to be practically solved on Ethereum, which hinders the implementation of the proof of stake. However, as early as 2013, Dan Larimer had a solution that he was able to try in action with BitShares and then Steemit: delegated proof of stake.
Dan Larimer: a pioneer of the crypto-universe
Dan Larimer is a pioneer of the crypto-universe, one of the first developers to have raised the problems and limitations of proof of work, remarks he addressed to Satoshi Nakamoto himself. In the case of a peer-to-peer digital payment network such as Bitcoin, the censorship resistance and security properties of the protocol are crucial, and come before scalability. On the other hand, in the case of a blockchain used to deploy decentralized applications, which must carry out a large number of transactions in a minimum of time, it is essential to find a way so that the network can adapt to an ever-growing increase in load. Dan Larimer’s challenge is to make scalability inherent in the protocol, by design.
The Birth of Delegated Proof of Stake
Dan Larimer did not like the initial form of proof of issue – allowing all participants in the network to become validators of transactions.
- High probability that validators are offline ;
- Without peer supervision, an attacker’s disturbance potential would be proportional to his funds ;
- With no mining process, generating a random number to select the validator for a block is impossible (an attacker could control random generation).
- And above all, entrusting all power to computer code alone (code is law) makes the entire network very resistant to corruption, but vulnerable in the case of an error.
The idea of the DPoS is to entrust the validation of the blocks to a restricted group of entities, the delegates (also called witnesses), who are elected by the holders of the native token of the blockchain. Thus, unlike traditional proof of stake, where any coin owner can become a block validator-producer, and be rewarded in proportion to its assets put in escrow, delegated proof of stake is a consensus mechanism based on the democratic vote of the token holders. The latter elect nodes to supreme power : that of validating and registering blocks on the chain.
Practical proof of Dan Larimer’s solution
The starting assumption is that proof of stake is the most effective and fairest governance process to date. Moreover, thanks to the blockchain, this democratic, liquid and representative voting process is completely transparent.
Through these 3 articles, we could see that the proof of possession solution solved a certain number of problems identified in proof of work, but that it was not without disadvantages. The only one to have been able to solve this problem and to demonstrate it was Dan Larimer with the delegated proof of stake solution. Now that we have identified the context, the problems and the solution, let’s get to the heart of the matter with a general explanation of how EOS works.