Comparation between PoW,PoS and DPoS Governance Models
These governance models weigh heavily as some of the most critical factors of a platform such as latency and throughput — some of the most popular governance models that every blockchain enthusiast will have heard of include Proof of Work (PoW), Proof of Stake (PoS) and Delegated Proof of Stake (DPoS). These are the most widely used consensus algorithms in the blockchain space. This article pitches the three governance models against each other to give the reader a clear view of how these governance models compare.
Proof of Work (PoW)
The concept for the Proof of Work governance model was presented in 1993 before the term ‘Proof of Work’ was coined in 1999 by Marcus Jakobsson and Ari Juels. The core reason for applying the PoW model is to deter denial-of-service attacks by requiring requesters of a particular service to do work, and in blockchain’s case, computational work, before a block is submitted.
Many platforms have employed this consensus such that for one to mine a particular digital currency, they have to spend computational energy. Miners have to solve complex mathematical problems that require much energy. The first miner to solve the problem receives handsome rewards regarding the digital currency of that particular platform. This can be seen in Bitcoin’s case.
➡️Proof of Work also solves the problem of double spending in cryptocurrency. The more extensive the network, the harder it is for an individual to execute double spending because of the computational energy required to control the network. The kind of energy necessary to influence transactions in bitcoin is enough to power approximately 15 households in America; this is according to digiconomist. Herein lies a significant problem with PoW.
The world is trying to go green by consuming less energy and coming up with more ways to produce green energy. The computational power required for the mining activities taking place around the world is enormous. This is against what the world is aiming for regarding energy consumption.
➡️Proof of Work’s other drawback is seen in its latency and throughput figure. They are low with platforms such as Ethereum only managing to hit a peak of 15TPS which is poor compared to the demand that the network experiences. This brings us to the alternative governance model that many developers have been using, the Proof of Stake mechanism.
Proof of Stake (PoS)
Proof of Stake has been the more logical option for those who want to avoid the drawbacks of PoW. Proof of Stake works similarly to PoW. However, the difference in these two consensus methods is that PoS requires the miner to own/hold/have digital currency. The amount of cryptocurrency of a particular platform owned is an indication of the stake a miner has for that specific platform.
➡️The workings of the PoS consensus mechanism are two-fold. The first method is by placing a high requirement for conducting an attack on the network. Fifty-one percent of all cryptocurrencies in that network will be required to initiate an attack. Due to most set up on these platforms, it is difficult for one source to have such a huge percentage. This, therefore, bars the greater population from initiating such an attack.
➡️The second way is through lowering the incentive for conducting the attack. If a miner is determined to attack by acquiring the required amount of cryptocurrency, then they would be attacking themselves indirectly. By holding such a vast number of cryptocurrencies, if the platform takes a hit and it affects the value of these digital coins, then the attacker also losses a similar percentage value. This mechanism discourages attackers by ensuring that there is no reward in attacking the platform.
More blockchain enthusiasts are inclined to PoS as it favors the majority compared to PoW. An excellent example of why PoS is preferred is Bitcoin. Now, Bitcoin uses PoW. Miners usually have to look for powerful equipment which is very expensive to mine. Comparing that to any platform that uses PoS, what their miners require is just ownership of some digital currency and internet connection via available devices.
Proof of Stake is not perfect in itself. It has certain drawbacks that can easily be exploited. It depends on the owners of large percentages of cryptocurrencies to push the platform and the cryptocurrency in the right direction. A generous nature of a vast majority is highly unlikely, as history has taught us, therefore some miners may end up being exploited to benefit the few at the top.
Hacking also affects PoS governance models more than it does PoW. When hacked, a miner loses more than just their cryptocurrency; they lose their place in the platform. They cannot participate in voting unlike in PoW where miners only lose their cryptocurrency. These drawbacks led to the development of the Delegated Proof of Stake (DPoS).
Delegated Proof of Stake (DPoS)
Delegated Proof of Stake (DPoS) comes in as a viable solution to the problems facing both PoW and PoS. Its functions are similar to that of PoS, but it is different in that it has more democratic features when compared to PoS. It is currently the governance model that most new platforms are opting for as it provides a more wholesome approach as a governance model.
➡️In DPoS, delegated witnesses are introduced. These witnesses have the power to vote on behalf of those who have elected them. The witness functions similarly to miners in platforms using PoS. In DPoS however, the performance of the selected witnesses is scrutinized such that those who underperform or who do not represent the views of their voters can be voted out, and new witnesses voted in.
➡️Stake in the platform in DPoS is similar to PoS as stakeholders have influence proportional to the number of cryptocurrencies they own. In DPoS, the threshold to become a valid voter and contributor to the platforms is lowered to levels which favor the frequent users of these platforms. Delegated Proof of Stake introduces democracy into blockchain. It is therefore only as useful as the voters within that platform. Those who are voted as witnesses dictate the direction of the platform thereby putting pressure on voters to elect those whom they see as fit to lead them to greater heights.
The success of DPoS has been seen thus far in platforms such as Steem that have become prominent worldwide. It has also helped maintain decentralization in platforms where it has been applied, and it has been instrumental in fending off regulatory interferences. Furthermore, it has dealt with the setbacks of both PoW and PoS while maintaining their strengths thus leading to more robust platforms with excellent performance.