Delegated Proof-of-Stake (dPOS)
By CoinGecko | Updated on Mar 03, 2020
A consensus mechanism where selected members of a network are voted as delegates to validate transactions and produce blocks on a blockchain.
Members of the network vote for delegates through their holdings. Usually the highest voted delegates have the most power and tend to produce the most blocks and therefore rewards. Some protocols have built in mechanisms to balance it out.
Overall, the delegated proof-of-stake system was built to counter the energy use and efficiency issues of the proof-of-work blockchain, at the cost of some degree of centralization.
Related Terms
Token
Blockchain based unit of value issued by an organization, which grants token holders a right to participate in a network.
Faucet
A faucet usually represents a site or app where a user can navigate to for small rewards repeated over time.
IEO
Initial Exchange Offering (IEO) is a spin-off of Initial Coin Offering (ICO), where the sale of tokens are conducted on an exchange rather than by the coin team themselves.
Rug Pull
Sudden removal of liquidity which typically leads to asset prices crashing from the lack of liquidity to absorb buy/sells.
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