How to stake cryptocurrencies in 2022, explained
DPoS is a version of PoS where participants can pool tokens in a staking pool to determine a block validator.
In 2013, Daniel Larimer developed an evolution of PoS in which validators are joined by a new group, the delegates. In the resulting Delegated Proof of Stake (DPoS), delegates exist as representatives from the community, as indicated by those holding tokens. These ones can then vote on which validator could create a new block and become entitled to a reward paid through transaction fees. Delegates would also be required to authorize the network rules and maintain the blockchain’s stability, a position that any network member could hold, although only for a short time.
Any user engaged in the staking process and eligible to become a delegate is referred to as a “witness,” the name stemming from their ability to witness transactions and act as nodes in the network. That said, unlike delegates, a witness does not have the opportunity to set the basic network rules. Both witnesses and delegates are voted on through a reputation model.
Tokens in DPoS-based blockchains are divided into tokens available (those in circulation) and those held in the stakes. Each user independently determines their stake amount, and, once selected, the stake may not be spent. These coins can only be used to become a witness, vote for delegates, and participate in network management via smart contracts. The concept is currently applied in projects including Tron (TRX) and EOS.