Delegated proof-of-stake

The final algorithm or schema we'll discuss here is the DPoS. This consensus scheme is claimed to be the most efficient (fastest and decentralized) and most flexible scheme available. The previous schemes are rather basic in the absence of any modifications and can be seen as the most centralized consensus algorithms. The main difference between the regular PoS and the DPoS system is akin to the difference between a direct democracy and a democracy run by representatives. The participating entities (individuals or organizations) choose an entity they trust the most to represent their portion of stake in the blockchain. You decide which entity, also called delegate node, will represent your stake in the blockchain. This allows you to join a team to enlarge your stake, which helps to offset and balance out the power of large stakeholders. By changing network settings, such as the block interval, transaction sizes or other more advanced parameter, can be tuned by the power of democracy through the elected delegates. This protects all participants against unwanted changes in the network.

DPoS is claimed to be more efficient. This allows lower transactions fees, fast confirmations, and increased profitability. Critics argue, however, that by consolidating the validation role in fewer hands, it is less decentralized and resilient. Because it employs a "democratic system," it suffers from voter apathy as any such system might. If the majority of the smaller voting block participants fail to vote, the network will exhibit a tendency to be controlled by large stakeholders.

In a cryptocurrency-based PoS blockchain, every entity can perform a "stake," or otherwise participate in the process of validating transactions and earn coins; whereas in a DPoS blockchain, participants who have coins are able to vote for, or join, a delegation. However, the delegation performs the function of validating transactions in order to maintain the blockchain and it is the delegation that profits from the transaction fees received.

Ark is a blockchain that uses DPoS as a consensus scheme. Ark is set of bridged blockchains (or sidechains), and it uses its own token and exchange to deliver an innovative blockchain technology that everyone can use. This blockchain allows all account holders to vote for the top 51 delegates. Everyone can become a delegate. These delegates are allowed to update the blockchain's database. Each account holder votes for a delegate, and these delegates represent all stakeholders of the Ark network.

Within predefined rounds of a given time interval, each delegate has the chance to update the database once by creating a single block round. In each round, the network generates a pseudo random list that denotes when a delegate is allowed to create, or "forge," a block. Transactions are added by a delegate to a block when they are forging it. Like the other consensus methods, Ark uses hash functions to validate the transactions and, once added to a block, participants can check the block to see which transactions have been verified. When the developers of Arc want to update their node software, they put the changes up to a vote. The majority vote decides which version of the software is accepted and used in production. This ensures that the changes that win the vote are in the best interest of the majority of the participants.

The DPoS system can detect inconsistencies and automatically correct them because the version and state of the database is held by the majority of the delegates. The same is also true regarding attacks, where an attacker, for example, would require 51% of all stakes (coins) in order to be able to vote for 26 delegates. If an attacker achieves this, they could do anything they want with these 26 delegates, but it won't be in their best interest to damage the system, since this would diminish the value of the coins.