In this article, Inal Kardanov, Waves (Waves Protocol) Developer Advocate, discusses key differences of the LPoS consensus algorithm versus PoS and DPoS.
Several consensus algorithms are used today, including Proof of Work, Proof of Stake, Proof of Authority, and even Proof of Burn and Proof of Elapsed Time. (Proof of Elapsed Time). They all have their advantages and disadvantages.
in the protocol MDMCOIN, the same as WAVES, the consensus algorithm used is the Leased Proof of Stake (LPoS), which performs very well, but is not very common. Waves is the largest blockchain in terms of capitalization to use this consensus algorithm. Let's find out the main differences between LPoS and other consensus algorithms.
How LPoS works
As with all other Proof of Stake (PoS) consensus algorithms, a miner's chance of generating the next block is proportional to the number of coins he has. Unlike Proof of Work (PoW), PoS does not require significant computational capabilities or energy, and it discourages a possible network attack as it will not be profitable.
LPoS differs from PoS in that regular users can participate in block generation by renting their MDMCOIN tokens to nodes in exchange for a premium. The funds remain under the full control of the token holder, as the lease can be canceled at any time.
Basically, a user transfers to a node the right to generate blocks using their balance instead of their tokens. This makes the user confident in the safety of their funds. The lease can be canceled at any time and the tokens will be immediately available for transfer and trading.
Difference between leasing and staking
Some blockchain protocols offer staking – a process that is similar to leasing but has some specifications. The main differences between staking and leasing are:
- In most protocols, the staking period must be defined at the time of fund transfer and staking cannot be canceled at any time or can only be canceled with a penalty. This has a negative impact on the user experience.
- In most PoW protocols, miners are subject to penalties for improper activity or unavailability. As a result, users who lease tokens to a node may lose their funds along with the node's owner. Such a situation occurred recently on the Polkadot network — https://cointelegraph.com/news/controversial-new-proposal-would-forgive-slashed-polkadot-validator
Delegated Proof of Stake
When I've spoken about LPoS at conferences, the question I've been most frequently asked is, "How is it different from Delegated Proof of Stake?"
Delegated Proof of Stake (DPoS) is a version of the PoS consensus algorithm, where token holders vote on a list of “delegates” — block validators/generators. The weight of a user's vote is proportional to the number of coins he has.
The specifics of voting systems vary from project to project, but typically users are entitled to a share of the prize pool collected by the delegate they voted for. Thus, the inefficiency or inappropriate behavior of a delegate leads to the deletion of its node.
All existing protocols that use DPoS stipulate the maximum number of nodes allowed to generate blocks. For example, the EOS network has only 21 block generators.
Unlike DPoS, LPoS has no restrictions on the number of generator nodes. For example, in the MDMCOIN network, the only condition for block generation is a balance of at least 1,000 MDMCOINs own or leased assets.
Technically, the network of MDMCOIN can have up to 210,000 nodes with a minimum required balance of 1,000 MDMCOINs that can generate blocks. Every day eight new block generators can be added. Access: https://explorer.mdmcoin.com to verify the generating portfolios.
Thus, LPoS combines the main advantages of PoS, such as energy efficiency and security, with a more user-friendly leasing process, also offering more decentralization than DPoS.
Article Source: https://medium.com/wavesprotocol/why-is-lpos-better-than-d-pos-4cf80f74f81c | Changed by the team MDMCOIN