So, What’s the Downside?
Nothing’s perfect, and DPoS has several flaws:
- It's easier to organize an attack: Because fewer people are in charge of keeping the network alive, it’s easier to organize a “51 percent” attack.
- The rich may get richer: People’s vote strength is determined by how many tokens they have, which means that people who own more tokens will influence the network more than people who own very few.
- Apathy can kill: Without a large number of engaged users, the system will not function as intended. (That’s a bit like any democracy or democratic republic.)
- Delegates could form cartels: Delegates can organize into cartels by concentrating the role of validation in a smaller number of hands. This not only makes it less decentralized, but it also makes it less resilient.
This notion that DPoS is not truly decentralized may be the most notable criticism of all. Yes, DPoS is less centralized than some other consensus protocols; nevertheless, power is still concentrated in the hands of a handful of users. DPoS sacrifices decentralization for scalability, critics say. Vitalik Buterin, the founder of Ethereum, made headlines earlier this year when he argued that DPoS creates incentives for witnesses to form cartels and bribe voters.
It’s become quite the hot-button issue recently, in light of EOS raising $4 billion in its initial coin offering. We’ll spare you the blow-by-blow, but here’s one comment from The Cryptograph: “Skeptics pointed to their idiosyncratic DPOS (delegated proof of stake) consensus algorithm protocol as a potential cesspool for corruption and nefarious undertakings.”
On the other hand, the voting mechanism is supposed to protect against the dangers of creeping centralization. Here’s the less-than-delicate way an Invest in Blockchain piece put it:
“In the world of DPoS, all the members of the workplace have a say in who controls that office. If you have an asshole manager or an incompetent CEO, vote them out. In short, DPoS offers a layer of technological democracy to offset the negative effects of centralization.”
Buterin articulated something called the Scalability Trilemma. How can a blockchain simultaneously solve for scalability, security, and decentralization? The consensus is, it cannot.
As Loom Networks’ Georgios Konstantopoulos wrote;
Α blockchain that claims to have solved the trilemma has either bent the laws of physics (highly unlikely), or it has discovered a breakthrough method that addresses the major blockchain scalability problems that have stumped top mathematicians and computer scientists for the past decade.
While this is not impossible, a more likely explanation is that the blockchain has sacrificed either decentralization, security, or both.
Konstantopoulos may have a bias, but he also has a point. In the case of DPoS, the tradeoff is between decentralization and scalability.
It’s not a very satisfying answer, but here it is: Selecting the best consensus protocol depends on your specific needs and concerns. For organizations that need speed, DPoS may be the best option.