Delegated Proof of Stake (DPoS) is a Sybil protection mechanism invented by Dan Larimer and used by certain distributed ledgers, including Radix. In DPoS, holders can delegate their network tokens to validators in exchange for a share of the staking rewards. Usually, inclusion in the approved validator set is conditional upon token holdings.
Two meanings of delegation
Networks that describe their consensus as delegated proof of stake use "delegate" for different roles. A 2017 comparison by Chjango Unchained, head of community at Tendermint, sets two designs side by side. In EOS, token holders vote for 21 block producers, who sign transactions and extend the chain; Dan Larimer chose 21 for EOS because more would exceed the attention voters can give to judging them. In Tendermint, the consensus engine behind the Cosmos Hub, a validator is anyone who locks up tokens as a bond, and a delegator is a holder who adds tokens to a validator's bond in return for a share of its rewards.
The two differ most in what a misbehaving validator loses. A Tendermint validator that signs conflicting blocks has its bond destroyed, including the stake delegated to it. Bonded tokens also stay locked for an unbonding period after their owner asks for them back, which warns light clients (phones and other software that do not follow the chain continuously) before the validator set changes. An EOS producer posts no bond: the protocol has no financial penalty, and relies on the threat of losing reputation and the elected position. Under a denial-of-service attack, the article adds, Tendermint stops producing blocks while EOS keeps going and forks into inconsistent states.
Radix follows the Tendermint pattern of holders staking to validators of their choice, without slashing: a validator that misses its turns in consensus loses emissions instead, as described under Staking.
How does delegated staking work on Radix?
An XRD holder stakes by depositing XRD into a validator's component, which returns that validator's liquid stake units (LSUs), a token for a share of the validator's stake pool. At each epoch, about five minutes on mainnet, the consensus manager takes the 100 registered validators with the most stake as the active set (babylon-node: GenesisConsensusManagerConfig). Emissions of about 300m XRD a year are paid into the stake pools at the end of each epoch, so an LSU redeems for more XRD over time instead of rewards arriving as separate transactions. The validator keeps the fee percentage it has set, and a fee increase takes two weeks to apply.
A validator has to make every proposal it is due in an epoch to earn that epoch's emissions. Radix has no slashing, so a validator's delegators lose rewards, never stake. Unstaking exchanges LSUs for a claim that redeems for XRD after 2,016 epochs, about seven days, and the stake earns nothing in that time (same source). Staking covers the rest, including LSUs used in DeFi and how Radix staking compares with other networks.
References
- Chjango Unchained (2017). Consensus Compare: Tendermint BFT vs. EOS dPoS. Cosmos Blog, Interchain Foundation (archived via the Internet Archive).