So far, many people tend to get the fact that Cardano (ADA) Ouroboros is a DPoS (Delegated Proof-of-Stake) algorithm wrong.
For starters, the Proof of Stake (PoS) Consensus algorithm was created to ease the massive energy consumption issue in Proof-of-Work consensus, such as that of Bitcoin. Research has demonstrated that energy consumption in Bitcoin mining is sufficient for a small country.
Now, the Proof-of-Stake consensus enables validators to stake their coins in order to confirm transactions and discover new blocks. The stake acts like an assurance or pledges that they will not be a negative entity to the game or take over the network.
The Difference Between Consensus Algorithms
Proof-of-Work has novel versions like the Delegated Proof-of-Stake (DPoS) algorithm, created by Dan Larimer, the developer of Steem, Bitshares, and EOS. In DPoS, a couple of validators are voted in a completely transparent and democratic manner to control the confirmation and creation of new blocks.
They are chosen to govern the network, and in exchange, they get rewarded. DPoS enables the inclusion of every coin holder in voting, irrelevant of the amount of stake they have.
There have been some misunderstandings of what DPos really is with Cardano’s new consensus algorithm, Ouroboros: it is a type of Proof-of-Stake but very different from the DPoS. Cardano developers have invested a lot of time and resources researching in order to develop something new, innovative, and different from the available consensus, DPoS.
The Cardano communication team has explained what Ouroboros is and how it functions in simple terms for the public who might not have the time and energy to read research reports.
What is Ouroboros and How it Works
In Ouroboros, nodes are pooled into staking pools because one node might not have sufficient expertise to deliver new blocks. Through randomization, staking pools are chosen by the Ouroboros algorithm to create new blocks based on the weight of their stake.
Staking pools generate blocks for the slot – a subset of an epoch – which they are selected for. The consensus also stops takeovers by choosing the densest chain or one that has the most validators and transactions, while DPoS selects the longest chain.
Every known crypto project is unique, and each varies from another, which is why they can all be included in the ‘Cryptocurrency and Blockchain Technology’ sector, without having to create divisions.