Diversified Proof of Stake

Diversified proof of stake is a non-standard label for variants of proof of stake that build in rules to keep staked tokens, and therefore influence over the network, spread among many independent validators. In ordinary proof of stake, and especially in delegated proof of stake, token holders tend to delegate to the largest or best-known validators, concentrating power. Diversifying designs counter this with measures such as capping the stake that counts toward any one validator, reducing rewards above a threshold, selecting validators partly at random or rewarding delegations to smaller operators. Effective proof-of-stake, used by the Harmony blockchain, is one named example of this approach. The aim is a higher Nakamoto coefficient and stronger resistance to collusion; the trade-offs include more complex rules and the possibility that large holders simply split their stake across several validators.