Subform of PoS, in which token-holders can still participate in the security and maintenance of a blockchain without having to actively operate a node. In NPoS systems, token-holders nominate a set of different validators with their stake using one transaction.
NPoS tries to achieve decentralization and fair representation through proportional justified representation and high security through maximin support. Slots in the active validator set (which changes periodically) are assigned to validators proportional to their nominations (proportional justified representation).
Once in the set, the maximin support provides for a distribution of nominated stake so that every validator in the active set has roughly the same amount of stake backing it.
Blockchains are run and maintained by a decentralized, globally distributed network of nodes and not a central entity. Hence, a mechanism is needed that helps this network, often-times consisting of unknowing or untrusting parties, to establish security, validity, and guaranteeing availability. Currently, there are two main mechanisms, namely Proof-of-Work and Proof-of-Stake, that are used in blockchain networks to provide for security through economic incentives and cryptography. Furthermore, these mechanisms help to appoint the next node which gets to add a new block to the blockchain.
