DELEGATING DIGITAL ASSETS AND WHY?
(BEGINNER'S GUIDE).
have you ever come across words like delegates, staking, delegating, validator, pos ( proof of Stake) and don’t have any clue?
If yes, this is for you, do not skip!
Who are Delegates?
Delegates are users in a DPoS ( decentralized proof of stake ) system who oversee governance within the blockchain.
This set of users is authorized to represent by others.
A Delegator?
A delegator is a token holder (can be any token), who wants to participate in staking.
What is delegating?
Delegating is the process by which we give others the authority to act on our behalf.
Delegating in crypto is also a process by which, we delegate our digital assets to a validator to act on the delegator's behalf(for voting purposes).
This process enables what we call
‘STAKING’
That is to say that when a delegator, delegates his/ her digital asset to a validator, we are doing what we call STAKING.
A validator?
A ‘Validator’ on a Blockchain is like a banker who verifies every incoming transaction.
A transaction will only be completed on the block(a bulk of transactions) when it has been verified by the validator.
A validator is a crucial part of the Proof of stake (POS) consensus mechanism whose responsibility is to verify blocks to earn rewards.
WHY SHOULD I DELEGATE MY DIGITAL ASSETS?
Delegating a digital asset is a way by which a holder of asset delegates his/ her holdings to a stake pool.
The (3) primary benefit of delegating your token to a validator :
- Delegator earns more crypto, and interest rates can be very generous.
- It's potentially a very profitable way to invest your money instead of leaving them in your wallet.
- It is not a strenuous activity you only need a crypto (digital asset) that uses the proof-of-stake model.
OTHER BENEFITS INCLUDE:
- Delegators benefit, as they can earn a percentage of block rewards without needing to become a validator themselves. That is to say that digital asset holders who don’t have any technical know-how needed to operate validator nodes but still want to earn rewards, may choose to delegate and earn rewards.
- Delegators have the flexibility to unbound, or remove, their tokens at any time - subject to each protocol’s unbounded period and may pay only a small percentage of their rewards as a fee for the service provided by the validator.
- There is no minimum quantity of tokens required for a token holder to delegate their assets to an active validator node. delegation allows even digital holders without many tokens to participate in the delegation process ( staking) and earn Rewards.
Considerations before delegating
Every blockchain network operates by its parameters.
To make sure of a good fit, it is important to understand the specifications of the network before you delegate.
A few key considerations include:
- Liquidity Warm-up periods (the amount of time after delegating to a validator before your tokens are eligible to earn rewards) and unbounded periods (after you request to remove tokens from delegation until you get them back) vary greatly per protocol.
They may range from a number of hours to a number of weeks or even up to a year. One’s liquidity needs will determine whether or not to delegate
2. Inflation and reward rate: Expected inflation and delegation reward rates also vary by protocol. It’s crucial to weigh the expected rewards for delegation against other methods for rewards generation — particularly given the emergence of DeFi applications.
3. Validator service fees :
On most PoS networks that allow delegation, validator node operators charge a small fee (a percentage of rewards earned) to delegators for the service provided. However, when comparing public delegators, it is vital to consider more than who charges the lowest service fee.
In many cases, those low-fee validators may cut corners on security and carry a higher risk of loss than premium-rate validators.
Whos Avaulto?
Avaulto as a Proof Of Stake Blockchain Company. Aims To Deliver High-End Quality Nodes Of Multiple Blockchains That Support Staking Mechanisms.
Holders of digital assets that support the stake model, delegate their digital assets to Avaulto POS validator to earn rewards.
These delegators after successful delegation
earn from (7- 47)% APR (annual reward rate ).
if you find this article, please consider staking with us
To know more about delegating your digital assets to Avaulto, visit our website.
Website link: https://avaulto.com/
