Delegator Meaning
What Is a Delegator in Crypto?
A delegator is a node that indirectly participates in a network’s consensus process without running as a full node. Through a process known as delegation, the network participant stakes their cryptocurrency tokens with a staking provider or an active validator node. By doing this, the node receives a percentage of the block rewards based on their token contribution.
Moreover, the delegator retains control over their tokens and can cash out at any time, based on the token’s unbonding period (the wait time before a user can withdraw their tokens after unstaking them).
Staking vs Delegation
Staking typically allows users to participate in the network as validators. It involves locking up a certain amount of the network’s native token for the opportunity to be selected as a validator. Delegating is the alternative method of earning yields besides staking in PoS or delegated proof-of-stake (DPoS) networks. While the staking process requires a minimum amount of tokens for participation, even users with the smallest account balances can participate in the delegation process.
Due to a lack of necessary resources (such as computing power and hardware), technical know-how, or the minimum token requirement to run a validator node, users who still wish to participate in the validation process choose to delegate. And by contributing their tokens to a validator’s staking pool, they can receive a commission from the block rewards the validator receives. Compared to staking, delegation is less of an active investment and demands less effort from the participants.
Generally speaking, this process is a mutually beneficial situation for both the validator and the delegator. Why?
In most PoS blockchains, the probability of being pseudorandomly selected to forge the next block is based on a node’s economic stake and the staking period. This means the more economic stake the network participant has on the network, the higher their chances of being selected as validators. Hence, contributing tokens to a validator’s node increases the size of their economic stake, thereby increasing their odds of earning rewards.
