[CRYPTO 101] What is a Delegator? How is it different from Validator?
Updated: Apr 2, 2022
The concept of validators and delegators exists in Proof-of-Stake blockchains such as Polygon, Avalanche, NEAR, etc.
Validator is the entrepreneur, running a business with technical knowledge. (v/s) Delegator is the capitalist/ investor, backing a entrepreneur to earn returns from the validator’s journey.
To understand the difference between validators and delegators, let’s first understand the Proof-of-Stake.
PROOF-OF-STAKE V/S PROOF-OF-WORK:
Let’s understand the difference with an example. Let’s say there are huge amounts of gold discovered in the land parcel next to your house. The whole community/ city will benefit from mining this gold. There are 2 key ways this gold can be mined: Proof of Work — May the best miner win The government imposes no restrictions on who can mine. Anyone with a pick and shovel to heavy mining machinery can simply show up and start digging. Finders keepers. Whatever you find is what you keep.
While this sounds simple, this is hugely inefficient. People without mining experience and with ineffective tools are also digging. A large number of resources are being wasted to mine relatively smaller amounts. And the distribution is uneven. This type of mining is called ‘Proof of Work’(POW).
In POW chains such as Bitcoin, anyone can spin up a node and start mining. The stronger your machine, the higher your chances of winning the mining reward. Hence, every miner is trying to put up better machinery than the next to mine the same cryptocurrency, wasting resources. Proof of Stake — Licensed to the best This time the government doesn’t allow anyone to show up and mine. It gives out licenses to mine. It picks some professional miners (with experience or simply initial capital) to mine. As a limited number of miners compete, resource utilization is more efficient. At the same time, there are enough miners to allow competition. This type of mining is called ‘Proof of Stake’ (POS).
In POS chains such as Polygon, and Avalanche, only certain node operators can run a node to earn rewards. They are generally called Validators. Validators have to ‘stake’ (deposit) tokens to earn the right to validate. They earn rewards generally in the proportion of the tokens staked.
Quick Comparison Summary: POW v/s POS
If you like to learn more about POS and how is it different from POW, watch this quick video.
VALIDATOR v/s DELEGATORS
Now, besides the security and decentralization, the first thing you might have noticed as a drawback of POS is the license. Looks like only a select few node operators can earn blockchain rewards.
That is not true. POS doesn’t mean that non-validators are excluded from earning rewards.
Most POS chains offer a function called DELEGATION. In the regular world, mining companies with licenses such as Rio Tinto, GMDC, etc. raise capital from common investors to become better at mining and share rewards with their investors. Similarly, in the blockchain world, investors, aka, token holders can delegate their tokens to a validator who in turn mines to earn rewards and shares a majority of the rewards back with the delegator.
Validators run the nodes (technically) to earn rewards. JUST LIKE AN ENTREPRENEUR RUNS A BUSINESS.
Delegators invest with/ back Validators with tokens to earn a share of rewards. JUST LIKE INVESTORS BACK A BUSINESS.
Quick Comparison Summary: Validator v/s Delegator
To know how much are the rewards earned by validators and how much is shared with delegators for all major POS chains, you can check out Staking Rewards or simply head out to the website of that POS chain.
If you want to earn rewards from any of your POS chain tokens such as Polygon or Eth 2.0, but don’t have the technical skills to run a node, consider delegation.
If the token you plan to delegate/ stake is Polygon (MATIC), check out Girnaar Nodes.
Girnaar Nodes is an Indian-origin VALIDATOR on POLYGON with top performance and currently offering 0% commission. Stake your MATIC tokens with us directly on the Polygon blockchain. See your Polygon (MATIC) bags grow while we work on the tech under the hood.
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