What is Address Delegation?

Address delegation is a mechanism, commonly found in Proof-of-Stake (PoS) blockchain networks, that allows token holders to delegate their staking rights or voting power associated with their address to another party, known as a delegate or validator. The owner retains full control over their funds, but the delegate can use the delegated stake weight to participate in network consensus (e.g., validating transactions, proposing blocks) or governance.

How it Works

1. Owner Chooses Delegate: The token holder selects a trusted delegate (often a validator node operator).
2. Delegation Transaction: The owner initiates a special transaction on the blockchain to assign their staking rights to the chosen delegate's address.
3. Delegate Acts: The delegate uses the combined staking power (their own plus all delegated stakes) to participate in network activities.
4. Rewards Distribution: If the delegate successfully participates (e.g., validates blocks), they typically earn rewards, a portion of which is often shared with the delegators after deducting a commission.

Benefits

• Participation without Running a Node: Allows token holders to earn staking rewards without the technical overhead of running their own validator node.
• Network Security: Encourages broader participation in securing the network by pooling stake.
• Governance: Enables participation in on-chain governance voting through delegates.

Risks

• Delegate Performance: Rewards depend on the delegate's uptime and performance. Poor performance or malicious behavior (slashing) can result in reduced or lost rewards for delegators.
• Centralization: If stake becomes concentrated among a few large delegates.

Related Terms

• Proof of Stake (PoS)
• Staking
• Validator (Implicit - needs creation)
• Slashing (Implicit - needs creation)
• Delegated Proof-of-Stake (dPOS)