Delegation

Delegation in cryptocurrency refers to the act of assigning the right to validate transactions and create blocks to another entity, typically called a delegate or validator. This process is commonly associated with proof-of-stake (PoS) and delegated proof-of-stake (DPoS) consensus mechanisms.

In a PoS system, token holders can delegate their tokens to a validator, who then uses these tokens as collateral to validate transactions and secure the network. Delegating tokens allows holders to participate in the consensus process and earn rewards without actively participating in block creation.

For example, in the Tezos blockchain, token holders can delegate their XTZ tokens to bakers, who are responsible for validating and creating blocks. Delegators receive a portion of the rewards earned by the baker proportional to the amount of tokens they have delegated.

Similarly, in DPoS systems like EOS or TRON, token holders can vote for block producers who are responsible for validating transactions and maintaining the network. These block producers are often referred to as delegates or witnesses. Token holders can delegate their voting power to a chosen delegate, allowing them to participate in block production and governance.

Delegation provides a way to decentralize the consensus process and distribute rewards among participants in a cryptocurrency network. It allows token holders to contribute to the network's security and governance without the need for extensive technical expertise or resources.