Do you know that mining isn’t the only way to earn cryptocurrency? There are few more members in the network that are taking part in blockchain maintaining and they don’t do it for free.
NOAH Blockchain will provide many ways to make a profit. Today we’ll describe delegating and validating – as an alternative of usual mining. Believe it or not, but it’s a really prospective way to earn.
Who are the Validators and Delegators?
If you’re interested in the crypto industry but haven’t heard these two words, don’t be upset. They are easy to explain.
NOAH Blockchain Network Validator — a technical team, organization, or a person who maintains a server that confirms transactions on the network. He receives a reward for this activity. In order to become a Validator, you need to spend either your own funds both in infrastructure and in freezing coins in your account or attract other holders to delegate coins to you. Validators are ranked according to their total stake.
NOAH Blockchain works on the concept of Delegated Proof of Stake (dPoS), which means that the weight of the validator is determined by his stake. Which is, the more coins are delegated to the validator, the higher his status on the network.
On the NOAH Blockchain Network, the Delegators are the holders of NOAH coins who cannot or do not want to run full nodes. They can delegate coins to the Validator and receive part of the income in return. Simply put, they “credit” the Validator with coins.
Since they share the income of their Validators, Delegators are taking responsibility. If the validator does not behave correctly on the network, each of his Delegators will be partially fined in proportion to the delegated stake. This is why Delegators should choose Validators carefully.
The main task of Validators is to constantly maintain the correct version of the software: their servers should always be online and private keys should not be compromised. If the Validator works with errors, a certain part of his total stake is reduced. This means that every user who has delegated coins to this Validator is also punished in proportion to his stake.
To reduce the chance of losing part of the stake due to the fault of the Validator, there are basic criteria for their selection:
- A number of own NOAH coins: Everything is simple here, the more Validator invests his own assets, the more he will be interested in stable maintaining.
- A number of Delegated NOAH: The total number of coins delegated to the Validator. The larger the stake, the greater the trust of Delegators.
- Validator’s fee: which he takes from the income before distribution to his Delegators.
- Validator statistics: The better the performance, the more trusted he is.
How can I make a profit?
As you might have guessed, there are two ways you can go in search of profit: to either become a Validator or Delegator. For sure, the first choice is much more expensive and difficult but the potential profit is greater too. And, as we mentioned earlier, Delegators have responsibilities too.
So how does this actually work? It’s pretty simple, there are two types of incomes:
- Block reward.
- Transactional fees.
Block reward is distributed in proportion to all Validators relative to their total share in the network. However, before the reward will be distributed to Delegators within the pool, the Validators may take their fee. In other words, Delegators must pay a fee to their Validators for the income they receive. So the fee is the first way.
Another way is transactional fees. This total revenue is divided between the pools of validator accounts depending on the weight of each Validator. Then, in each Validator pool, income is distributed among the Delegators in proportion to the share of each Delegator.
Conclusion: what to choose?
It turns out that mining is not the only way to earn cryptocurrency and maintaining the network can be very profitable. It all depends on how much time you are willing to devote and how many assets you have. If you are limited in your capabilities, becoming a Delegator is the right choice. But if you are ready to work hard and invest a lot of money — the Validator will be the best choice. Increase your capital wisely!
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