What is a Blockchain?
A blockchain is an immutable, distributed ledger of transactions which is maintained by a peer-to-peer network rather than a centralized authority. It can be thought of as a distributed database that gets synchronized as soon as changes are made.
Blockchain technology utilizes powerful consensus mechanisms (such as Proof-of-Stake) alongside crypto-economic incentives to verify the authenticity of transactions, secure the peer-to-peer network and nominate nodes (special peers in the network) to generate blocks.
What is Proof-of-Stake?
Proof-of-Stake (PoS) is a consensus algorithm used for the generation of new blocks. It requires validators (special nodes running the blockchain) to stake the network's native token in order to propose and/or validate new blocks and ultimately earn rewards. A stake can be seen as a form of security deposit that disincentives bad behavior.
What is a validator?
Validators are special nodes in PoS-networks, more precisely delegated Proof-of-Stake networks. They operate the blockchain infrastructure by proposing and validating new blocks and receive rewards (in the form of new tokens) for doing so. In addition, validators actively participate in the network's governance by voting on proposals. A validators voting power is weighted according to their total stake.
What is a delegator?
Token holders who want to stake their tokens but do not want to run a validator node, are called delegators. They can still participate in the network and earn income by delegating their tokens to a validator of their choice. For some networks, in the event of a validator misbehaving according to the protocol, delegators of the respective validator will also be penalized in proportion to their staked assets. We therefore advise you to carefully choose your validator.
Why should you stake your tokens?
Proof-of-Stake blockchains are inflationary as new tokens are rewarded for generating and validating new blocks. Token holders who are not engaging in the staking process - either by operating as a validator themselves or by delegating their tokens to validators - stand to lose out on rewards and see their assets getting diluted over time.