Blockchain & Cryptocurrency Glossary

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Delegated Staking

Pronunciation
[di-le-gay-tid stay-king]
Analogy
Delegated Staking is like entrusting your shares to a fund manager who votes on corporate actions on your behalf, while you retain ownership of the shares.
Definition
A staking model where token holders delegate their stake to validator nodes without transferring custody of their tokens, sharing in rewards and risks.
Key Points Intro
Delegated Staking operates through:
Key Points

Stake assignment: Tokens remain in owner’s wallet but count toward validator stake.

Reward sharing: Delegators receive a portion of validator rewards.

Non-custodial: Delegation does not transfer token ownership.

Slashing exposure: Delegators share penalty risk of validator misbehavior.

Example
In Tezos, a token holder delegates 100 XTZ to a baker; the baker runs the node and the delegator receives ~5% annual yield minus baker commission.
Technical Deep Dive
Delegation is recorded via an on-chain operation linking delegator address to validator. The staking contract includes delegated stake in the validator’s weight for block selection. Rewards are credited to the delegator’s withdrawable balance by the protocol’s reward distribution module each cycle.
Security Warning
Delegating to an unreliable validator may lead to missed rewards or slashing losses; research validator performance history.
Caveat
Delegators cannot control validator actions; poor validator governance can affect returns.
Related Terms
Validator
Staking Pool
Nominator
Unbonding Period
Commission Rate

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