The BSC (Binance Smart Chain) activity has been experiencing a significant surge. DApps such as PancakeSwap, Venus, and others are witnessing substantial growth. You can begin by reading our concise introduction if you haven’t yet studied the BSC ecosystem. It offers a thorough overview and is an excellent place to start for newcomers.
However, establishing an ecosystem and fostering a community of projects, infrastructure, developers, tools, and users is challenging. This aspect contributes to the immense power of cryptocurrencies and transforms open-source software into a shared resource. BNB Smart Chain, or BSC, is supported by community validators and delegators who stake BNB (Binance Coin) to earn rewards.
Suppose you’re unfamiliar with BSC or wish to gain further knowledge on the responsibilities of validators and delegators. In that case, we suggest referring to our article “A Journey to Decentralisation: Validators & Delegators.” This resource offers valuable perspectives and can enhance your comprehension of the topic.
Community validators aim to expand the BSC ecosystem, making it more extensive and accessible. But what does this entail, and how can you get engaged in?
What is BNB Chain (Binance Smart Chain)?
BNB Chain, formerly known as Binance Smart Chain, provides exceptional usability and functionality to individual crypto fans and companies. The blockchain is an entirely autonomous service not linked to Layer 2 networks or scaling solutions.
BNB Chain is home to several smaller and larger-scale decentralization apps, the most noteworthy of which are Binance DEX and PancakeSwap. Aside from sophisticated, intelligent contract support, the platform is also Ethereum Virtual Machine (EVM) compatible, allowing users to run ETH-based applications such as MetaMask.
Furthermore, BNB Chain is believed to be less expensive than Ethereum (the current maximum payable fee is 0.1%). Moreover, the blockchain provides quick block finality time, which increases client demand.
BNB funds innovative projects centered around blockchain technology. The chain supports BEP2, BEP8, and ERC-20 tokens and encourages cross-chain interoperability. Some of the BNB crypto tokens (previously Binance Smart Chain tokens) are Dogecoin (DOGE), Polkadot (DOT), Zcash (ZEC), etc.
Exploring The Role Of A BNB Smart Chain (BSC) Validator
Proof Of Staked Authority (PoSA) Consensus Model
BNB Smart Chain utilizes a consensus model known as Proof of Staked Authority (PoSA), which combines elements of Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). This unique consensus model facilitates fast block times and minimal transaction fees and operates with just 21 validators.
Role & Rewards Of Validators
Validators play a crucial role in powering the BSC network by processing transactions and signing blocks. BNB tokens reward validators for their services. However, they must undergo a daily re-election process through staking governance to maintain their position as part of the validator set.
Becoming An Elected Validator
Specific requirements must be met to become a validator. This includes setting up a hardware node with specified specifications, running a full BSC node, and staking a minimum of 10,000 BNB tokens. These requirements, however, only qualify an individual as a candidate for election.
To start producing blocks, a validator candidate must be elected. The top 21 validator candidates with the highest voting power become the elected validators. This selection process occurs every 24 hours through an ongoing election system.
You can view the current top validators on the Binance.org complete validator list.
Understanding The Role Of A BNB Smart Chain (BSC) Delegator
Delegating As An Alternative To Becoming A Validator
- Becoming a validator may not be suitable for everyone, but there’s an alternative way for regular users to participate.
- You can become a delegator by staking your BNB (Binance Coin) to validator candidates using supported wallets.
- By staking, you can select your preferred validator and assist them in meeting the protocol’s minimum stake requirement.
- Essentially, you’re pooling your BNB with your chosen validator, who receives rewards in BNB.
- Cryptocurrency networks are known for effectively creating economic incentives, and here’s where it becomes relevant.
- In return for your staking vote, the validator shares a portion of their earnings with their delegators, resulting in a mutually beneficial arrangement.
Redelegation: Supporting Multiple Validators Simultaneously
- Delegators have the option to perform redelegation. This allows them to transfer a portion of their stake from one validator to another.
- Redelegation serves as an excellent way to support multiple validators concurrently.
Undelegation: Cessation Of Delegation with A Transition Period
- Delegators can undelegated their stake, discontinuing their support for a particular validator.
- It’s important to note that nondelegation entails an unbinding period of 7 days, during which the delegator’s staked BNB remains locked.
- After the unbinding period, the delegator regains possession of their staked BNB.
- However, it’s crucial to understand that the delegator does not receive BNB rewards during the unbinding period.
Is it Advisable To Take On The Role Of Delegator On BNB Smart Chain (BSC)?
Delegation & Governance: A Choice In Your Hands
In this realm, the decision lies in your hands. By becoming a delegator, you can delegate your stake to a validator. Doing so gives them the authority to vote on governance issues on your behalf. Interestingly enough, did you know that BNB also holds governance rights? That’s right. Validators can govern specific network features within the BSC ecosystem, including adjusting gas prices, modifying system parameters, and even upgrading the blockchain.
Collaboration & Rewards: The Mutual Benefits Of Delegation
When you delegate your stake, you support your preferred validator and enhance their stake within the reward pool. This collaborative effort yields rewards for both parties involved. In fact, as of February 2021, BSC validators were earning an average daily staking bonus of 134 BNB, while BSC delegators enjoyed an average Annual Percentage Rate (APR) of 60%.
However, being a delegator is not solely driven by economic incentives. It goes beyond financial gains. By becoming a delegator, you play a crucial role in directly supporting the operation and security of BSC.
Unlocking The Path To Validator Status On BNB Smart Chain (BSC)
Have you resolved to set your sights on being a Binance Smart Chain (BSC) validator? What should you do next?
It would be best if you met the following prerequisites to become a BSC validator:
- Ensure that your hardware meets the necessary specifications.
- Run a BSC full node.
- Stake a minimum of 10,000 BNB.
By fulfilling these criteria, you will be added to the validator candidate list, increasing your chances of attracting more delegators who will stake their BNB with your validator.
It’s worth noting that as of March 2021, the top 21 elected validators had over 150,000 BNB staked. This indicates that there is significant competition, which ultimately benefits the overall health of the network.
If you would like a more comprehensive technical guide on accomplishing these steps, I recommend consulting the BSC Validator guide.
Unlocking The Power Of BNB Smart Chain: A Delegator’s Journey
If you prefer to avoid the intricacies of becoming a validator and want a more straightforward option, becoming a delegator might be more suitable for you. By delegating your BNB stake, as a BNB holder, you can easily support BSC and earn a return.
To learn how to stake your BNB using popular wallets, refer to the following guides:
- BNB Chain Wallet
- Trust Wallet
The staking rewards are distributed to delegators every day at 00:00 UTC. When you delegate your stake to a validator, you’ll receive tips the second day after you have commissioned.
As to what returns can you expect? Let’s use one of the popular validators as an example, Ankr. As of March 2021, this validator yields 27% APR. Not too shabby; however, don’t forget that the rewards can fluctuate.
There are numerous opportunities for individuals, including developers, users, and DeFi enthusiasts, to contribute to the BSC ecosystem’s growth actively. Engaging in BNB staking is a fantastic means for anyone to participate in BSC, acting as a direct proponent for network stability and safeguarding. For further information regarding the specifics of BNB staking, we recommend referring to the BNB Chain documentation.