Abstract
Binance Smart Chain allows users to enjoy the borderless DeFi infrastructure at low fees. The infrastructure is powered by 21 community validators. These validators are responsible for processing transactions, providing computing power and hardware, and are also responsible for maintaining network security. In return, they receive rewards from transaction fees and Binance Coin staking.
Are you also willing to contribute to the development of Binance Smart Chain (BSC) and receive rewards? Any Binance Coin holder can do this by simply staking Binance Coin as a principal. Let’s take a look at how it works and how users can participate.
The activity of Binance Smart Chain (BSC) continues to increase. Numerous DApps such as PancakeSwap and Venus have experienced significant growth. If you have not yet joined the Binance Smart Chain (BSC) ecosystem, please read the "Binance Smart Chain (BSC) Quick Start Guide".
Nevertheless, building an ecosystem and community of projects, infrastructure, developers, tools, and users is no easy task. This is the power of digital currencies and what drives open source software as a common good.
Binance Smart Chain (BSC) is supported by a large community of validators and delegators who can earn rewards by staking Binance Coin. If you are new to Binance Smart Chain (BSC) or don’t yet fully understand the roles of validators and delegators, please read our article Journey to Decentralization: Validators and Delegators.
The goal of community validators is to strive to build Binance Smart Chain (BSC) into a larger and more convenient ecosystem. What exactly does this goal mean, and how can we get involved?
Binance Smart Chain uses a consensus model called "Proof of Stake Authority (PoSA)". This is a hybrid model between Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). This consensus model has a short block time, low transaction fees, and only requires 21 validators to run.
Validators take turns generating blocks, essentially powering the Binance Smart Chain (BSC) network by processing transactions and signing blocks. In return for their services, they can be rewarded with Binance Coins. At the same time, they also need to go through the governance mechanism of staking and conduct re-election every day in order to continue to become validators.
What are the qualification requirements to become a validator? Validators need to operate a hardware node that meets specification requirements, run a full Binance Smart Chain (BSC) node and stake at least 10,000 Binance Coins. But this is still not enough, and even if these requirements are met, it will only be avoted candidate.
In order to actually start producing blocks, a validator candidate also needs to become a voted validator. The elected validators are the top 21 validator candidates with the highest voting power. Through an ongoing election process, validators are updated every 24 hours. To get an idea of who’s who, check out Binance.org’s list of top validators.
Not everyone can become a validator. So, how can ordinary users become participants in Binance Smart Chain?
You can become a delegator and stake your Binance Coin holdings to validator candidates through wallets supported by the platform. Through staking, you can choose your preferred validator and help it achieve the minimum staking amount required by the protocol.
You are essentially staking Binance Coin with your preferred validator. We already know that validators are rewarded in the form of Binance Coins. We also know that digital currency networks are very efficient at creating economic incentives. So what happens next is easy to guess. The validator will share a portion of the revenue with the delegator in return for the delegator voting in the form of pledge, thus achieving a win-win situation for both the validator and the delegator.
The delegate can also perform the re-delegation process. This means they can transfer part of the staked assets from a specific validator to other validators. Re-delegation is a great way to support multiple validators at the same time.
The principal can also cancel the delegation of the pledged assets. As you might expect, this means that the delegator has terminated its relationship with the validator that once served it. Please note that the unbinding period for canceling a delegation is 7 days. At the end of this period, the delegator will receive the staked Binance Coins. During the unbonding period, the delegator cannot receive Binance Coin rewards.
The decision is yours. As a delegator, you need to entrust your staked assets to your preferred validator while fully trusting the validator to vote on governance decisions on your behalf. What? Does Binance Coin also have governance rights? Yes. Validators have the power to govern some network functions in Binance Smart Chain (BSC), such as adjusting gas prices, changing system parameters, and even upgrading the blockchain.
By delegating, you also increase the validator’s share of the entire reward pool. This method promotes sincere cooperation between both parties and jointly obtains rewards. In February 2021, the average daily staking reward for Binance Smart Chain (BSC) validators was 134 Binance Coins. Meanwhile, the average annualized return for Binance Smart Chain (BSC) delegators is 60%.
While economic incentives are attractive and what makes the world go round, principals receive more than just returns. By becoming a delegator, you will directly support the operation and security of Binance Smart Chain (BSC).
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Now you have made up your mind Challenge yourself and become a validator on Binance Smart Chain (BSC). What to do next?
Becoming a validator in Binance Smart Chain (BSC) must meet the following requirements:
If the criteria are met, you will be successfully shortlisted as a validator candidate and have the opportunity to attract more principals to pledge (delegate) Binance Coin to you.
As of March 2021, the top 21 elected validators have each staked over 150,000 Binance Coins, making competition very fierce (which is good for the overall health of the network).
For more detailed technical guidance on specific methods, please read the "Binance Smart Chain (BSC) Verifier Guide".
If you don’t want to be verified like Investors are equally worried about all technical difficulties, and becoming a principal may be a better choice. If you are a Binance Coin holder, entrusting the management of your pledged assets may be the simplest and most direct solution. While supporting Binance Smart Chain (BSC), you can also earn a certain amount of income in return.
Read the following guides to learn how to stake Binance Coin using some popular wallets:
Staking rewards will be distributed to the delegator at 8:00 am (Hong Kong time) every day. After the staked assets are delegated to the validator, you will start receiving rewards the day after the delegation.
What is the expected return? Let’s take the validator of a popular token like Ankr as an example. As of March 2021, its validators have an annualized rate of return of 27%. This data is not bad, but don’t forget that rewards will fluctuate up and down.
Whether you are a developer, a user or an ordinary DeFi enthusiast, there are many ways to participate Ecosystem construction. However, Binance Coin staking is an excellent way for everyone to participate in the Binance Smart Chain (BSC) project and directly contribute to the healthy and safe development of the network.
For more information about Binance Coin staking, please read the Binance Chain documentation.
Have additional questions about Binance Smart Chain validators and delegators? Please visit our Q&A platform Ask Academy, where members of the Binance community will patiently answer your questions.