Summary
Binance Smart Chain allows users to enjoy borderless DeFi infrastructure at low fees. This infrastructure is supported by 21 community validators. These validators are responsible for processing transactions, providing computing power and hardware, and maintaining network security. In return, they receive rewards from transaction fees and Binance Coin staking.
Would you like to contribute to the development of Binance Smart Chain (BSC) and get rewarded? Any BNB holder can do this by staking BNB as a delegator. Let’s learn how it works and how users can participate.
Introduction
Binance Smart Chain (BSC) is seeing increasing activity. Many DApps, such as PancakeSwap and Venus, have seen significant growth. If you haven’t yet joined the Binance Smart Chain (BSC) ecosystem, please read the Binance Smart Chain (BSC) Quick Start Guide.
Still, building an ecosystem and community of projects, infrastructure, developers, tools, and users is no easy feat. This is the power of cryptocurrencies and what drives open source software as a common good.
Binance Smart Chain (BSC) is supported by many community validators and delegators who can earn rewards by staking BNB. If you are new to Binance Smart Chain (BSC) or do not fully understand the roles of validators and delegators, please read our article "The Journey to Decentralization: Validators and Delegators".
The goal of community validators is to work hard to build Binance Smart Chain (BSC) into a larger and more user-friendly ecosystem. What does this goal mean specifically and how can we participate in it?
What are Binance Smart Chain (BSC) validators?
Binance Smart Chain uses a consensus model called "Proof of Authority Stake (PoSA)". This is a hybrid model between Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). This consensus model has a fast block time, low transaction fees, and only requires 21 validators to operate.
Validators take turns to produce blocks, essentially empowering the Binance Smart Chain (BSC) network by processing transactions and signing blocks. In return for providing services, they can receive Binance Coin rewards. At the same time, they also need to be re-elected every day through a governance mechanism called staking to continue to be validators.
What are the qualifications to become a validator? Validators need to operate a hardware node that meets the specification requirements, run a complete Binance Smart Chain (BSC) node and stake at least 10,000 Binance coins. But this is still not enough. Even if these requirements are met, they are just candidates for voting.
In order to actually start producing blocks, validator candidates also need to become elected validators. Elected validators are the top 21 validator candidates with the highest voting power. Validators are updated every 24 hours through an ongoing election process. For specific candidates, please check the list of top validators listed on Binance.org.
What are Binance Smart Chain (BSC) Delegators?
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 BNB to validator candidates through a supported wallet. By staking, you can choose your preferred validator and help it achieve the minimum staking requirement required by the protocol.
You are essentially staking BNB to your preferred validator. We already know that validators are rewarded in BNB. We also know that cryptocurrency networks are very efficient at creating economic incentives. So it’s easy to guess what happens next. Validators share a portion of their revenue with delegators in return for voting in the form of staking, thus achieving a win-win for both validators and delegators.
Delegators can also perform a re-delegation process. This means they can transfer part of their stake from a specific validator to another validator. Re-delegation is a great way to support multiple validators at the same time.
Delegators can also un-delegate their staked assets. As you might expect, this means that the delegator has terminated their relationship with the validator that served them. Please note that there is a 7-day unbonding period for unbonding. After this period, the delegator will receive the staked BNB. During the unbonding period, the delegator cannot receive BNB rewards.
Should I become a delegator in Binance Smart Chain (BSC)?
The decision is yours. As a delegator, you delegate your staked assets to your preferred validator and trust the validator to vote on governance decisions on your behalf. What? Does Binance Coin have governance rights? Yes. Validators have the right 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 approach encourages both parties to work together to obtain rewards. In February 2021, the average daily staking reward for Binance Smart Chain (BSC) validators was 134 BNB. At the same time, the average annualized rate of return for Binance Smart Chain (BSC) delegators was 60%.
While economic incentives are attractive and what makes the world go round, delegators gain 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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How to become a validator in Binance Smart Chain (BSC)
Now that you’ve decided to challenge yourself to become a validator on Binance Smart Chain (BSC), what’s next?
To become a validator in Binance Smart Chain (BSC), you must meet the following requirements:
The hardware configuration meets the requirements.
Run a full Binance Smart Chain (BSC) node.
Stake at least 10,000 BNB.
If you meet the criteria, you will be shortlisted as a validator candidate and have the opportunity to attract more delegators to stake (delegate) Binance Coin to you.
As of March 2021, the top 21 elected validators have staked over 150,000 BNB each, making competition very fierce (which is good for the overall health of the network).
For a more detailed technical guide on how to do this, read the Binance Smart Chain (BSC) Validator Guide.
How to become a delegator in Binance Smart Chain (BSC)
If you don’t want to worry about all the technical difficulties like a validator, becoming a delegator may be a better choice. If you are a Binance Coin holder, delegating the management of your staked assets may be the simplest and most direct solution. While supporting the Binance Smart Chain (BSC), you can also earn a certain amount of returns.
Read the following guides to learn how to stake Binance Coin using some popular wallets:
Binance Chain Wallet
Trust Wallet
MathWallet
Staking rewards will be distributed to delegators at 8:00 am (UTC) every day. Once the staked assets are delegated to the validator, you will start receiving rewards the next day after 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 validator has an annualized return of 27%. This data is not bad, but don’t forget that rewards will fluctuate.
Summarize
Whether you are a developer, user, or just a regular DeFi enthusiast, there are many ways to participate in building the ecosystem. However, BNB staking is a great way for everyone to participate in the Binance Smart Chain (BSC) project and directly contribute to the healthy and secure development of the network.
For more information on BNB staking, please read the Binance Chain documentation.
Do you have any other questions about Binance Smart Chain validators and delegators? Visit Ask Academy, our Q&A platform, where members of the Binance community will patiently answer your questions.