Why delegate Sandblock Coins? How to do it?
Thanks to the migration to the new Sandblock Chain (read announcement here), you can delegate your SBC to validators node. Why delegate your coins? How to delegate your coins?
The new Sandblock Chain is based on Tendermint and Cosmos SDKs. Cosmos is a decentralized network of independent parallel blockchains. The Sandblock Chain is one of them. These blockchains are powered by BFT consensus algorithms like Tendermint.
Sandblock Chain is using DPoS, meaning you are able to stake your SBC, as a delegator or as a validator. In this Medium post we are going to focus on the delegator part. A new Medium post will be published soon for the validator part (you can already check the documentation).
BitcoinWiki’s definition: DPoS is designed as an implementation of technology-based democracy, usied […] to protect blockchain from centralization and malicious usage.
Why delegate your Sandblock Coins?
By delegating your coins, you help to secure the Sandblock Chain. The Sandblock Chain is a Proof-of-Stake chain that uses delegation process to allow anyone, even non-validators to participate in staking.
🔒 Security
In the Sandblock Chain, the main task for Delegators is to distribute voting power among Validator nodes. This gives decentralization to the Sandblock project. All holders of SBC can participate in the consensus, not necessarily by running servers, but by controlling validators through their stake.
DPoS is used to secure the network and to maintain a non-malicious network. It’s why, one of the most important part is to pick validators wisely and withdraw the stake from them if they act bad.
By delegating your Sandblock Coins, you actively participate in the security of the network and its expansion. You are part of the Sandblock ecosystem. Delegating your coins makes it possible to keep the network going and to maintain it!
So what the delegators do?
They vote on the validators. They secure the network with their stake. It makes sense to pick validators that also have a lot of coins at stake, so they don’t become malicious. The delegators also decide which validators are to support.
In practical use, what happens when you delegate your Sandblock Coins? Simply said, you lock your coins with the validator node. That means that you can’t access your SBC directly but don’t panic: no one can access them, they are still yours. The validator node can’t run away with your funds.
Your locked SBC act as an incentive to keep a non-malicious network, because if someone act badly, it will get slashed and the network will take a cut in his SBC funds. When you delegate your SBC, you have to check the health of the network to ensure you that you will not lose SBC.
⚠️ Warning about slashing: if your validator gets slashed, you also lose a part of your staked coins. Slashing is a mechanism where the validator gets punished for bad behavior. The slashing mechanism is set to cut 5% of bonded SBC, so the validator will lose stakes and delegators too (according to their stakes proportion).
That’s why it is important to split your delegated coins as well as to keep an eye on the validators, which is an incentive to monitor what is happening on the network, thus keeping the network secure.
💰 Rewards
By delegating your Sandblock Coins, beside helping with the security of the network, you are rewarded on your stakes by partially collecting the transactions fees.
Whenever someone sends a transaction, a fee must be paid and this fee is distributed between all stakers. If you participate in the process of creating new blocks, then you get your share of the fees proportional to your stake. Delegators and validators participate both in this process.
Validators can charge a commission on the redistribution. For example, you can delegate your Sandblock Coins to a validator that take 0.20% of commissions. In this case, if the validator has 1,000,000 SBC and you represent 5% of that, for any 100 SBC received through transactions fees, you will get 5 SBC minus the commission = 4.99 SBC.
Moreover, each validator is weighted according to their relative total bonded stake (how much SBC a validator have: delegate or not) and where a validator’s total bonded stake is directly correlated to their chance to propose a block and the amount of reward they receive for doing so.
➡️ How to delegate Sandblock Coins?
If you are a Sandblock Coin holder, all you have to do is delegate your SBC to a validator or several validators (you can see the current active validators here).
With your Keystore file / private key / mnemonic phrase
- Access your wallet from the explorer: “Access my wallet” — “Software” — “Keystore File” (or “Private Key” or “Mnemonic phrase”). Unlock your wallet with your password.
- Click on “Delegate my SBC” at the bottom of the page:
- You will be asked for a validator address and the amount of SBC to delegate.
A validator address must begin with “sandvaloper”. Remember that you will need to pay a transaction fee to delegate your coins.
- After confirming your transaction, your Sandblock Coins will be delegated to the validator you choose!
- You will start receiving rewards from transaction fees: you can compound these rewards with your initial stake.
With a Ledger hardware wallet
- Access your Ledger hardware wallet from the explorer: “Access my wallet” — “Hardware”. Unlock your Ledger.
- Follow the guide above.
⬅️ How to undelegate your Sandblock Coins?
At any moment you can decide to undelegate your coins from a validator. If your are not longer happy with the services or commission rates the validator is providing, then you may decide to move your delegated SBC to another validator or to simply undelegate them.
With your Keystore file / private key / mnemonic phrase
- Access your wallet from the explorer: “Access my wallet” — “Software” — “Keystore File” (or “Private Key” or “Mnemonic phrase”). Unlock your wallet with your password.
- Click on “Undelegate my SBC” at the bottom of the page:
- You will be asked for the validator address from which you want to undelegate (it should begin with “sandvaloper”) and the amount of SBC to undelegate. You can’t undelegate SBC from a validator if you haven’t delegate SBC to it…
A validator address must begin with “sandvaloper”. You can find the list of all active validators on the explorer. Remember that you will need to pay a transaction fee to undelegate your coins.
- After confirming your transaction, your Sandblock Coins will be undelegated and will be sent to your wallet! You can re-delegate them to any active validator.
- You will not receive rewards from transaction fees anymore.
With a Ledger hardware wallet
- Access your Ledger hardware wallet from the explorer: “Access my wallet” — “Hardware”. Unlock your Ledger.
- Follow the guide above.
Ending note
Now, you know why and how to delegate your Sandblock Coins. Delegate your coins can be really interesting for the security of the Sandblock Chain and you will get rewards on transactions fees!
No excuses to not delegate your coins or to launch a validator node if you are tech-friendly! We can assist you in configuring a validator node on our Telegram channel if you have any difficulties.
