What are Nominators?
Nominators are essential participants in the blockchain network. They provide security to the blockchain by staking their tokens and taking part in validating transactions. In return, they receive rewards for their contribution. The process of becoming a nominator is quite straightforward; all one needs to do is stake their tokens on a validator or multiple validators and wait for the blocks to be produced. Nominators must remain actively involved in the network since any downtime due to inactive nodes can affect rewards negatively.
Nominators need to take great caution when selecting which validators they will stake their tokens on as it can have a major impact on their rewards. Each validator has different terms of service that must be taken into consideration when deciding to stake with them, including the amount of tokens required, any fees that will be incurred, and rewards percentages. Nominators must also take into account the validator’s performance history and security measures as these can affect their returns greatly.
Nominators also play a crucial role in ensuring the network is secure against malicious actors by actively participating in governance discussions and proposals. They are able to vote on whether or not they approve of certain changes to the blockchain protocol and have a say in deciding its future direction. As such, nominators need to stay up-to-date with all relevant information related to their chosen validators and the blockchain network itself so that they can make informed decisions during voting sessions.
Overall, nominators play an important role in the blockchain network by providing security and taking part in governance. Their participation is essential for keeping the network secure and reliable, so it’s important for them to understand their responsibilities fully before staking their tokens. With careful consideration and a bit of luck, nominators can maximize their rewards while also helping to ensure the safety of the entire blockchain network.
Simplified Example
Nominators in a blockchain can be thought of like scouts for a sports team. Imagine your favorite sports team is looking for new players to join the team. The coach can't see every player in the world, so they have scouts who go out and look for talented players. The scouts make recommendations to the coach on which players they think would be a good fit for the team.
Similarly, in a blockchain, nominators play a similar role by recommending validators to be in charge of verifying transactions and adding them to the blockchain. Just like how the scouts recommend players to the coach, nominators recommend validators to the blockchain network. The network then selects the validators to make sure all the transactions are accurate and secure. This helps the blockchain network function smoothly and efficiently, much like how the scouts help the sports team by finding the best players.
History of the Term "Nominators"
The term "nominator" within the realm of cryptocurrency is thought to have emerged in the early 2010s, coinciding with the ascent of proof-of-stake (PoS) consensus mechanisms. In PoS blockchains, nominators hold a pivotal role in the process of selecting validators, which are nodes responsible for validating transactions and appending new blocks to the blockchain. Nominators engage by staking their cryptocurrency tokens to support validators, thus earning rewards for their active participation in the network.
Examples
Delegators in a Delegated Proof of Stake (DPoS) System: In a Delegated Proof of Stake (DPoS) blockchain, nominators are individuals who delegate their voting rights to a set of validators. Nominators choose a set of validators they trust to represent them in the consensus process and to vote on behalf of the network. By delegating their voting rights, nominators can help to increase the security and efficiency of the blockchain, as well as participate in the governance of the network.
Supporters in a Token-Based Election System: In a token-based election system, nominators are individuals who support a particular candidate or proposal by holding a certain amount of tokens. Nominators use their tokens to vote for a candidate or proposal they support, and the candidate or proposal with the most votes wins the election. By holding tokens, nominators can influence the outcome of the election and help to make decisions about the future of the network.
Stakeholders in a Proof of Stake (PoS) System: In a Proof of Stake (PoS) blockchain, nominators are individuals who hold a certain amount of tokens and participate in the consensus process by validating transactions and blocks. Nominators are incentivized to act honestly, as they stand to lose their stake if they are found to be acting maliciously. By participating in the consensus process, nominators help to secure the network and maintain its integrity, and may also receive rewards for their contributions. In some PoS systems, nominators can delegate their stake to other validators, allowing them to participate in the consensus process without having to run their own node.
Related Terms
Blockchain: A decentralized, digital ledger that records transactions across a network of computers.
Proof of Stake: A consensus mechanism used in blockchain systems to secure and validate transactions.