Delegation is a passive investment vehicle, which I believe is unique to the Steem blockchain. While the two most commonly known and understood ways to make Steem are to be awarded author rewards for content creation and curation awards for manual or programmed upvoting, there is a third way of earning Steem called Delegation. When you earn Steem through delegation, you don’t create content and you don’t upvote content. Instead, you first “Power-Up” or transform Steem the cryptocurrency into “SteemPower” the unit of influence or value awardment on the Steemit platform. Then you loan Steem Power to other people or businesses on the Steem blockchain, through a loan process called delegation. The people or businesses you delegate your Steem to, use your SteemPower primarily to award content and earn curation awards, which they then share with you. Thus you can earn Steem here without being active.
Delegation explained
To understand why delegation is possible you need to understand that unlike many other cryptocurrency blockchains which have one coin, the Steem blockchain has three, which are called Steem, Steem Power and SBD. Influence on the Steemit platform otherwise know as the amount of Steem award your upvote bestows, depends on how much Steem Power you process either through purchase, lease or loan. Those who own SteemPower can delegate or loan Steem Power to others, who use it primarily to generate curation awards and share those awards with the owners of the SteemPower. Thus curation can be an active process of consuming and upvoting, an automated process using upvote bots like Steemauto or a delegated process. People who own SteemPower loan it out through a special loan process called delegation.
The Safety of Delegation
I have loaned people money before and it is always risky because once you give someone your money. There is a risk of the business failing and you lose all your money. There is the risk that the business succeeds and you don’t get your proper share. There is always a sense of vulnerability when your money leaves your possession. The wonderful thing about this invention, called delegation, which I think is unique to the SteemBlockchain, is that you when you delegate Steem Power you still control it. So you can take it back anytime you want by Un-Delegating it. You don’t have to ask permission to take it back and you don’t have to wait for someone to give it back to you. You just Un-delegate it and take it back.
Examples of Delegation
Many people delegate their Steem Power to manual curation projects to support NewSteem and so they don’t waste their daily voting power allotments. Other people delegate to Steem Engine Tribe upvote bots, which are manual curation bots, designed to reward Tribe Frontend content with both Tribe Token awards and Steem awards.
Delegation FAQ
You can only delegate Steem Power you own.
You can’t delegate Steem Power you leased or Steem Power delegated to you.
Once you undelegate Steem Power the project or business you delegated it to loses that Steem Power immediately and can no longer use it. However you won’t be able to use it for 4 days. This is a safety feature to protect the blockchain from people who would abuse this delegation system.
How to Delegate and Un-Delegating
This subject is covered in detail in this post.
That’s it for this short Report. Please feel free to ReSteem if you found this helpful to help others who may not be familiar with delegation.
Thank you.
✍🏼 by Shortsegments
“The Hustle Never Sleeps”
