A Quick Guide to BNB Staking on Binance Smart Chain (BSC)
Binance Smart Chain lets you enjoy borderless DeFi infrastructure for low fees. It’s powered by a set of 21 community validators that process transactions, provide computing power and hardware, and maintain network security. In return, they receive rewards from transaction fees and BNB staking.
Would you also like to contribute to the growth of BSC and earn a reward for it? Anyone who’s a holder of BNB can do that by simply staking BNB as a delegator. Let’s see how it works and how you can participate.
BSC has been booming with activity. DApps like PancakeSwap, Venus, and many others are seeing a lot of growth. If you haven’t played around with the BSC ecosystem, you can begin by reading our quickstart guide to BSC.
With that said, building an ecosystem and community of projects, infrastructure, developers, tooling, and users isn’t an easy feat. It’s what makes crypto so powerful, and it’s also what can make open-source software a type of common good.
Binance Smart Chain (BSC) is supported by a number of community validators and delegators who can stake BNB to earn a reward. If you’re new to BSC or don’t fully understand the role of validators and delegators, check out our article A Journey to Decentralization: Validators & Delegators.
The goal of community validators is to grow BSC into a bigger and more accessible ecosystem. So what does this actually mean, and how can you participate?
What is a Binance Smart Chain (BSC) validator?
Binance Smart Chain uses a consensus model called Proof of Staked Authority (PoSA). It’s a hybrid between Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). This consensus model can support a short block time and low fees, and it only requires 21 validators to run.
Validators take turns to produce blocks. They essentially power the BSC network by processing transactions and signing blocks. In return for their service, they earn a reward in BNB tokens. Meanwhile, they also require daily re-election by staking governance to be able to continue to be part of the validator set.
What are the requirements to be a validator? A validator needs to spin up a hardware node with the required specs, run a full BSC node, and stake a minimum of 10,000 BNB. But that’s not all. These requirements are only enough to become an elected candidate.
In order to actually start producing blocks, a validator candidate needs to become an elected validator. Elected validators are the top 21 validator candidates with the highest amount of voting power. They change every 24 hours through an ongoing election process, and you can check them out on the top validator list on Binance.org.
What is a Binance Smart Chain (BSC) delegator?
Becoming a validator is not for everyone, so how can you participate as a regular user?
You can become a delegator and stake your BNB to validator candidates through one of the supported wallets. Through staking, you can choose your preferred validator and help them achieve the minimum stake required by the protocol.
In effect, you are pooling your BNB to your preferred validator. As we know, validators receive their reward in BNB. We also know that cryptocurrency networks are highly effective in creating economic incentives. You probably know where this is going. In return for the staking vote, the validator shares a portion of its earnings with its delegators. It’s a win-win situation.
Delegators can also do a process called redelegation. This means that they can transfer part of their stake from a given validator to another validator. Redelegation can be a great way to support more than one validator at the same time.
Delegators can also undelegate their stake. As you’d expect, this means that they stop delegating to the validator they’ve been delegating to. Note that undelegation works with an unbonding period of 7 days, at the end of which the delegator receives their staked BNB. The delegator doesn’t receive BNB rewards during the unbonding period.
Should I become a delegator on Binance Smart Chain (BSC)?
Well, the choice is up to you. By becoming a delegator, you’re delegating your stake to your preferred validator. You are also trusting them to vote on governance decisions on your behalf. Wait, there are also governance rights to BNB? Yes. Validators can govern certain network features of BSC, such as adjusting gas prices, changing system parameters, or even upgrading the blockchain.
By delegating, you also increase the validator’s stake in the overall reward pool. As both of you benefit from joining forces, both of you earn a reward. In February 2021, the average daily staking reward for a BSC validator was 134 BNB. Meanwhile, the average APR for BSC delegators was 60%.
While economic incentives are great and make the world go round, being a delegator isn’t only about the returns. By becoming a delegator, you are directly supporting the operation and security of BSC.
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How to become a validator on Binance Smart Chain (BSC)
So you’ve decided you’re going to reach for the stars and become a BSC validator. What do you need to do?
To become a validator on BSC, you need to fulfill these requirements:
Meet the necessary hardware requirements.
Run a BSC full node.
Stake at least 10,000 BNB.
This will allow you to get on the validator candidate list and potentially attract more delegators to stake (delegate) their BNB to your validator.
As of March 2021, the top 21 elected validators all have more than 150,000 BNB staked, so you’ll have plenty of competition (which is good for the network’s overall health).
If you’d like to go through a more detailed technical guide for how to do this, check out the BSC Validator guide.
How to become a delegator on Binance Smart Chain (BSC)
Becoming a delegator is probably a better choice for you if you don’t want to go through all the technical nitty-gritty of becoming a validator. If you’re a holder of BNB, delegating your stake can be a straightforward solution to support BSC and earn a return.
You can check out these guides for how to stake your BNB using some popular wallets:
Binance Chain Wallet
The staking rewards are distributed to delegators every day at 00:00 UTC. When you delegate your stake to a validator, you’ll start receiving rewards the second day after you have delegated.
As to what returns can you expect? Let’s use one of the popular validators as an example, Ankr. As of March 2021, this validator yields 27% APR. Not too shabby; however, don’t forget that the rewards can fluctuate.
Whether you’re a developer, user, or just a DeFi enthusiast, there are many ways to participate in building the BSC ecosystem. BNB staking, however, is an excellent way for anyone to get involved with BSC as a direct supporter of network health and security.