While the two most commonly known and understood ways to earn Tokens are to be awarded author rewards for content creation and curation awards for manual or programmed upvoting, there is a third way of earning Tokens called Delegation.
Graphic by Shortsegments.
When you earn Tokens through delegation, you don’t create content and you don’t upvote content. Instead, you first “Power-Up” or transform Hive the cryptocurrency into “HivePower” the unit of influence or value awardment on the Hive platform. Then you loan Hive Power to other people or businesses on the Hive blockchain, through a loan process called delegation. The people or businesses you delegate your Hive to, use your Hive Power primarily to award content and earn curation awards, which they then share with you. Thus you can earn Hive 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 Hive blockchain has three, which are called Hive, Hive Power and HBD. Influence on the Hive platform otherwise know as the amount of Hive award your upvote bestows, depends on how much Hive Power you process either through purchase, lease or loan. Those who own Hive Power can delegate or loan Hive Power to others, who use it primarily to generate curation awards and share those awards with the owners of the Hive Power. Thus curation can be an active process of consuming and upvoting, an automated process using upvote bots like Hiveauto or a delegated process.
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 Steem and now the Hive Blockchain, is that you when you delegate Hive Power you still control your Hive. And 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 Hive Power to manual curation projects to support Content creators and so they don’t waste their daily voting power allotments. Other people delegate to Hive Engine Tribe upvote bots, which are manual curation bots, designed to reward Tribe Frontend content with both Tribe Token awards and Hive awards.
Delegation FAQ
You can only delegate Hive Power you own.
You can’t delegate Hive Power you leased or Hive Power delegated to you.
Once you undelegate Hive Power the project or business you delegated it to loses that Hive 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.
✍🏼 By Shortsegments
Posted via Steemleo