Hello, I know some of you guys have thoughts in your mind towards this delegation of a thing. So I constructed a research in other to help the community know what delegation is all about and enlighten the community about the risks before taking any action towards delegation
Steem Power delegation works like a donation all you do is buy a particular amount of SP sending it to an account. The delegation lasts for just 90 days. After those 90 days or which ever time frame was agreed on between the two parties. The delegated SP goes and the delegatee keeps all curation rewards.Effectively, for votes made the delegatee, it would seem like they own the SP.
Although delegators can cancel their delegations at any time, but it takes 7 days before they can use the SP themselves again.
You can only delegate SP you own, not SP delegated to you.
Delegating steem power is done for so many reasons and here are some of those reasons
- Donating your SP to curators you trust.
- Combining your SP from different accounts to get a stronger voting power.
- To increase curators reward.
- Donating SP for contests you are organising to raise voting power temporarily for that particular cause, you can also ask people to delegate SP to you.
- Groups Voting - Several small accounts coming together to form a stronger voting account to help each other.
According toin one of his post on the same topic
Passive Investment - A whale or anyone wanting to get a passive return on their Steem Power can delegate out to those who want to borrow. The borrower pays a daily fee for borrowing the funds and there is usually an established time period of the delegation.
Active Investment/Side Hustle - A person that thinks they have something to gain by borrowing SP can pay the upfront fee to borrow SP for a set period of time.
- You can't delegate SP that is being powered down.
- You can't power down delegated SP.
- You can delegate part of your SP and power down the rest if you want.
There are a few whales offering these services ad hoc, but the only mainstream service that I know of is via MinnowBooster.net/market
Borrower Rates
1 Week Period: 52% APR
4 Week Period: 26% APR
Investor Returns
2 Week Period: 23% APR
5 Week Period: 19% APR
Please note that these are not compounded rates, compounding them would make them a slightly higher APR. There are reasons for the difference between the buyer and investor return APRs.
The first is because of the 7 day waiting period that the delegater has to wait before being able to use the SP that was delegated out from the time delegation stopped. For example, let's say you delegate out 1000 SP for 60 days to Peace. Peace pays 30 Steem upfront and gets access to 1000 SP right away and has it for 60 days. At the end of those days, Peace loses that 1000 SP. You get your 1000 Steem Power back after 67 days (60 days delegation and 1 extra week for delegations).
In conclusion delegating SP can be really helpful but all you need to know is that if you are delegating as a group, it must be to someone you trust.
Hope this article was helpful, in case of any question feel free to ask in the comment section.
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