Introduction to Delegators
Introduction to Delegators
What is a Delegator?
A Delegator is a non-technical network role in the SubQuery Network and is a great way to start participating in the SubQuery Network. This role enables Delegators to “delegate” their SQT to one or more Indexers and earn rewards (similar to staking).
Without Delegators, Indexers will likely earn fewer rewards because they will have less SQT to allocate. Therefore, Indexers compete to attract Delegators by offering a competitive share of an Indexer’s rewards.
Requirements to be a Delegator
One of the best things about being a Delegator is that you don’t need any devops, coding, or technical experience. Basic understanding of the SubQuery Network is all that is required to become a Delegator.
Benefits of being a Delegator
There are several benefits of becoming a Delegator:
- It's easy to get started and requires little technical knowledge, Delegators only need to acquire SQT tokens and then learn the process of delegating the tokens to their preferred Indexer(s).
- Delegating contribute to the network and to Indexers. In return, Delegators are rewarded with SQT.
- Delegators earn rewards by putting their SQT to work by delegating their SQT to Indexers and earning a share of the reward pool.
- There is no minimum required delegation to be a Delegator. This means that anyone can join no matter how much SQT one has.
Risks of being a Delegator
Even though it is not considered a risky role, being a Delegator includes a few risks to be aware of.
- Market volatility risk: The constant fluctuations in the market is a risk that affects not just SQT, but all tokens in the general cryptocurrency marketplace. Taking a long term approach can reduce this type of risk.
- Constant adjustments of staking parameters by Indexers and delegation fees can increase the risk to a Delegator. For example, a Delegator might miss a change in staking parameters resulting in a less than expected return. To reduce this risk, when Indexers decrease their stake parameters, it will only take effect after the next full Era has been completed, giving time for delegators to assess and make any changes.
- Indexer poor performance: It is possible that Delegators can select Indexers that perform poorly and therefore provide a substandard return on investment to Delegators. Delegators are therefore encouraged to do Indexer due diligence on potential Indexers. A Reputation Index is also available to help Delegators compare Indexers to each other.
Once a preferred Indexer(s) is found, due diligence should be performed to check an Indexer’s reputation and reliability. Assessments could be performed to evaluate if the Indexer is active in the community, if the Indexer helps other members, if it is possible to get in touch with the Indexer, and if the Indexer is up-to-date with protocol and project updates. The aforementioned Reputation Index can also serve as a primary selection indicator.