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Validator

Validator is a participant in the network responsible for verifying and validating new transactions and . Validators play a pivotal role in preventing fraudulent activities, , and ensuring the reliability of the distributed ledger. Validators contribute to the decision-making process about which transactions are valid and which should be added to the . Validators do this by their crypto to support the network.[1][2]

Overview

Validators are responsible for storing transaction data, processing and verifying transactions, and adding new to the . This involves checking that  transactions are valid according to the network’s rules and ensuring that the sender has enough funds to complete the transaction. In return for their work, validators receive . [6]

To become a validator, a network participant must lock up a specific amount of the network’s native . This is called crypto . They provide this amount as collateral to ensure their honesty. Validators are incentivized to play by the rules, as their stake, i.e. their funds, can be slashed if they attempt any malicious behavior.[2]

Validator Roles

Different blockchain networks employ various , each with its unique approach to selecting and rewarding validators.

Proof-of-Work (PoW)

Miners validate transactions on blockchains that use a , such as . With this method, miners with specialized computers must work to solve complex mathematical problems. The miner that solves the puzzle first, receives a as well as the .[2][4]

Proof-of-Stake (PoS)

Validators can validate transactions on  blockchains without specific hardware. Instead, they prove their honesty by coins. Then they are rewarded in after verifying the transactions.[2][4]

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Delegated Proof of Stake (DPoS)

DPoS takes a step further by allowing coin holders to vote for delegates who will become validators. These delegates, often a smaller number than all coin holders, take on the responsibility of validating transactions and maintaining the network's integrity.[5]

Validator Risks

Slashing

When one becomes a validator, there's a risk of being partially or fully slashed for not properly fulfilling their duties. Slashing can occur if a validator signs two different blocks for the same slot, if validators provide conflicting attestations, or if they sign two blocks simultaneously to initiate a validation. Should slashing occur, the amount deducted from the validator’s staked assets will vary based on the severity of the violation.

Liquidity

To become a validator, each user must an asset for a certain period. This makes the asset inaccessible until the lock period ends. Consequently, users cannot sell their assets when their value has decreased or increased sharply.

Costs

The capital required for hardware can be expensive, which also includes the need for electricity and internet costs.
[3]

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