Delegation in blockchain and cryptocurrency refers to the process of assigning one's staking power or voting rights to another participant, known as a validator or delegate, who acts on behalf of the delegator. In delegated proof-of-stake (DPoS) systems, token holders delegate their tokens to validators who secure the network and produce blocks, earning staking rewards that are shared with delegators. This mechanism allows smaller holders to participate in network governance and earn rewards without running their own validator node.
Example
“He delegated his 5,000 ADA to a Cardano stake pool, earning passive staking rewards of about 4% per year without needing to run his own node.”