Delegation Mechanism

Delegation is the process of assigning a restaked balance to an Operator within Pell Network. The Restaker will earn fees based on the Decentralized Validated Services (DVSs) that the Operator selects to run. If a Restaker wishes to end their assignment to a particular Operator, they can undelegate their balance and later redelegate it to a different Operator. This flexibility allows Restakers to optimize their fee earnings and adjust their delegations according to the performance and choices of various Operators.

Here are the caveats related to delegation within Pell Network:

1. Single Operator Delegation: Stakers can only delegate to one Operator at a time. This means you cannot split your restaked balance among multiple Operators.

2. All or Nothing: Delegation is an "all or nothing" operation. You must delegate your entire available restaked balance to a single Operator, without the option to divide it.

3. Automatic Delegation for New Stakes: If you have already delegated your stake to an Operator in any quorum, all new stakes will be automatically delegated to the same Operator.

4. Redelegation Option: If the delegated Operator is no longer in the active set of a DVS (such as being ejected), the Restaker has the option to redelegate their total value locked (TVL) balance to another Operator. This provides flexibility in maintaining active participation in the network even if the original Operator is no longer viable.

Delegation Mechanism

Stakers have two options to participate in Pell Network:

1. Direct Participation: Independent stakers can opt into DVS on Pell Network, allowing them to directly provide verification services.

2. Delegation: Independent stakers can delegate their stake assets to various Pell Network node operators, who will manage the verification services on their behalf.

Some Pell Network restakers who hold BTC or BTC LSD may prefer not to act as operators themselves. To accommodate these users, Pell Network offers a delegator mechanism that allows restakers to delegate their staked assets to entities that operate DVSs nodes. These delegated operators manage the validation nodes, charge fees for their services, retain a portion of these fees, and send the remainder to the delegator.

However, the delegator model in Pell Network requires restakers to place trust in their chosen operators. If an operator fails to fulfill their obligations within the Pell Network modules they participate in, their staked deposits may be slashed. Consequently, restakers who have delegated their stakes to these operators will also experience slashing. Therefore, it is crucial for Pell Network restakers to conduct thorough due diligence on the operators they choose to delegate to.

While Pell Network does not offer built-in incentives for trust delegation, there is potential for others to develop innovative delegation frameworks on top of the network. Additionally, restakers need to carefully consider the fee-sharing arrangements between operators and delegators. With a variety of operators available for BTC LSD delegation, this creates a free market for delegation within Pell Network.

Each operator in Pell Network will deploy a delegation contract within the network, specifying the fee distribution between the operator and the delegators. This delegation contract will then manage the distribution of fees accordingly.