what is all this about?

Delegation, Explained

The Tezzigator delegation project is currently on track to have implemented a fully automated and resilient delegation and accounting system by the time the Tezos genesis block goes live. But first, some definitions and explanation:

Proof Of Stake: In a PoS system such as Tezos, your amount of Tezos operates very similar to a bitcoin (PoW, or proof of work) mining machine. Except it doesn’t burn nearly (*anywhere* near) as much electricity or require cooling. In bitcoin, the more mining power you have relative to everyone else, the more bitcoin blocks you mine. With Tezos, the more Tezos you own and have bonded/staked relative to everyone else staked/bonded, the more Tezos blocks you generate. Pooling in bitcoin is essentially analogous to delegation in Tezos. While much mining processing power (requiring much electricity and cooling) is required to secure the bitcoin network, Tezos will require a high percentage of Tezos out there actively participating in the network, and not just sitting in peoples’ wallets. This has been sort of a problem for PoS systems to date, but there is a clever solution, described next.

Non-dilutionary Inflation: One of the clever features Tezos has developed is the concept of non-dilutionary inflation, a solution to a big problem in PoS cryptocurrencies: how to make sure the PoS network stays secured and get people to actively participate in the network and not just keep their Tezos in their wallets. If you actively participate (described next) you get awarded a bonus of tezzies, beyond that of fees from transaction in the blocks you generate. Currently the estimate is 5%. With this estimate, if everyone participates, everyone gets 5% extra; thus the inflation is "non-dilutionary". So, you'll want to not just sit on your Tezos.

Staking, Baking, and Bonds: A "stake" is simply your amount of Tezos. Staking is the process of reserving some or all your Tezos into a "bond" to participate in the block generation process. The bond is the amount of your Tezos you elect to put up in a "baker" node, which is what generates blocks when the random time comes for that baker's bonded stake. While a bond is in place, no one (not even the owner of the Tezos!) can touch or spend Tezos. After the bond expires, currently said to be around 90 days, you then once again maintain full control and can then spend your Tezos again. Or put them back in a bond.

Delegation: Alternative to maintaining a computer 100% of the time dedicated to running a Tezos baking node, you can delegate your bond out to another Tezos account (Tezzigator!). That account will then run the baker node and will generate and sign blocks on your behalf. Once again, while a bond is in place, no one (not even the owner of the Tezos!) can touch or spend Tezos. Delegation is only for block generation and signing (and voting). Delegation will be a straightforward process from your Tezos client.

Architecture: There will be resilient/redundant baking nodes in two different datacenters, in an Active/Standby mode, each communicating with each other via a proprietary high-availability protocol. There will be full SSL communications, and CloudFlare will also be implemented for DDoS protection.