Understanding the Hive platform: Delegation and Resource Credits.

in LeoFinance2 months ago (edited)

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Resource Credits and Delegation

Today I would like to talk briefly about delegation and resource credits. The “under the hood” operations of the Hive blockchain.

Resource Credits

This term is defined by it’s creators, the software developers.Their definition: Resource Credits are non-transferable credits given to each account based on how much Hive Power it has, which get “spent” whenever a user transacts with the Hive blockchain.

So what function doe this new entity called Resource Credits perform on the Hive Platform?

They are a form of currency you spend to enact or perform transactions on the platform. What are Transactions: They are votes, comments, transfers and power ups. You pay or expend Resource Credits when you perform transactions or interact with the Hive platform. Each transaction has a specific cost in Resource Credits, if you have enough resource credits to cover the cost, you can perform the transaction.

If you don’t have enough resource credits you get an error message telling you that you are unable to perform the transaction or interaction. You should also be aware that the cost of transactions varies depending on factors that effect blockchain perform and the available supply of resource credits.

Although transactions on Hive are always described as Fast and Free, that’s only a surface look and the majority of users don’t know that you actually utilize something called Resource Credits to carry out transactions on the Hive blockchain. These are transactions and they require Resource Credits, which are generated daily by HivePower.

But it’s something that happens “below the surface” or “under the hood” so you don’t need to know or understand it, until you run out and can’t post or you invite someone here and create an account, but forget to give them some Hive and have them “power it up” to Hive Power. So bloggers need it to blog and Similarly for games, the new player need it to play. can be delegated a small amount of Hive Power allowing them to play. I believe Splinterlands gives new players a small delegation so they can play matches and trade/buy cards. These are transactions and they require Resource Credits, which are generated daily by Hive Power.

Other useful information from the GitHub article on Resource Credits:

This information restates some of the information above in slightly differen ways, which might be useful. The RC bandwidth system is a complete rewrite of the bandwidth system.
Its goals include:
• >Enable simple, effective UI feedback to users about bandwidth usage and >remaining bandwidth
• >Simplify the mental model of what buying additional SP gives users
• >Reduce or eliminate unstable feedback in current bandwidth system
Resource credits
Each account has a manabar called "resource credits." Resource credits have the >following characteristics:
• >RC's are attached to a particular account and cannot be transferred
• >An account's maximum RC is proportional to its VESTS
• >Transacting uses RC
• >Transactions which would cause a negative RC balance are blocked
• >RC regenerates over time

Computing Price

The price of each resource will be based on the current level of the stockpile. As the stockpile decreases, the price of that resource (in terms of RCs) increases. In other words, as the stockpile goes down, accounts will have to pay more RCs to use the remaining resources.
Cost in RCs won’t translate into anything like a price increase in terms of Hive or USD, due to the fact that RCs are non-transferrable. The goal is only to leverage a market system to ration resources, not to create speculative opportunities or manufacture another token that can be used to purchase goods or services.<
Computing Cost
For each transaction, the System will statelessly compute a value and exchange rate in RC for resources like CPU megacycles, state memory, and history size.

Delegation

While the most commonly known and understood way to make Hive is through content creation (author rewards) or content consumption and upvoting (curation rewards), there is a third way of earning Hive called Delegation. When you earn Hive through delegation, you don’t create content and you don’t upvote content. You invest money in Hive, you Power-up your Hive to Hive Power and then you loan Hive Power to other people or businesses on the Hive blockchain, through a loan process called delegation. The people or businesses you delegate your Hive to, make money and give you a percentage. That’s delegation in brief and I will describe it in more detail below.

Delegation explained

To understand delegation you need to understand that unlike many other cryptocurrency blockchains which have one coin, the Hive blockchain has three called Hive, Hive Power and HBD. Influence on the Hive platform depends on how much Hive you have “Powered Up” or converted to Hive Power. Hive Power determines how much your vote is worth on the platform. Because it’s our Hive Power and not our Hive which determines the value of our vote, we delegate or loan our Hive Power to new accounts, businesses or projects through a special loan process called delegation.

Delegation is safe

I have loaned people money before and it is always risky because once you give someone your money. There is a risk of them not returning your money or the business fails and you lose all your money. The wonderful thing about delegation is that you when you delegate Hive Power you still control it. So you can take it back anytime you want by Un-Delegating it. You don’t have to ask permission to take it back and you don’t have to wait for someone to give it back to you. You just Un-delegate it.

Examples of Delegation

You can delegate your Hive Power to a new account, a project or a business on the Hive blockchain. You can delegate for free to help new people get started or you can earn passive income when delegating to a business or curator.

Delegation is a Passive Investment

The other great thing about delegation is that it is passive. You delegate to a project and then you earn Hive if the project earns Hive. Now you don’t have to do anything else.

How to Delegate

You can delegate using the drop down menu in your wallet page on Peakd.com, hive blog.com or inside your wallet on hive-engine. Leofinance user interface of the wallet page also allows you to delegate there also.

Un-Delegating

When you want to take your delegation back you use the same sites to undelegate, replacing the number of powered up units with zero. It usually 3-4 days to get your delegation back.

Additional things about Delegation that you should also know.

You can only delegate HivePower you own. So you can’t delegate HivePower you leased or HivePower someone delegated to you. Once you undelegate HivePower the project or business you delegated it to loses that Power immediately and can no longer use it. However you won’t be able to use it for 4 days. This is a safety feature to protect the blockchain from people who would abuse this delegation system. Now while this is a short and simplified version of the process, I feel it hits the important points you need to understand about delegation. Let’s move on to Resource Credits.

Final words and closing comments

That’s a look at what’s “under the hood” of the Hive blockchain engine! I think that just like your car, you never notice what’s under the hood until something goes wrong, like you can’t post or comment and you get an error message which says you have insufficient resources credits to carry out the transaction. But invariably, if you wait a day or even a few hours you generate more and the problem resolved itself. It’s very important to understand these things if you want to “onboard” new people such as Splinterlands does or Travel.io does. Or if you invite your friend to Hive and they haven’t bought any Hive, just delegate them 15 Hivepower or HP and they will probably be fine and never need to know what’s under the hood.

✍🏼 by Shortsegments

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Thank you! I understand resource credits better now...
What is voting mana then and how does it operate with resource credits?
I know that the voting amount impacts the voting mana used, but does it also impact the resource credits spent?
This is useful for me to understand because I'm making a lot of votes for creative content h24.

Your welcome.
Good question. There were changes with HardFork 20 and Voting Mana was one of them. The old term is ”Voting Power”, the New term is Voting Mana, this partially regenerates every day.

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Appreciate the overview explanation about hive power and resource credits. Resource credits have always been somewhat of a mystery for me.

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Your welcome. I am glad you found it useful.

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Delegation is the good investment to get Passive income for those who have HIVE Power and have no time.
!wine

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Cheers, @tin.aung.soe You Successfully Shared 0.100 WINE With @shortsegments.
You Earned 0.100 WINE As Curation Reward.
You Utilized 1/3 Successful Calls.

wine-greeting


WINE Current Market Price : 0.000 HIVE

Exactly.

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Lol, that's my photo.

Hi @tarazkp

My apologies for using your photo. I appreciate your forbearance. It has been removed.

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Great explanation, this content should be easily reachable for newcomers.
Could it be added to resources on Discord or in Leopedia ?

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Thank you, that’s up to @khaleelzaki 😊
But you can suggest it.
:)

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Thanks for this I have some people to share this with right now.

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Your welcome, I am glad you found the information useful.

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Great explanation, I had been trying to understand what the power up in Hive was for a long time, greetings.

Greetings to you also, and thank you.

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I thank you for this under-the-hood look at Resource Credits and also your explanation of Delegation. Delegation sounds like an amazing financial tool for passive investment while holding a token for longterm investment and appreciation.

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Your welcome

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RC is a bit the limit of HIVE especially for new users but also keep away the many spammers present on the net!

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Exactly, it is a great way to limit spammers who invest in no hive

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