Entities in a Proof of Stake network that contribute an amount of capital to a one or more validators, but don’t actually run the an authoring node or produce blocks, they only play a role in increasing Economic Security. In effect, they are willing to put skin in the game and claim that the some validators are honest.
Proof of Stake networks that allow this are called Delegated/Nominated Proof of Stake networks.
By convention, when an entity can just chose one validator to attest, it is called Delegation. When multiple parties can be selected, it is called Nomination.
Ideally, in Nominated Proof of Stake, an optimization process can split the total stake of a nominator efficiently among the attested validators. This is something that Polkadot aims to do1.
Also see Centralizing Effect, which applies to different forms of delegation, nomination, and more broadly “staking pools” as well.
Footnotes
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Search for “Polkadot Nominated Proof of Stake” for more info. ↩