Polkadot (DOT) Staking: What It Is And How To Do It
Polkadot was established in 2016 as a blockchain project by Gavin Wood, a co-founder of Ethereum. The network is a Layer-0 protocol and operates on a multichain mechanism.
In staking Polkadot, the DOT token is used to nominate the network validators in exchange for rewards. Choosing a validator is the first and most crucial step stakers need to navigate because validators are selected based on their reliability in verifying the legitimacy of each transaction.
Requirements For DOT Staking
Intending users must be able to meet the minimum amount of DOT to stake and nominate validators, and this amount usually fluctuates. However, this rule does not apply to users seeking to join a nomination pool.
Benefits Of Staking Polkadot
By staking DOT, users contribute to providing security and decentralization to the blockchain and earn rewards for their contributions. Moreover, users can also utilize the staked asset to create a passive income stream for themselves with opportunities for further growth within the ecosystem.
How To Stake DOT
Holders of the DOT tokens can participate in the platform’s governance by staking their assets and earning rewards. In addition, the most common ways to engage in Polkadot stakings are via a crypto exchange, hardware wallet, the Polkadot app, or joining a nomination pool.
Using The Polkadot App
Users can use the application to stake or nominate a validator. On the Polkadot network, nominators can propose up to 16 potential validators because the platform relies on validators to operate nodes and secure the ecosystem.
That said, below are the steps involved in nominating a validator on the Polkadot app:
- Create an account
- Select the “Network,” “Staking,” and “Account page” tabs
- Select “+ Nominator”
- Navigate the stash and controller account
- Select or enter the amount to bond
- Click on your desired validator
Stake Native or Join a Nomination Pool
By engaging in native staking, stakes could easily stake DOT. Users also have the option to either bet directly as a nominator or join an existing nomination pool.
Using A Crypto Exchange
Another way to participate in the Polkadot staking is through a cryptocurrency exchange. Users can buy DOT on their preferred exchange, add them to the Polkadot wallet, and then select the stake tab to begin their staking journey.
In addition, speakers can purchase DOT via fiat or crypto assets. They can deposit the currencies into the exchange’s account or the DOT address.
Some of the most notable Polkadot staking platforms include Binance, Kraken, KuCoin, Coinbase, and Crypto.com.
Staking Via A Wallet
Staking Polkadot through a wallet is more complex than using a crypto exchange. The selected validator is the intermediary between the stakers and their expected rewards. In using a wallet for staking, users must choose up to 16 validators before they can start staking.
Before using a wallet, stakers must first purchase some DOT from exchanges. Some staking wallets include Polkadot.js, Fearless, Ledger, Talisman, Nova, Subwallet, and Polkawallet.
Rewards For Staking DOT
Every 24 hours, Polkadot staking rewards are shared with delegators and stakers depending on the number of blocks their stakes contributed towards the reward. Polkadot offers higher returns on stakings compared to other PoS blockchains.
According to Staking Rewards, a leading crypto staking data aggregation platform, the yearly rewards given to Polkadot holders vary depending on the crypto trading platform, the validators, and the wallet.
Risks Involved In Polkadot Staking
Like other investment platforms in the crypto industry, Polkadot staking comes with risks. But it offers a higher annual reward than others which can fluctuate due to the broader market condition.
Despite being seen as a secure investment platform, Polkadot staking comes with few risks, especially in nominating validators. For example, validators may breach the terms of the condition, and Polkadot, in return, will slash their stakes.
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