How to stake Polkadot (DOT)?

Unlike restricted proof-of-work (PoW) blockchains like Bitcoin, the Polkadot blockchain allows cross-blockchain transfers of any asset or data, facilitates more transactions per second and needs less infrastructure.

Polkadot uses a nominated proof-of-stake (NPoS) blockchain centered on interoperability of parachains that connect to and are secured by the Relay Chain. Validators can validate both the Relay Chain and the parachains, making it a flexible and scalable blockchain solution.

The native token on the Polkadot blockchain is named DOT (DOT). It can be used on the Polkadot network for trading, staking, bonding, paying transaction fees and voting in network governance.

This article highlights what Polkadot staking is, how it works, how to stake DOT, its requirements and rewards, and why tokenholders should stake DOT.

What is Polkadot staking and how it works

Founded in 2016 as a layer-0 protocol and multichain network, Polkadot is a blockchain project introduced by Ethereum co-founder Gavin Wood.

The project aims to create a decentralized, secure and fair internet known as Web 3.0, or Web3, by facilitating communication across previously incompatible and independent blockchain networks.

Polkadot staking involves using DOT tokens to nominate validators in exchange for earning rewards. Polkadot is an NPoS blockchain that relies on nodes to verify transactions and secure its network. The NPoS mechanism is a sophisticated process in which nominators select the validators who are allowed to participate in its consensus protocol. Generally, more participants and more distributed nodes mean a more decentralized network, reducing the likelihood of successful blockchain attacks by hackers.

Depending on their availability, level of expertise and budget, DOT holders can engage with the Polkadot staking system natively in four main ways. Stakers unable to produce the minimum required amount to nominate individually (this is a fluctuating amount) can join a nomination pool and share all benefits and penalties proportionally.

Alternatively, stakers can nominate validators. Stakers often choose a validator based on their reliability in verifying the legitimacy of network transactions. On the other hand, stakers can open and run a nomination pool, if they are confident in their abilities to identify competent and trustworthy validators, and ask for a commission. Others can join and stake their cryptocurrency.

At the top end are the validators, better suited to people with significant time commitment and technical expertise. These people run the nodes, which are servers running specialized software that may submit a block of transactions and either validate or disapprove it.

Note that there’s a stringent set of staking requirements before Polkadot allows anyone to become a validator since validators need specialized expertise and validators will be in charge of a master node.

Stakers who stake with a validator get more Polkadot tokens as a reward if the validator correctly verifies a transaction. If validators approve a fraudulent transaction or try to defraud the system, they and their nominators will get slashed by losing a percentage of their staked DOT. Any slashed DOT will be added to the Polkadot Treasury.

Additionally, there are specialized positions that require more technical expertise than a nominator but less commitment than a validator. These include collators, who are responsible for keeping track of valid parachain transactions and submitting them to validators on the Relay Chain, and members of the Polkadot Alliance.

DOT staking requirements

Users will need a fluctuating minimum amount of DOT to stake and nominate directly. This rule does not apply when joining a nomination pool, using a liquid staking method or using an exchange since users delegate their power to validators who meet minimum requirements.

An exchange platform may impose additional requirements, such as Know Your Customer/Anti-Money Laundering, minimum staking amounts, minimum lockup periods or fees.

Why stake Polkadot

Staking DOT is a way to provide security and decentralization to the network and earn staking rewards. People who stake DOT help maintain the network’s stability, development and security in exchange for DOT.

Stakers can even use the staked tokens to generate a passive revenue stream with the potential for growth in the ecosystem. Investors in the Polkadot ecosystem get to participate in the network’s governance while benefiting from the token’s appreciation.

How to stake Polkadot (DOT)?

DOT holders may participate in the network’s governance by staking their tokens and earning DOT token rewards.

The common ways to stake DOT are through a cryptocurrency exchange, a hardware wallet, the network’s Polkadot.js user interface (UI) or the Polkadot app.

1. Using Polkadot.js UI

Stakers may use the Polkadot.js UI to either stake as a validator or a nominator. Nominators can propose up to 16 validator prospects on the Polkadot platform….