When we use the term staking, this is uniquely for proof of stake blockchains. These distribute rewards for delegating your tokens to the project on the chain to validate and help to secure the blockchain. you can read more on the beginners guide written previously
What is Polkadot?
A multi-chain platform that enables different blockchains to interoperate and share information. It aims to create a decentralized and scalable network where various blockchains can communicate and work together, allowing for greater flexibility and innovation in the blockchain space. Polkadot uses a unique governance model that allows stakeholders to have a say in the network's decision-making process. This allows for upgrades and changes to be made without requiring hard forks, which can be disruptive to the network. It's designed to provide a secure and efficient framework for building and connecting decentralized applications across blockchains.
How to stake Polkadot (DOT) on your Ledger Wallet.
Staking can be done in various ways. I prefer to stake directly on your Ledger using Ledger Live; this is a fairly straightforward process if you take your time.
Log your Ledger into Ledger Live on your desktop and ensure that your Ledger and apps are up to date.
Open your polkadot app on your Ledger, so you are ready to sign off each transaction as and when requested, and then using your wallet in Ledger Live, click stake.
Click on the bond option and choose how much dot you would like to stake, always leave a bit of dot in your wallet for fees; your Ledger will automatically hold 1 dot back as this keeps your wallet live following protocols.
You may be prompted to select your reward destination.. bonded balance auto compounds your rewards, and available balance puts them straight into your wallet. You can also change this using the polkadot staking dashboard, https://staking.polkadot.network/#/overview.
Now is the time to nominate the validators you will stake with to earn rewards. You can select up to 16, and we generally say this is a good idea as this increases your chances of gaining rewards regularly. A tip here is to avoid oversubscribed and high-commission validators. You can research the validators available here:https://polkadot.subscan.io/validator
Once you have selected your validators, you are actively staking your polkadot; it can take up to 72 hours to gain your first staking rewards; after that, they are distributed daily.
What Are The Polkadot Staking Requirements?
The minimum amount of tokens required to bond on the chain is 100, BUT this will not guarantee you are getting staking rewards; that amount varies and can be found here under minimum active stake: https://staking.polkadot.network/#/nominate
Generally, throughout 2022 and 2023, this number has been around 300- 400 DOT to gain rewards. At the time of publishing this article (October 2023) minimum required to gain rewards staking is 452 DOT
Maximizing Staking Rewards with Polkadot
With its innovative protocols, Polkadot offers a compelling opportunity for users to earn rewards through staking. By automatically holding 1 dot back in your wallet, you can keep it live and aligned with the token guidelines.
Once you have set up your wallet, you will be prompted to choose your reward destination. The bonded balance option automatically compounds your rewards, while the available balance deposits them directly into your wallet. Should you wish to make changes to this arrangement, the staking dashboard provides a convenient platform.
What to do if you don't have enough Polkadot to gain staking rewards?
In 2023, the introduction of nomination pools allows any polkadot holders to stake their tokens on the chain using Ledger by utilising a nomination pool. This is a great way to stake while holding instead of being left out.
What is a Nomination Pool?
Fundamentally, this is a facility set up by an individual which allows up to one thousand people to add their polkadot to a group/pool (a minimum of 1 DOT can be allocated… be mindful of withholding some for fees as mentioned above). This means anyone who holds less than the reward threshold or doesn't want to research their validators can still earn rewards on chain staking via a pool.
What Are The Staking Risks for Nominators
As a nominator in the network, there are certain risks associated with staking. One of the main risks is slashing, which occurs when a validator misbehaves or goes offline for an extended period of time. Both the validator and the nominators have bonded the network in such cases.
What Is Slashing?
In Polkadot, slashing is a concept that refers to the penalty imposed on validators for misbehaviour. Validators play a crucial role in securing the network and validating transactions. However, they can be slashed if they engage in malicious activities or fail to meet their responsibilities. Slashing involves reducing a validator's stake or even completely confiscating it, depending on the severity of the offence. This serves as a deterrent and ensures the integrity of the Polkadot network. Validators are incentivized to act honestly and responsibly to avoid any slashing penalties.
What does a validator node do?
A validator node is a key component of a blockchain network. Its primary function is to validate and verify transactions on the network. Validator nodes are responsible for checking the accuracy and authenticity of transactions, ensuring that they meet the predefined rules and requirements of the blockchain protocol. This process involves verifying digital signatures, checking transaction details against the network's ledger, and confirming that the transaction follows all necessary consensus rules.
Once a validator node has confirmed the validity of a transaction, it adds it to a block along with other validated transactions. This block is then added to the blockchain in a secure and irreversible manner. Validator nodes also participate in the consensus mechanism of the blockchain, which ensures that all nodes agree on the order and validity of transactions.
In summary, a validator node plays a crucial role in maintaining the integrity and security of a blockchain network by validating transactions and participating in the consensus process.
How to join a Polkadot nomination pool
You can use your Ledger device, but you don't do it through Ledger Live (this must be closed when you try to join a pool)… and you do NOT bond any DOT to do this.
The first thing to do is set up your Ledger wallet on the Polkadot JS page; dead easy to do. Follow this guide by polkadot: https://support.polkadot.network/support/solutions/articles/650001708.12
The easiest way to join a pool is to visit this site https://staking.polkadot.network/#/pools. Connect your Ledger in the top right corner, find the pools tab on the left, search and select a pool, and then click join. We have a Learning Crypto nomination pool you are welcome to join. At the time of writing, we have over 28000 Dot in the nomination pool.
This is the guide Polkadot initially wrote on how to join, which is a little more longwinded but is an alternate option if, for any reason, the above doesn't work. https://support.polkadot.network/support/solutions/articles/65000181401-how-to-join-nomination-pools
How To Troubleshoot Your Ledger Wallet
Your Ledger and Polkadot app must be up to date (so Ledger Live needs to be up to date as well),
If you are using a Ledger S, you need to add the XL Polkadot app as the light version installed as standard on the S won't sign the transactions required to join the pool; here is how this is done: https://support.polkadot.network/support/solutions/articles/65000179210-ledger-method-not-supported-
Dot will leave your Ledger account and be added to the pool; it's completely safe and secured by a Polkadot smart contract.
You need to claim rewards manually, and you can either rebond them back into the pool or claim them back to your wallet.
The pool we have set up is called Learning Crypto Dot Pool
Stake Polkadot on-chain using other wallets: Nova, Fearless and Talisman
How To Stake Using Nova Wallet Staking.
Using Nova Wallet is another option available to you. We have found it has the best UI and ease of use for people, so it is the one we'd always look at using first.
Firstly, you need to download the nova wallet app onto your chosen device from this site https://novawallet.io/
When you open the app, you will be asked to create a wallet; if you are using a Ledger (ideally, you should be to stake on-chain), choose the use hardware wallet and follow the on-screen instructions. Unfortunately, this only works with a Ledger Nano X due to its Bluetooth functionality. If you have a Ledger S or S Plus, this way of staking is not for you as you can't maximise the security the Ledger offers.
Your Ledger device will be visible once you have created your wallet and entered the nova wallet app. Additionally, there is a staking tab at the bottom of the overview page.
Click on the staking tab, choose Polkadot and then allocate how much DOT you wish to stake and where you want your rewards sent to; they even have recommended validators if you don't want to choose your own.
All the same, rules apply for staking with nova wallet as it is on-chain staking. Nothing else changes.
You can use other wallets for Polkadot; please see this link here.
What Are The Transaction Fees For Polkadot?
Transaction fees play a crucial role in the network. DOT, the native token of Polkadot, is used as a gas token for transaction fees. Every transaction conducted on the network requires a small fee to be paid in DOT. In addition to transaction fees, DOT can be used for staking, where users can temporarily lock up their DOT to contribute to network security. The ability to pay transaction fees and participate in staking with DOT adds value and utility to the token within the Polkadot ecosystem.
How long are your tokens locked up for in staking?
It takes 28 days to unstake your DOT, and this can be done on Ledger Live by clearing your nominations and then unbonding your DOT. During this time period, you won't be able to receive tokens, so be careful when you unstake.
Can you auto-compound your DOT staking to increase your future payout?
A stash account is a default staking address in Polkadot where you can have your rewards paid and automatically compounded. One of the two accounts, the other being the controller account, helps manage your funds in Polkadot. The stash account holds the funds bonded for staking, acting as a "safety box" for your assets. To bond your dots and nominate a validator, select your stash account, controller account (which can be the same as the stash account), and the amount you want to stake. You can set this to automatically go back into your account so your staking amount keeps increasing after each reward.
What Is The APY On Polkadot Staking Rewards
Stakers are gaining 15-20% APY on their delegated polkadot, depending on whether you are compounding rewards. The yield generated varies depending on how much DOT is staked on the network.
You can check for the current APY by visiting this site https://polkadot.js.org/apps/#/staking/targets
How Is Kusama related To Polkadot?
Kusama is closely related as it serves as a pre-production environment for testing and experimenting with new features and upgrades before they are implemented on the Polkadot network. Kusama, often referred to as "Polkadot's wild cousin," allows developers to trial new ideas, test the resilience of the network, and identify any vulnerabilities or weaknesses. It provides a platform for innovation and iteration, ensuring that only the most robust and secure features make their way into the Polkadot ecosystem.
Polkadot vs Ethereum
When comparing Polkadot and Ethereum, it's important to understand the key differences between these two blockchain platforms. While both are decentralized networks that enable the development of smart contracts and decentralized applications (DApps), they have distinct features and goals. Ethereum is known for its robust ecosystem and wide adoption, making it a popular choice for developers. On the other hand, Polkadot is designed to be a scalable and interoperable platform that allows different blockchains to connect and share information. By leveraging a unique technology called parachains, Polkadot aims to solve some of the scalability issues faced by Ethereum. Ultimately, the choice between Polkadot and Ethereum depends on developers' and users' specific needs and requirements.