[blogpost] how to stake polkadot

[yangwao]

title

The Complete Guide on Where to Stake Polkadot

date

8/8/2023

‍

Cryptocurrency staking has become an intriguing concept for many investors to earn passive income. One such coin that offers staking opportunities is Polkadot (DOT). This article provides detailed insights on where to stake Polkadot and guides you through the staking process on various platforms, including Ledger and Coinbase.

Understanding Polkadot

Polkadot is a highly scalable, interoperable, and secure network protocol that enables cross-chain transfers of any type of data or asset. By bringing multiple blockchains into one unified network, Polkadot aims to create a new internet, decentralized and secure, where independent blockchains can share information and functionality.

Polkadot's native token, DOT, serves multiple purposes within the Polkadot network, including governance, bonding, and staking. Staking DOT is one of the primary ways users can earn returns on their DOT holdings.

Polkadot Staking: The Basics

At its core, staking involves participants locking up a certain amount of their cryptocurrency to help secure the network and validate transactions. In Polkadot's case, the network operates on a Nominated Proof-of-Stake (NPoS) consensus mechanism, which is an evolved version of the traditional Proof-of-Stake model.

In Polkadot's NPoS environment, two key roles come into play: Validators and Nominators. Validators are network nodes responsible for maintaining the network and validating each block. Nominators, on the other hand, are DOT token holders who contribute to the network by selecting trustworthy validators.

Why Stake Polkadot?

Staking Polkadot (DOT) brings with it a handful of benefits. By staking DOT, you contribute to the network's stability, development, and security, while earning staking rewards for your participation. These rewards can create a passive revenue stream with potential growth within the ecosystem. Moreover, Polkadot stakers also have the opportunity to participate in the network's governance, benefiting from the token's appreciation while influencing the network's future.

Where to Stake Polkadot: Exploring Options

When it comes to where to stake Polkadot, you have multiple options at your disposal. These include staking natively on the Polkadot network, staking through a cryptocurrency exchange, or using a hardware wallet. Let's delve into each of these options.

Native Staking on Polkadot Network

The Polkadot network allows for native staking, where you can either stake directly as a nominator or join a nomination pool. The network provides a user-friendly web app called the Staking Dashboard, where you can manage all your nominations, join pools, and monitor your token accumulation.

Staking on Cryptocurrency Exchanges

Many cryptocurrency exchanges offer Polkadot staking services. Opting to stake on an exchange is relatively straightforward, as it simply involves purchasing DOT tokens and selecting the staking option. Some popular exchanges that support Polkadot staking include Kraken, Binance, Coinbase, and KuCoin.

However, it's important to note that staking on an exchange comes with its own set of challenges and risks. For instance, you don't have control over your private keys and are thus reliant on the exchange's security measures. Moreover, exchanges usually take a percentage of the staking rewards as a fee for their services.

Staking with a Hardware Wallet

For those prioritizing security, staking DOT through a hardware wallet is a viable option. Hardware wallets, such as Ledger, allow you to securely stake your DOT tokens while maintaining full control over your private keys. This option, however, requires a bit more technical know-how.

How to Stake Polkadot on Ledger

Ledger, a renowned hardware wallet provider, officially supports staking on the Polkadot network. Here's a step-by-step guide on how to stake Polkadot on Ledger:

1. Set up your Ledger device: Ensure your Ledger device is up-to-date and has the Polkadot app installed.

2. Connect to Ledger Live: Once your device is set up, connect it to Ledger Live to manage and interact with your DOT tokens.

3. Bond your assets: Navigate to the "Account Actions" tab in Ledger Live and select the "Bond" option. Enter the amount of DOT you wish to stake and confirm the transaction.

4. Nominate a validator: After bonding your assets, select the "Nominate" option and choose the validator to whom you wish to delegate your DOT. Once you've made your selection, confirm the transaction.

Remember that once you've staked your DOT, an unbonding period of 28 days applies before you can withdraw your tokens.

How to Stake Polkadot on Coinbase

Coinbase, a popular cryptocurrency exchange, also provides an option to stake Polkadot. However, at the time of writing, Polkadot staking is not available on Coinbase. It's always best to check the latest updates on the official Coinbase website for the most accurate information.

Self-custodial staking Polkadot

However, there is an option doing non-custodial staking of Polkadot by yourself using official dashboard

Polkadot Staking Rewards

Polkadot staking rewards are distributed once every 24 hours. The amount of rewards you receive depends on several factors, including the number of DOT tokens you've staked and the performance of your chosen validator. The current annual reward rate for Polkadot staking varies but is typically around 14%.

Risks of Staking Polkadot

Like any investment, staking Polkadot comes with its share of risks. The network's annual reward rate can change due to market conditions. Furthermore, if the validators you nominate violate the network's rules, a slashing event may occur, resulting in the loss of some of your staked DOT. Therefore, it's crucial to carefully select validators with a proven track record of reliability.

Wrapping Up

Polkadot offers a compelling staking opportunity for those looking to earn passive income on their DOT holdings. Whether you choose to stake on the native network, through a cryptocurrency exchange, or via a hardware wallet like Ledger, it's essential to understand the process and potential risks involved. By doing your due diligence and making informed decisions, you can leverage Polkadot staking to grow your crypto portfolio.

[thnaylor]

Hi, are [blogpost] issues open for assignment? I would like to give it a go. 😄

[floyd-li]

👋

[kodabot]

ASSIGNED - @floyd-li 🔒 LOCKED -> Thursday, August 24th 2023, 12:58:32 UTC -> 36 hours

[kodabot]

ASSIGNMENT OVER - @floyd-li has been unassigned.

[yangwao]

I would like to give it a go. 😄

@thnaylor sure take it if so

[thnaylor]

👋

[kodabot]

ASSIGNED - @thnaylor 🔒 LOCKED -> Thursday, August 24th 2023, 07:49:33 UTC -> 24 hours

[thnaylor]

@yangwao Do you know which tag we should use with this post?