Hey crypto friends!
Exciting news! You can now stake Polkadot token with Klever Wallet. Yes, you heard correctly – start staking DOT with Klever today!
Make sure you have at least 1 DOT on your Klever Wallet and you can start staking directly on Polkadot through these pools and begin earning rewards right away. Don’t miss out on this fantastic opportunity!
You just need to open your Klever Wallet app, go to the main menu, staking option, click on DOT and start your journey!
What is Polkadot?
Polkadot is arguably one of the most successful projects aimed at enhancing the fundamental technology that supports decentralized applications (dApps). The Polkadot protocol seeks to eliminate barriers between different blockchain ecosystems, facilitating direct communication between these networks without the need for intermediaries. Polkadot can be described as a ‘network of networks,’ where even blockchains with very distinct architectures can interact with each other. This is possible through parachains, or specialized blockchains, which have their own functionalities and tokens.
The network uses a named proof-of-stake (PoS) consensus algorithm and was inspired by the Ouroboros protocol.
What is Polkadot Staking?
Polkadot uses a consensus algorithm called Nominated Proof of Stake (NPoS), which is different from Bitcoin’s Proof of Work (PoW). Staking is the process of holding and locking up a certain amount of cryptocurrency in a blockchain network to support its operations and security. In return for this, you earn rewards, usually in the form of additional cryptocurrency.
Pros and cons of Staking Polkadot
Staking Polkadot (DOT) can be an attractive option for crypto users looking to earn passive income and contribute to the Polkadot’s blockchain security and stability. However, like any investment strategy, it comes with its own set of advantages and disadvantages. Understanding these pros and cons can help you make an informed decision about whether staking Polkadot is the right choice for you.
Pros of Staking DOT
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Rewards for Enhancing Network Security: Participants earn rewards by staking tokens, contributing to network security.
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Accessible Entry: Nomination Pools allow for a low barrier to entry.
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Decentralization through NPoS: The sophisticated Nominated Proof of Stake (NPoS) system allows staking with up to 16 validators, promoting network decentralization.
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Incentive Structure: 10% annual token inflation is primarily allocated for staking rewards.
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Ideal Staking Rate Rewards: When the network’s staking rate aligns with the ideal rate, all inflation-generated tokens are distributed as staking rewards. Historically, the network has operated without considering active parachains in its inflation model, affecting the ideal staking rate, which adjusts based on active parachains and liquidity needed for network security.
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Dynamic Inflation Response: Any deviation from the ideal staking rate leads to a portion of inflation-derived tokens being directed to the treasury. A lower than ideal staking rate increases the annual return, encouraging more staking. Conversely, a higher rate reduces returns, prompting some to withdraw their stakes.
Cons of Staking DOT
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Locking Period: Tokens are locked for approximately 28 days on Polkadot, with no rewards available during the unbonding period.
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Slashing Risks: There is a risk of losing a portion of staked tokens if the active validator misbehaves.
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Reduced Liquidity: Staked tokens cannot be used for other purposes such as participating in crowd loans or transferring to different accounts.
It’s important to decide whether locking up your DOT tokens for a while, aiming to earn more profit, is the right choice for you. Alternatively, you might consider waiting and storing your crypto assets or swapping DOT for another token, depending on your financial situation. Each option has its benefits and risks, so understanding your goals and the current market conditions is crucial.
Polkadot Staking Rewards
The Polkadot staking rewards system can be easily understood, ensuring fair reward distribution, preventing centralization, and encouraging validators to stay active on the network.
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Rewards for Validators and Nominators
Validators, who produce new blocks, earn tokens as rewards.
These rewards can be shared with nominators who support them by staking DOT tokens.
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Equal Reward Distribution
All validators receive rewards equally, regardless of the amount of DOT staked. This prevents power concentration among a few validators with large stakes.
The reward system includes some variability, so rewards may differ slightly among validators.
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Earning Era Points
Validators can earn additional rewards by performing various tasks on the network, earning era points.
More era points mean higher rewards for that specific era, encouraging active participation from validators.
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Reward Distribution
After deducting the validator’s commission, the remaining rewards are distributed proportionally to all stakers (validators and nominators).
Pretty cool, right? Download Klever Wallet and earn rewards by staking DOT now.
Be your own bank. Be Klever.
