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…