Staking Polkadot (DOT) Overview

Staking your Polkadot (DOT) allows you to earn rewards. This guide walks you through how to stake your DOT tokens using a variety of methods, including both custodial and non-custodial approaches.

Polkadot is a Proof-of-Stake blockchain which means for the Polkadot blockchain to function some token holders need to stake their DOT tokens in exchange for rewards. In this overview we will highlight the different options for doing exactly that: staking with a non-custodial method and a custodial method.

Polkadot Staking Overview (Non-Custodial)

Staking Polkadot with your non-custodial account is the decentralized method where you maintain full custody of your DOT in your account. This allows you to nominate different validators who offer different percentage returns, while at the same time each validator carries a risk profile.

You don’t want your validator you’re trusting to be slashed & lose your staked DOT. If you choose the right validators this is highly unlikely to ever happen. You can also learn exactly how to execute this method by following the steps that Polkadot outlines on their website.

How to Stake Polkadot on the non-custodial platform
Here we will do a quick overview of how to stake Polkadot (DOT) to support their network using: https://polkadot.js.org/

What is the minimum DOT needed to “stake”
10 DOT ($79) minimum bond to be a nominator so you can “nominate” a validator, which effectively allows you to stake.

Setting up your account on polkadot.js.org
Start by selecting to be a Nominator (see image below)

After selecting ‘Nominator’ the menu below will open up. This is where you get to choose your stash account and your controller account.

Difference between a stash and a controller account
A stash account is where all the funds you are going to be staking are held. Think of this as where you are “stashing” all of your DOT.

A controller account is the account that can initiate most of the transactions when it comes to staking like choosing and changing validators. But it can’t add to or take away funds from the stash account.

Choosing a payment destination
When it comes to the payment destination (at the bottom of image above). This part can be confusing but there are 4 options and we’ll go through them below.

• Stash account (increase the amount at stake): this means compounding. So all your rewards from staking will go back to the amount you’ve initially bonded
• Stash account (do not increase the amount at stake): put the rewards in your stash account but not have them bonded but free to use
• Controller account: send the rewards to your controller account and not have them bonded or staked
• Specified payment account: maybe you have another account you want to send the awards this is where you would select that option

Finding validators
You can choose up to 16 validators and you will start earning (not immediately) but after the next new Era starts. Eras’ on Polkadot are only 24 hours. It’s good to find validators that you can trust, not just the validators that give out the highest return. It is beyond the scope of this overview on how to find the best validator but Polkadot has a great guide on just how to do that.

Pros of Polkadot’s non-custodial staking

• Relatively easy to follow interface
• Only need 10 DOT (around $79) to stake, down from 120 DOT (around $948) a year ago
• Gives you the power to choose the validators that you trust at the percent return that you desire
• Allows for added security by giving you one account to hold your tokens (stash) and one for making transactions (controller)

Cons of Polkadot’s non-custodial staking

• Choosing a validator can be confusing and difficult
• The user interface is nice but not as easy as other more centralized options
• If you use the same stash and controller account it’s only as secure as your password on your Polkadot JS extension
• To get more security it takes a few more steps

How to Stake Polkadot on Custodial Platforms

Staking on custodial exchanges and companies is fairly easy and straightforward.

• Sign up for the platform. Complete KYC (know your customer) regulations
• Deposit money from a bank or send over Polkadot tokens (DOT) to that exchange
• Follow each platform’s guide for staking (usually quite simple)

Staking on other platforms (custodial)
Sometimes there are different centralized platforms out there where you can stake your DOT. Some examples include: Binance , Crypto.com and Kraken.

Pros of Staking on custodial platforms

• Very easy to do
• You don’t have to be technical
• You can buy and sell DOT and send the money to your bank account all on the same platform
• Usually a very small minimum investment around $10

Cons of Staking on custodial platforms

• Sometimes the company can get hacked or go bankrupt and you can lose your money
• Voyager and Celsius both are custodial and went bankrupt and lost people millions who were staking there
• Sometimes these exchanges are not supporting the Polkadot network by staking and validating transactions instead they are doing more risky actions like lending out your DOT

Staking DOT for Polkadot Auctions

Another staking option is to stake your DOT tokens by contributing them to the crowdloans of new projects holding Polkadot auctions. This option often involves you being rewarded in the native token of the new project, learn more about the entire DotSama auction process here. On December 16th 2022 Pendulum will host an auction on Polkadot and contributions will be rewarded in PEN tokens. Anyone can get on the waitlist when we announce it for extra rewards too. Those who contributed to our successful Amplitude crowdloan on Kusama back in June have been rewarded in AMPE tokens. Pendulum is building the infrastructure needed for traditional finance to access DeFi. Pendulum’s vision is to build the missing link between fiat and DeFi through a forex-optimized smart contract blockchain. Join our socials for more educational deep dives on DotSama and help us shape the fiat DeFi future!

About Amplitude

Pioneering the internet of fiat. Amplitude is the sister network of Pendulum on Kusama. It will act as a testing ground for Pendulum applications and network parameters and be powered by the AMPE token.

About Pendulum

Building the missing link between fiat and DeFi through a fiat-optimized smart contract blockchain based on Polkadot’s Substrate. Allowing traditional finance fiat services to integrate with DeFi applications such as specialized forex AMMs, lending protocols, or yield farming opportunities. Developed by SatoshiPay.

Keep your eyes on the Pendulum!

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