- Stake CRO and earn interest
- Buy and sell 140+ cryptos
- Spend crypto using the Crypto.com CRO Visa card
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Polkadot is a third-generation blockchain network with lofty ambitions. It aims to solve the major pain points of the traditional blockchain ecosystem by providing a new way to solve issues surrounding scaling, security, blockchain creation and cross-blockchain transfers.
Polkadot does this through the use of parachains – an interoperable network of blockchains each with their own unique rules and functionality. This is a distinct departure from blockchains such as Ethereum and Cardano, which focus on Smart Contracts to achieve similar results.
Unlike Bitcoin, which uses a proof-of-work (PoW) consensus algorithm to validate transactions and mine new tokens, Polkadot uses a nominated proof-of-stake (NPoS) system in which users deposit DOT tokens into specialised addresses in order to validate the chain and earn rewards. This is a process known as staking.
This guide will explore the various ways that you can stake DOT tokens to earn rewards, whether by directly staking on chain or through some of the more novel methods, such as using an exchange or DeFi service.
To explain staking, let's look at a traditional savings account. Each month, you deposit cash into your account and your bank pays you interest on your savings. It pays you this interest because it's using your money to make money. This is one of the ways the banking system works.
Staking works in a similar way. The funds that you lock in, or stake, are used to help validate transactions on the Polkadot network. You receive your "interest" from these tokens in the form of DOT rewards.
You can stake Polkadot in two ways: as a validator or a nominator. Validators are those who create the blocks, nominators are those who vote on who gets to be a validator. If the validator that you've voted for with one of your 16 votes wins a block, you get part of their bounty.
Similarly to Bitcoin mining, staking Polkadot as a validator requires a high level of technical know-how and investment in a masternode that runs 24/7 before you can realise a profit.
Alternatively, anyone can stake Polkadot as a nominator without any technical expertise or significant investment in equipment. You can do this by depositing funds on a cryptocurrency exchange or by locking them in a wallet.
Lastly, while it isn't technically staking, another way to earn passive rewards from simply holding Polkadot is to transfer it to one of many lending platforms such as Celsius or Crypto.com, where they use it to lend to other investors, earning you a variable amount over your deposit term.
The easiest way to get started with Polkadot staking is through a cryptocurrency exchange such as Binance or Kraken. Using an exchange to stake is as easy as buying DOT tokens, picking your favourite exchange and depositing your tokens into your Polkadot wallet. Once you have tokens in your wallet, it's easy to start staking.
Here's how to stake Polkadot on Binance:
Pros of staking on an exchange
Cons of staking on an exchange
Another way to stake Polkadot is with a wallet or node. You can choose from physical hardware wallets such as a Ledger to browser-based wallets like Polkadot JS and mobile wallets like imToken.
It's straightforward to stake with a mobile wallet such as imToken:
Often reserved for the most hardcore fans, the most complex way to stake Polkadot is via your own masternode set-up as a validator. Even Polkadot's help section recommends having "significant system administration experience" before running your own validator.
Since a masternode is always synced with the blockchain, it must remain running at all times with both the speed and the capacity to cope with this load. Given this, those wishing to go down the masternode route will require significant investment in either hardware or virtual machines (VPS).
Likewise, to be an active validator, you will be required to stake around 2 million DOT tokens to take part.
As mentioned above, you can use platforms such as exchanges, lending services and certain DeFi protocols to deposit your DOT tokens in return for rewards. While not all of these services provide staking in the true sense (depositing tokens to secure the blockchain), they provide similar rewards.
The good thing about staking Polkadot is that it's almost entirely passive income. Once you've deposited and locked in your stake, you start earning.
While how much you can earn varies depending on how much commission your chosen validators tend to pay out, the number of validators and the number of tokens you initially staked, the returns will always be greater than if you had simply left your tokens idling in your wallet.
Staking Polkadot is an easy way to earn additional passive income in a relatively safe, low-risk way. However, there is one core drawback: the risk of being penalised and fined if one of the people (validators) that you have nominated chooses to misbehave or becomes reckless with the protocol.
Used to boost network security, "slashing" reinforces the need to nominate validators with a strong performance record.
There are three key reasons why cryptocurrency fans enjoy staking Polkadot:
As with many cryptocurrency projects, there are some things you need to remain aware of:
Polkadot is a blockchain project that allows you to earn rewards by staking DOT tokens on a cryptocurrency exchange or within a wallet. These tokens are locked in for a period of time and used by validators to facilitate network transactions.
For those interested in holding cryptocurrency for the long term, this is a passive way to earn additional DOT tokens without a significant amount of investment or effort.
SPONSORED: Learn how to set up a Trezor Model T hardware wallet and keep your funds secure with this simple guide.
Read our comprehensive look at NFTs, including what they are, how to invest and the risks attached with buying them.
Find out how to stake your TRX tokens and how Tron’s delegated proof-of-stake consensus mechanism works.
Find out all you need to create your own NFTs – the new application of blockchain technology that enables digital ownership of assets.
Looking for an Axie Infinity scholarship? This NFT blockchain game guide lists all the best guilds with tips on how to be the best scholar.
Socios.com is a sporting app that uses blockchain technology to bring fans closer to their favourite football clubs
Illuvium is an open world RPG meets auto battler with an economy based on collectable NFTs and resource mining. Is it worth your ILV stake?
Find out how to leverage XTZ token holdings to earn interest. Stake in the Tezos blockchain or provide liquidity to a DeFi protocol.
On 30 September, Terra mainnet upgrade Columbus-5 is set to bring a new wave of functionality and investment to Terra and Cosmos.
SPONSORED: Save yourself the heartache of lost funds by learning how to safely send cryptocurrency from one wallet to another with this simple guide.
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.