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Calculate Your KSM Staking Rewards
Examine the Long-Term Compounding Effect of Staking - per Asset, Provider, Staking Amount and Price Scenario.
Learn about Kusama Staking
How to stake KSM
To earn a yield on your KSM, you can either lend them out to custodial providers or via a Defi lending protocol, run your own validator or nominate your tokens to a pool of your choice.
We recommend using a Ledger Hardware Wallet to keep full control over your funds. To nominate your tokens, you should ensure you have your KSM on Talisman wallet or Subwallet and follow the steps below:
Step 1: Go to the Kusama Staking Dashboard and ensure you have your KSM on your Talisman wallet.
Step 2: On the left side of the dashboard, select ‘Pools’ and then click ‘Join’.
Step 3: Select a pool then click ‘Join’. Check our FAQ on how to choose a pool if you are unsure who to nominate to.
Step 4: Choose the amount of KSM to bond then click Submit.
Find Verified Staking Providers on Kusama in Subscan.
Do I need to maintain my staking in any way?
Once you have delegated your KSM, there are things you need to consider going forward.
- Firstly, rewards are not auto-compounded, so if you want to get the most out of your investment, you should consider claiming and staking your rewards more frequently, but consider that each transaction will cost you some gas. Hence, please optimise your strategy for that. By using our Kusama staking calculator, you can calculate the optimal re-stake frequency for your amount of DOT.
- As a participant in the Kusama ecosystem, you have the opportunity to actively engage in governance by voting on proposals after you have staked your tokens. However, please note that in order to participate in governance, you must have chosen the native staking option and not staked your tokens through staking pools. This may be changed in the future once accounts are afforded the ability to split votes.
- Find Verified Staking Providers in Subscan.
It is important to monitor the performance of your chosen staking pool and to consider switching to a different one if they raise commissions to unreasonable levels or get slashed. By doing so, you can ensure that you are getting the best possible returns on your staked tokens.
How do I choose a Kusama pool?
It is essential for users to stake their PoS tokens with dependable and highly performant validators, which is why we have rolled out our Staking Rewards Verified Staking Provider (VSP) Program in June 2022. Through this program, we thoroughly scrutinize potential validators, evaluating factors such as security measures, their on-chain reliability, their provider setup, and value-added services for the whole ecosystem.
There are many metrics to consider when selecting a validator to nominate to:
Low commission: The commission rate a validator charges is the % of your reward that the validator keeps for themselves. A high commission rate means your rewards will be lower whilst a low commission rate could mean that the validator is not profitable and could cause issues for them in the future. Keep in mind that validators can adjust their commission rates up or down over time.
Number of pool members: A high number of nominators could indicate positive sentiment towards a pool.
Validators Self-Staked balance: A provider that has a high amount of staked tokens likely has more incentive to continue operating their services as they have more to lose than those with low self-staked balances.
Pools should be actively nominating: Look for pools that have a green “Active / Bonded” tag.
Network Share: You typically don’t want to choose a pool with the highest network share or a pool with a low network share. Nominating to the most popular pools increases centralisation risks within the network as the validators that support that pool will have more say in governance and a larger share of the blocks. A pool with a low network share, might not be profitable and hence increases the risk of them discontinuing their services.
Performance: Make sure you pick a pool that has validators with the highest possible uptime performance by viewing the validator information on the Validator Dashboard. Our recommendation is to only pick those with a >=99% performance and a long history of not getting slashed.
Era points are above average: Validators will get more rewards for being active.
Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools, explorers, etc. This can be another great way to filter for validators that are thinking long-term. You can view the value-added services of staking providers by clicking on their name on the provider page.
How are the staking rewards generated?
The Staking Rewards on KSM come from:
- Inflation on the Kusama Network (Block Rewards): On Kusama network, inflation is set to be 10% annually, with validator rewards being a function of the amount staked and the remainder going to the treasury. This implies that KSM holders who choose not to stake will get diluted over time.
- Transaction Fees: Each transaction processed by the network comes with transaction fees. Fees on Kusama are charged prior to transaction execution. 20% of the transaction fee will go to the block author (i.e. The validator and its nominators), and the remainder will go to the Treasury.
Please note that the total annual rewards are divided by all active stakers; hence, as the amount of staked tokens goes up, the reward rate goes down.
What are the risks to staking KSM?
Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.
Slashing risk: KSM delegated to a validator can be partially slashed if the validator misbehaves. The exact percentage of tokens that will be slashed can vary depending on the specific circumstances of the offence.
Unbonding risk: The unbonding period for KSM is 7 days. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. They first need to wait 7 days for the tokens to unbond before they become liquid. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold KSM long-term.
Chilling: If a validator was unresponsive for an entire session, the validator bond would be chilled in a process known as involuntary chilling. When a validator has been involuntarily chilled, it may restrict the validator from being selected in the next election depending on the session in which it was chilled. While a validator is chilled, they will not earn rewards for their participation in the network.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your KSM investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
What is KSM?
KSM is the native token of the Kusama network that is used to carry out the key functions of the platform as detailed below:
- Staking: Users can temporarily lock KSM up to contribute to the security of the Kusama Network.
- Network Fees: KSM is used for transaction fees. Each transaction processed by the network requires a small fee to be paid.
- Governance: KSM is used to vote on governance proposals on the network. Only staked tokens are eligible to be used for governance voting. The amount of voting power is measured in terms of stake. Kusama token holders have complete control over the protocol. All privileges, which on other platforms are exclusive to miners, are given to the Relay Chain participants (KSM holders), including managing exceptional events such as protocol upgrades and fixes. If you are staking through a nomination pool, you cannot vote (e.g. in Referenda or for Council members) with your nominated funds. This may be changed in the future once accounts are afforded the ability to split votes.
- Parachains: You can use your KSM to participate in a parachain auction to help a new project secure a slot on the Kusama Network. Community members temporarily lock their tokens in support of a particular project. In return for committing your KSM to this auction process, you will be rewarded with tokens of the project that is bidding wins the auction.
What consensus algorithm does Kusama use?
Kusama uses a consensus mechanism called “NPoS” (Nominated Proof of Stake) to select the validators who are allowed to participate in its consensus protocol. In NPoS, “nominators” can choose to nominate their stake to specific validators. The validators are chosen based on their reputation and the amount of stake they hold, and they are rewarded for their contributions to the network with transaction fees and block rewards. NPoS allows for virtually all KSM holders to continuously participate, thus maintaining high levels of security by putting more value at stake and allowing more people to earn a yield based on their holdings.
What are the tokenomics of KSM?
The supply of KSM is uncapped, it is an inflationary token with 10% inflation per year. The 10% inflation on the network is reserved for the distribution of staking rewards.
Initial Token Distribution
The genesis distribution of KSM was exactly the same as for DOT. If you purchased DOTs in the sale then you own an equal share of the Kusama network.
The Initial token distribution of DOT is as follows:
- 3.42% is allocated to Private Sale Investors
- 5.00% is allocated to SAFT Investors
- 50.00% is allocated to Auction Investors
- 11.58% is allocated to Future Sales
- 30.00% is allocated to Web 3 Foundation
From the Staking Rewards Journal