About NEAR Protocol
NEAR Protocol is a sharded, developer-friendly, proof-of-stake blockchain. The market cap is $615,854,088 and the 24h volume is $120,376,510.
Staking NEAR Protocol
NEAR Protocol blockchain consensus is achieved via Thresholded Proof of Stake. Investors can leverage their crypto via staking. Currently there are 2 options to earn passive income and staking rewards with your NEAR Protocol investment as outlined below.
Run a Validator
- How does Staking work on NEAR?
NEAR Protocol uses Proof-of-Stake (PoS) consensus to secure and validate transactions on the blockchain. Validators earn NEAR Token rewards for producing new blocks in the form of a static inflation rate of about 4.5% each year.
Token holders not interested in being a Validator can stake to a Validator’s staking pool and earn a portion of Token rewards too. This incentivizes Token holders to stay involved with the community and support Validators who are keeping the network running smoothly.
The amount of staking rewards one can earn is proportionate to the total amount of tokens staked to the Network. For example, if there are 1000 total tokens staked and you have staked 100 of them, you can earn 10% of the rewards. If there are 2000 total tokens staked and you have staked 100 of them, you’ll only earn 5% of the rewards.
- What are the requirements for staking NEAR?
If you are a Validator, follow the official NEAR documentation to learn about setting up your node, choosing the right hardware configuration, and communicating with other NEAR Validators.
If you are a NEAR Token holder and want to stake to a Validator’s staking pool, this can be done either from the NEAR Wallet or in some cases your custody provider.
You will need NEAR tokens to stake. If you are not an early contributor or investor who has earned tokens through contribution, you can also find NEAR tokens available on exchanges. Locked tokens received from community contributions are also eligible for staking.
- How do staking rewards work on NEAR?
The NEAR Protocol inflation generates ~5% new tokens every year, of which 90% (or 4.5% of the new supply) goes back to staking. There are 1 billion NEAR in the initial token supply, so we can expect about ~45 million tokens to be distributed as token rewards in the first 12 months.
Rewards are distributed proportionally to your share of the total staked: if the protocol has 500 million NEAR tokens staked and you stake 5,000 NEAR (0.0001% of the total), the protocol will reward you with approximately 450 newly minted tokens, or 0.0001% of 45 million, over 12 months.
There are additional factors that weigh into the exact amount of NEAR token rewards you will receive. For example, NEAR rewards are automatically restaked, compounding your total stake. Also, if the total stake increases to 700 million, the same 5,000 NEAR will now receive 0.0000071% of the rewards, or ~321 tokens. Additionally, NEAR burns the gas spent for the transaction fees, so staking doesn’t receive any rewards from high network usage.
- What are the risks staking NEAR?
Staking (and taking any other actions with tokens) should be carefully considered based on your personal financial situation and tax laws in your region. On a technical level, the largest risk in Proof of Stake blockchains is typically Slashing conditions which can lead to lost tokens.
Slashing conditions are rules that Validators need to follow in order to stay part of the active set of Validators. If slashing conditions aren’t met, a validator may be kicked out of the active pool and penalized.
As of today, NEAR will have no slashing conditions for the foreseeable future. The only risk to staking during this initial phase of the network, is that offline Validators won’t receive rewards for missed blocks. Similarly, NEAR token holders who Stake to a Validator’s pool that is not active will also not receive any rewards.
In the future, if the community elects to enable Slashing conditions, slashing will be progressive and only for submitting an invalid state. It is not intended for Slashing to apply to a node missing blocks.
It’s also worth mentioning that Token holders staking to Validators is done via smart contracts, so it may have risks if the underlying Validator Pool’s code is not correct or secure.
- Which wallets can I use for staking NEAR?
Choosing the best wallet comes down to your personal preference as well as the technical capabilities of the wallet you are using. The NEAR Wallet is the only wallet supported by the NEAR Core team and NEAR foundation, but there are a number of other community wallets and custody solutions live on NEAR like the Dokia Capital Staking application and Moonlet’s Wallet.
To pick a wallet, you will need to identify how you got your NEAR tokens. Some early NEAR community contributors received their tokens inside Lockup Contracts. This means their Token balance will unlock over time. Only certain Wallets like the NEAR Wallet support locked tokens at this time.
If you have unlocked tokens, most wallet providers and custody solution options should be compatible for you to stake with.
The final consideration in choosing a wallet provider for staking is that some staking providers and wallets don’t allow you to choose a staking pool or only support certain staking pools. If there is a specific Validator or staking pool you have in mind, you may need to find a wallet compatible with their pool.
- Are my tokens locked while staking?
Yes, once you put your tokens into a staking pool, you can’t spend or move them in any way. In order to withdraw them, you have first to unstake the desired amount, and then wait up to four epochs to be able to withdraw them to your wallet. Every epoch is a sequence of 43,200 blocks, or ~12 hours, so you can unlock your staked tokens in a couple of days. This lock period is also necessary if you want to unstake to move your stake to a new Validator. The NEAR Wallet provides a clear interface for staking, unstaking, and withdrawing tokens.
- How to choose a good validator in NEAR?
NEAR is running on a BFT protocol, so having 33% of the stake offline can stop the production of new blocks. The best thing to do when considering which Validators is to divide your stake across different Validators, prioritizing the other 67%. Since there is no slashing, the risk of choosing less known validators is lower than usual.
Another factor to consider is Pool Fees. You will also notice each validator has a “Pool Fees” amount listed. This % is the amount of fees the Validator will keep to manage their operation. For example, if 100 token rewards are created, 10% of them (10 tokens) will be kept by the validator and 90% will go to the token holders that staked to that Validator.
That said, Zero fees are not always good. Being a Validator requires time from qualified professionals operating high-quality infrastructure – which are expensive to maintain. If something so valuable is offered for free, ask questions. Also, Validators can change their fees at any time, so make sure to keep an eye on the fees in your pools and join Validator’s community chats or mailing lists for updates.
Staking is not only about the rewards, but it is also the basis for the security and stability of the NEAR Protocol. To avoid centralization, split your stake between smaller staking pools instead of putting everything in the largest one. Check the list of all NEAR Validators.