ZUG, Switzerland— 31 October, 2022, Polkadot’s Nomination Pools allow users to earn staking rewards with as little as 1 DOT, and the new Staking Dashboard, now out of beta, provides an easy way to do it.
Nomination pools are a major upgrade to Polkadot’s staking system, having dramatically lowered the barrier of entry to staking DOT natively (directly on the network). Combined with the new user-friendly Polkadot Staking Dashboard, the participation in staking is now easier and more convenient.
With just 1 DOT, participants can earn up to 18% staking rewards by pooling their DOT tokens together to nominate validators (rewards fluctuate based on network conditions). Rather than using a third party to stake, and pay a commission, users keep all of their rewards, which are paid directly to their wallets.
Before nomination pools, around 170 DOT was required to earn rewards on natively staked tokens, which meant many people could not take part. Now everyone can afford to take part in staking irrespective of their economic circumstances. Nomination pools bring Polkadot’s patented Nominated Proof-of-Stake model to fruition.
As a truly decentralized network, Polkadot aims for anyone to be able to participate. People with fewer tokens have historically found it difficult to participate in staking pools across the blockchain space, and intermediaries are usually required to assist them. Polkadot’s native nomination pools address this issue and represent a major breakthrough in blockchain technology. This reinforces the decentralization of Polkadot relative to its peers because of its evenly distributed validator stake according to Messari.
The launch of nomination pools coincides with the full launch of Polkadot’s Staking Dashboard. For newer and less technical DOT holders, the dashboard eliminates the need to stake with third party providers, and allows them to participate in nomination pools instead. The dashboard has just come out of beta, during which the community was able to try it out. The full version is now available with some user experience improvements with several more features planned for future updates.
Polkadot token holders can already start benefiting from nomination pools, a blockchain wallet is the only thing required to participate. Anyone can join a pool via the Staking Dashboard. Or, users can permissionlessly create “pools” of their own for others to join via Polkadot-JS Apps. Nomination pools are designed to be infinitely scalable, meaning that there is no technical limit on the number of pools and members that can participate therein.
Tokens contributed to a pool will nominate the same validators together. The ‘votes’ issued by the pool will automatically be balanced across the validators which were nominated for maximum effect. Rewards earned are split pro-rata among active participating members and there is a minimum lock-in period of 28 days.
After joining a pool, a member can unbond all or part of their funds at any time. On withdrawing their funds, they can join another pool if they wish, and the whole system is trustless — since nomination pools are completely on-chain, there is no need for users to hand over funds or keys. To incentivize creating high quality pools, the Polkadot council is currently discussing whether to reward creators with a DOT reward.
Following a successful launch on Polkadot’s canary network Kusama in June, Polkadot’s nomination pools have attracted significant attention from key stakeholders in Web3. Paulo Martins, Founder, TurboFlakes, said: “Nomination pools are a game changer for the staking system on Polkadot.”
Robert Dörzbach, Marketing at Staking Facilities, added: “The new staking dashboard is seamless to operate so that it empowers any token holder to contribute to the security and maintenance of the network – irrespective of technical knowledge.*
And Ilhan Gnossienli, Staker Space, commented: “Nomination pools are a unique feature on Polkadot and are generally not implemented in other blockchains. On-chain registration of the process is novel and being able to delegate a minimum of 1 DOT is very inclusive.”
Nomination pools are a major upgrade to Polkadot’s staking system. After achieving Proof of Stake, Polkadot set its sights on “super scaling the PoS system”. To support 100 parachains on Polkadot, the validator needs to increase considerably and the scalability of nomination pools will allow for the addition of these additional validators.
For the latest updates to Polkadot’s staking system, follow the staking system updates on the Polkadot blog.