How much can you earn by staking your Polkadot (DOT) with Kraken?
Note: As of February 2023, Kraken no longer offers staking-as-a-service due to a settlement with the SEC. View SEC press release.
What is Polkadot?
Polkadot is a promising network protocol that allows arbitrary data – not just tokens – to be transferred across blockchains. It aims to enable a new decentralized web by allowing blockchains of all kinds to securely interoperate. Polkadot was co-founded by Dr Gavin Wood, the co-founder and original CTO of Ethereum (ETH). The Polkadot token, known as DOT, allows investors to own a part of the protocol and earn a yield on their investment through a process known as staking. You can learn more about Polkadot here at polkadot.network.
How does staking Polkadot work?
Staking is the process of holding your DOT tokens in a crypto wallet to support the operations and security of the Polkadot network. By participating in the Polkadot network through staking, DOT holders are rewarded with a return on their investment known as a staking reward. You can either be a nominator or a validator when it comes to staking. As a validator, you can earn a higher staking reward, however you are responsible for running and maintaining a validator node on top of providing your DOT to stake. This requires advanced system administration expertise and puts your money and your reputation at risk. As a nominator, you choose a validator such as a crypto exchange like Kraken, and simply deposit your DOT to be staked, earning slightly less staking rewards. For most people, the later approach is safer, easier, and still provides excellent staking rewards.