How much can you earn by staking your Kusama (KSM)?
What is Kusama?
Kusama is a public pre-production environment for the Polkadot network. Developers are able to use Kusama to test new blockchains or applications before launching them on Polkadot. Since Kusama mimics major design features of Polkadot, it acts as a sandbox for developers to test early versions of Polkadot projects with a live cryptocurrency traded on an open market. Because of this, Kusama is considered a “Canary network” for the Polkadot blockchain.
Kusama was founded in 2016 by the creators of Polkadot: Gavin Wood (also a co-founder of Ethereum), Peter Czaban, and Robert Habermeier. Wood has a particularly deep background in the crypto space as he not only co-founded Ethereum but also invented the smart contract programming language Solidity and is the president of the Web3 Foundation.
What is Kusama staking?
Like its bigger brother Polkadot, Kusama also operates with a Proof-of-Stake consensus mechanism. This means that users holding KSM tokens earn staking rewards in exchange for using their holdings to support the operations and security of the Kusama network. Through this process of staking, the Kusama network ties its security to the honesty of the majority who are incentivized as token holders to maintain the integrity and value of the network.
How do I stake my KSM?
Broadly speaking, there are two different approaches to staking KSM:
- Run your own node as a validator (hard). Advanced users can run their own Kusama node, which entails provisioning a machine or virtual machine to run node software, and then keeping your node updated and online. This approach is slightly more profitable but requires you to pay for the hosting for your node, and your time to properly configure the node and maintain it to ensure that it stays online.
- Nominate your KSM (easy). Nomination is where you appoint your staking rights to a validator so that you can participate in staking without having to maintain your own node. The downside is that the validator takes a small fee for their service, reducing your staking rewards.
To nominate your KSM, you can use a non-custodial wallet like the Polkadot{.js} browser extension or Polkawallet. You can find a complete guide to staking with Polkadot and Kusama here. With a non-custodial wallet, you have the sole control of your private keys which means that you do not have to trust a third party with your keys. The downside to a non-custodial wallet is that you are solely responsible for not losing your keys and keeping them secure. With this approach, you are responsible for choosing a good and reliable validator to stake your tokens with, so choose carefully.
