Polkadot Staking Explained. Best Polkadot Staking Tools for Investors

While the above is a simple explanation for how staking works, in Polkadot’s case, there are a few different ways to stake your DOT tokens. For most investors, the are two primary methods of staking worth talking about. That’s either by becoming what’s known as a validator, or being a nominator. Validators are the ones that actually create the transaction blocks on the blockchain, while nominators primarily vote on who should become a validator or not.

While being a validator gives you the biggest rewards, it’s also much more expensive in terms of an upfront investment. It also requires a constantly running computer with an internet connection. In contrast, being a nominator is a lot easier and a lot cheaper for the ordinary crypto investor. Polkadot recommends nominators stake somewhere around 150-200 DOT, although you can still receive rewards on as little as one DOT token. In contrast, running a validator node requires at least 350 DOT, or around $12,740 USD.

While a “staking tool” might sound like some complex, third-party piece of software, it’s actually a pretty simple tool that most exchanges offer to investors. These staking tools let you earn passive income on your initial investment in the Polkadot ecosystem. 

A lot of cryptocurrency exchanges have staking tools built into their platform-based crypto wallets. This includes exchanges like Binance and Kraken, both of which offer DOT tokens to investors. This makes it easy to just stake your tokens directly on the exchange, rather than going to another website. 

Third-party crypto wallets also offer their own staking tools as well. The most popular of which is Ledger , a well-known hardware wallet. When you connect your Ledger wallet to your computer, you can pull up software that shows you how much DOT you have, and whether you want to stake it. All you have to do is press the button that says “earn rewards,” decide how much DOT to stake, and pick which validator you’d like to nominate.

There generally aren’t that many differences between different staking tools. Instead, it’s better to ask yourself which particular tool, or the company behind the tool, is most reliable. Usually, this would be a well-respected wallet developer, like Ledger, a mainstream crypto exchange, like Binance, or even the Polkadot website’s native platform itself.