Staking Polkadot (DOT) is possible and will give a return of 6-17 % minus fees.
Polkadot (DOT) is a layer 1 crypto platform using the consensus model Proof of Stake. This allows you to either stake or soft stake your crypto to increase your fortune.
We advise that you read through this article about staking and soft staking first, if you are not familiar with the terms.
Polkadot (DOT) staking vs inflation rate
Polkadot´s (DOT) inflation rate is said to be dynamic, but that is strictly speaking not correct. The inflation rate is fixed by design to be 10 %. This means that every year extra 10 % of Polkadot (DOT) is pumped out into the marked. Therefore, your staked Polkadot (DOT) will decrease in value if your annual reward is less than 10 %. The dynamic element comes from how those 10 % are released. A part of those Polkadot (DOT) is paid out to validators and a part is sent to Polkadot´s treasury.
The sizes of the two parts vary and therefore the inflation is said to be dynamic. We will not cover the inflation mechanism of Polkadot (DOT) any further, but you can read more about it on here if you are interested.
Polkadot (DOT) APR vs APY
You will receive your rewards weekly as explained above. The rewards are not restaked automatically. Instead, the rewards are put in your wallet and free to use immediately. You want to stake these rewards as quickly as p
There are many aspects to consider when deciding where to stake or soft stake Polkadot (DOT). In fact, it is worth considering accessibility, safety, rewards of your staked Polkadot as well as how your staking or lending effects the ecosystem. This article will solely cover which staking option gives you the highest returns.
It is paramount to understand the difference between APR and APY when comparing rewards. Annual Percentage Rate is the raw amount you will earn over a year including any fees you have to pay. So, if an exchange offers you 12 % APR it´s actually 12 % minus their fees. Annual Percentage Yield is the amount you will earn over a year including fees but also compound interests.
We stated above that your reward needs to be more than 10 %. This is rewards after getting compound interests and after paying fees. All rewards has been converted to APY in our comparison below. This is the only way to properly compare the Polkadot interest rate from the different options.
Polkadot staking on-chain
You should always consider the option of staking your crypto on-chain. By cutting away the middleman you help crypto projects stay decentralized and avoid that a crypto exchange takes a fee on your rewards.
The average reward is 13,5 % APY as tested by holdpolkadot.com. Be aware that it depends on which validator you choose. Currently a minimum of 120 DOT is required to stake on-chain. There is a 28 days unbounding period for having rewards paid out. When you stake on-chain you run a risk of your staked coins being slashed. In contrast if you soft-stake on an exchange the exchange often mitigates that risk for you.
Polkadot staking on Binance
Binance has 3 earn tiers for Polkadot . You can lock your investment for 1 month, 2 months or 3 months. The longer you lock, the higher return. The options of locking for 2 and 3 months have both been sold out for very long, at least 4 months. Last time we checked even the 1-month option was sold out.
You will sometimes see higher APY on Binance. This is due to limited offer campaigns they run to attract new customers. Normally, you can only enter this Binance earn programs with 10 DOT or similar.
Polkadot staking on Kraken
Kraken offers 12 % APY on Polkadot in their earn program. The rewards are automatically added to your staking. The minimum requirement for entering the earn program is 1 DOT.
Polkadot staking on Crypto.com
Crypto.com offers three different terms for entering their earn program. Namely, flexible terms or locking your crypto assets for 1 month or 3 months. Your rewards depend on your customer tier, which is measured by the amount of staked Cronos (CRO) you have staked with Crypto.com.
All returns on Crypto.com are measured in APR. We have made an overview of the Polkadot options below and converted the rewards to APY. The table implies that you restake your rewards.
As seen above the Tier 1 with 3 month locking period gives the highest returns. Considering the inflation rate, some of the options actually ends up diminishing the value of your Polkadot savings.
Conclusion on staking Polkadot (DOT)
We examined staking our assets on three crypto exchanges and directly on-chain. The highest returns come from Binance with their 3 months locked terms. This however is almost permanently sold out. The next best rewards are available on Crypto.com if you have enough CRO locked to be in customer tier 1. With no initial funds and looking at available options, you get the best staking returns directly on-chain and next best on Kraken.
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