Grow your stake¶
Kusama uses NPoS (Nominated Proof-of-Stake), comprising the roles of validators and nominators to maximize chain security. Validators take the role of both validating blocks and guaranteeing the finality of the chain, while nominators can help choose the set of validators by indicating their support weighted by KSM.
Both validators and nominators will earn rewards— and may be penalized—proportional to the amount that they stake, with validators having the ability to set some payment preferences.
Running a validator is a process which requires dedicated hardware and some technical prowess. Nominating (basically, voting with your stake on which validators will be part of the active validator set) is much less technically demanding.
Staking and Nominating FAQs¶
What is staking?¶
Staking allows KSM holders to participate in the security and availability of Kusama by leveraging their tokens to validate. Validators who stake KSM, have an operational validator node, and behave honestly will get rewarded with KSM. Actors who misbehave or who are unavailable/offline will have a portion of their stake slashed as a penalty.
What are the annual returns for staking?¶
The exact number will vary depending on the amount of KSM staked. If there is about 50% of KSM staked, then each validator slot will receive about 20% annual returns for good behavior.
What do I need to stake?¶
To become a validator, you need a computer with recently up-to-date specifications, a stable and fast internet connection, and KSM to stake. If you do not have KSM to stake, it is also possible to convince nominators to nominate you. Once you have acquired enough stake to make it into the validator set, you will start validating.
To become a nominator, you only need to have some KSM to stake.
What is nominating?¶
A nominator publishes a list of validator candidates that they trust, and puts down an amount of KSM at stake to support them with. If some of these candidates are elected as validators, they share with them the payments, or the sanctions, on a per-staked-KSM basis. Unlike validators, an unlimited number of parties can participate as nominators. As long as a nominator is diligent in their choice and only supports validator candidates with good security practices, their role carries low risk and provides a continuous source of revenue.
Can I nominate multiple validators?¶
Yes. Validators are selected via the Phragmen Method. You can think of this is a version of "approval voting" - you can approve zero, one, or multiple validators (although of course, if you do not nominate any validators, you are not nominating and thus will not receive any rewards).
For a more in-depth explanation of Phragmen, please see the Polkadot Wiki Phragmen page.
What is the maximum annual interest and rewards possible when nominating or validating?¶
Returns will vary based on several factors including, how many KSM are staked for a given validator, how much your proportion is in that stake, and how many validators are in the set at a given time.
Annual inflation of the DOT supply will not exceed 10%.
Rewards from validating is expected to be ~ 20% annually, assuming no slashing and remaining in the validator set the entire time. Note that only some of the rewards come from supply inflation; other rewards come from transaction fees, tips, and the like.
Maximum rewards are obtained when the percentage of all DOTs staked is at 50%.
What do I need to nominate?¶
All you need are some KSM and decide which validator to nominate.