Polkadot is a blockchain network that aims to connect different blockchains within a single decentralized system. Polkadot was created by the Web3 Foundation and is an alternative to Ethereum and Bitcoin-based cryptocurrencies. Polkadot has a unique cryptocurrency – DOT. In this article we will take a look at how and if it is possible to “mine” the Polkadot cryptocurrency.
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How does PoS (Proof of Stake) work?
Instead of the traditional Proof of Work (PoW), Polkadot uses the Proof of Stake (PoS) mechanism to manage the network. This means that with Polkadot there is no “digging” of cryptocurrency in the classic sense. Instead, users must have a DOT to participate in the blockchain creation process and earn on their investments.
What is a nomination?
At Polkadot, nomination is a process in which users, known as nominees, engage their DOTs to select validators who are responsible for creating blocks, maintaining network security and collecting rewards. The rewards are then divided between validators and nominators in proportion to their committed DOT.
What does the selection of Validators consist of?
In order to participate in the nomination process and earn rewards in the Polkadot network, you must select the right validators. The key factors to look at are DOT commitment, reputation, commission, performance and experience. You can check the list of validators on the official Polkadot website and various other sources, such as Polkascan, Subscan and Polkastats. It is worthwhile to carefully study the available information on validators before you decide to nominate one.
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How to nominate validators?
Below are the steps you need to take to nominate validators:
Step 1: Create a Polkadot account
To get started, you need to create an account on the Polkadot network. You can do this by using the official Polkadot.js app or other Polkadot-enabled wallets.
Step 2: Buy and store DOT
The next step is to buy DOT from a cryptocurrency exchange and store it in your wallet. Make sure you use a secure cryptocurrency wallet and secure your private keys.
Once you have accumulated enough DOTs, you can start nominating validators. This should be done as follows:
- Log in to your Polkadot.js account.
- Go to the “Staking “tab and click “Account Actions”
- Then click “Nominator” to open the window for nominating validators.
- Select the validators you want to nominate. You can nominate up to 16 validators.
- Enter the number of DOTs you want to involve in the nomination.
- Click “Bond & Nominate” to complete the nomination process.
Once the nomination process is complete, awards will be given in proportion to the amount of DOT involved. For larger awards, increase the amount of DOT you engage, or change the validators to more effective ones.
How to check your awards?
To check your rewards and manage your nominations, you can use the official Polkadot.js wallet. On the home page of your account, you will find information about your engaged DOT, a list of earned rewards and current nominations. Rewards in the Polkadot network are not automatically paid to your account. You must manually apply for their withdrawal in the Polkadot.js panel. Remember to do this regularly, as rewards expire after 28 days.
Summary
Polkadot cryptocurrency digging involves nominating validators and engaging DOTs to earn rewards. It’s worth remembering that Polkadot is based on Proof of Stake rather than the traditional Proof of Work, so “digging” involves engaging cryptocurrency rather than using computing power. Make sure you carefully review the validators and manage your appointments to maximize your profits.
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