Nominating vs. Joining a Nomination Pool Print
Modified on: Mon, 29 Jul, 2024 at 3:47 PM
Staking on Polkadot allows DOT holders to be rewarded for helping secure the network by backing validators that produce blocks and confirm the transactions. In Polkadot, there are two native ways to participate in staking: nominating and joining a nomination pool.
This article briefly describes both forms of staking and compares their advantages and disadvantages.
For more information, visit the Polkadot wiki.
TABLE OF CONTENTS
Nominating
Nominating, also known as "solo staking," allows participants to lock their funds and choose which validators to support. Although funds are locked, they can still be utilized for other on-chain activities like voting on Polkadot OpenGov.
This method offers greater freedom in decision-making but also comes with the responsibility of selecting a reliable set of validators.
Only the top nominators by stake are eligible for staking rewards, creating a "dynamic minimum" threshold that must be met to earn these rewards.
This approach is ideal for nominators who prefer to make their own decisions and have sufficient bonded funds to rank among the top nominators by stake.
Nomination pools
Nomination pools allow members to combine their funds to operate as a single nominator account. The pool creator, or a designated nominator, can oversee and adjust the validator selections for all pool members. This designated nominator can change the validator selections at any time, but a pool member needs to unbond and wait for the unbonding period to end to join a different nomination pool.
Because funds are transferred to the nomination pool's account, members of a nomination pool cannot use these bonded funds for other on-chain activities, like voting on Polkadot OpenGov.
ℹ️ GOOD TO KNOW
Efforts are currently being made to enable members of nomination pools to use their funds for participation in OpenGov without having to leave the pool.
Nomination pools are ideal for those who prefer not to continually monitor their validator choices or who do not have enough DOT to stake individually. You can join a nomination pool with as little as 1 DOT.
Comparison table
The table below summarizes the differences between nominating and joining a nomination pool in Polkadot.
| NOMINATING | JOINING A NOMINATION POOL |
|---|---|
| Minimum 250 DOT to nominate | Minimum 1 DOT to be a member |
| Should bond more than the minimum active nomination in an era to be eligible to earn staking rewards | A nomination pool earns rewards in an era if it satisfies all the nominator conditions |
| Nominator manages the list of staked validators | The pool operator manages the nominations |
| Rewards can be compounded automatically or sent to any account | Rewards can be manually claimed to the pool member's account or be bonded in the pool again to compound them |
| Rewards determined by the protocol, minus the commission charged by validators | Rewards determined by the protocol, minus the commission charged by validators and the nomination pool |
| Staked tokens can be used for participation in Polkadot OpenGov | Staked tokens cannot be used for participation in Polkadot OpenGov yet |
| If the active validator gets slashed, all active nominators are subjected to slashing | If the active validator gets slashed, all pool members are subjected to slashing |
| Can bond and stake DOT indefinitely | Can bond and stake DOT while the pool exists |
| Unbonding period of 28 days. Can switch validators without unbonding | Unbonding period of 28 days. Need to unbond before switching to a different pool |
| Bonded funds remain in your account | Bonded funds are transferred to a pool account administered by the network protocol, not accessible to anyone else |
| Rewards payout can be triggered permissionlessly by anyone (typically by the validator) | A pool member can self-claim the rewards or grant permission to any other account to claim and compound rewards on their behalf |
Recommendations
Depending on the type of user you are and the amount of funds you want to stake, you might find one of the two options better suited to your needs. Below are some basic recommendations:
Nominate if:
- Your stake would be over the dynamic minimum to obtain staking rewards. Consult this minimum in the Staking Dashboard.
- You are willing to nominate your validators and check their performance periodically. Check the articles below to learn about the responsibilities of nominators and good practices when nominating:
The Role and Responsibilities of a Polkadot Nominator
How Do I Know Which Validators to Choose? You want to continue participating in the decision-making process through Polkadot's OpenGov governance.
Join a nomination pool if:
- Your stake does not exceed the dynamic minimum to obtain staking rewards.
- You prefer not to make the choice of validators yourself or cannot periodically check their performance.
- You prefer to choose when to claim or compound your staking rewards.
- You don't mind not participating in Polkadot OpenGov.
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