Update: Fearless Security
Hello, friends! This is James Agenda here.
Polkadot blockchain recently completed its first birthday.
Since Polkadot's launch date, 26 May 2020, I've been staking DOT and KSM through many places.
Today I'm bringing the platforms where I had the best experiences Staking Polkadot and their difference.
I'm also describing the details of each one and bringing a comparison between them.
Which place pays the highest Staking Rewards on Polkadot?
Which is one is the easiest to Staking DOT?
Straight to the point, these are the 5 best places to Stake Polkadot, IMHO:
Binance
Fearless
Kraken
Ledger Live
Polkadot.js
(It's not a ranking, they are just listed in alphabetic order.)
Today I'm also talking about:
Why Stake Polkadot?
Comparison criteria
Evaluation of the 5 best places to Stake Polkadot
Results of my experiences in each place
Conclusion – Which are the best strategies when choosing places to Stake Polkadot?
Which strategy am I implementing?
If you want to save some time, go ahead and navigate through the underlined topics above.
But if you want to see everything, let's begin!
Why Stake Polkadot?
When you Stake Polkadot, you put your DOT tokens "to work" and generate more DOT.
For example:
If today you Stake 100 DOT, next month you will have 101 DOT (approximately).
Is it magic? Risk-free?
Actually, there are no miracles.
Whenever you Stake DOT, your tokens are being used to validate / mine the blockchain.
You are helping to secure the blockchain and receiving staking rewards for that.
But you may also lose some of your DOT tokens if they are misused.
This risk looks scary, but it's very rare, especially if you know what you are doing.
(If you want to know more about what Staking is, leave a comment or send me a message, and I may write more about it.)
Comparison criteria of places to Stake Polkadot
I made this comparison of places to Stake Polkadot based on my own experience using them.
I chose these criteria for the comparison:
Custody
Staking Rewards
Liquidity
Usability
Security
Here is what I mean for each one:
🔑 Custody
If you keep custody of your DOT tokens, it means that you have the seed/private key, and then you really own the tokens.
This happens when you Stake Polkadot directly on the blockchain, i.e., Stake "on-chain".
In this case, you control your staked funds but need to take some extra actions while Staking DOT. (like choosing good validators)
If you do not have custody of your DOT tokens, it means that someone else owns the tokens, and you need to trust in them.
This happens when you Stake Polkadot through an exchange.
"Not your keys, not your coins."
In this case, you don't need to worry about complex steps, but you need to trust all your funds in a centralized entity.
If you "have" 1 DOT on an exchange, you "actually have" 0 DOT plus a promise that the exchange owns you 1 DOT.
This is the same as money.
If you have a 1 dollar bill in your pocket, you control it, and you really own it.
If you have 1 dollar at the bank, the bank controls it, and you need to trust in them.
🤑 Staking Rewards
The Staking Rewards are the amount of DOT you receive compared to the total amount that you Staked.
In the previous example, the staking rewards were 1% per month.
The Staking Rewards may vary depending on many factors.
I'm comparing the average APY% (Annual Percentage Yield) that I managed to get in those different places.
⏳ Liquidity
By liquidity, I mean how long it takes to remove your assets from staking and transfer/sell them.
For example:
Suppose you are Staking Polkadot via an exchange and also Staking on-chain. 50 DOT on each stake.
You then decide to sell all the 100 DOT to buy a product you need for your home.
In a centralized exchange, you may be able to unstake and change your 50 DOT for dollars in minutes.
However, you will need to wait 28 days to transfer/sell the other 50 DOT staked on the blockchain.
💻 Usability
Some platforms have a clean layout and are user-friendly. Others are harder to use.
By usability, for each platform I'm evaluating:
Layout and interface.
How easy is (and how long it takes) to learn how to Stake DOT there?
How many steps does it take to stake/unstake your tokens?
How often do you need to keep taking action while your funds are already staked?
🛡️ Security
There are always some risks when Staking Polkadot or any other asset.
But some places are less riskier than others.
I'm evaluating how you could lose some of your tokens on each specific platform.
Evaluation of the 5 best places to Stake Polkadot
First, I will start with the two ones that are Exchanges: Binance and Kraken.
On both of them, you don't have custody of your assets.
After, I will talk about the other ones, which are wallets: Fearless, Ledger Live, and Polkadot.Js.
When you Stake Polkadot using a wallet, you are Staking directly on the blockchain, i.e., or Staking "on-chain".
So, let's begin:
Staking Polkadot on Binance
Binance is the largest crypto exchange in the world.
🔑 Custody on Binance
When staking Polkadot on Binance, you don't have custody of your assets and need to trust in the exchange.
🤑 Staking Rewards on Binance
Binance offers the highest Staking Rewards through three staking products with different durations:
30 days the APY% is 11.51% on DOT and 14.79% on KSM
60 days the APY% is 14.21% on DOT and 15.79% fon KSM
90 days the APY% is 16.62% on DOT and 19.43% on KSM
Sometimes there are even higher APY% (above 20%) in special products, but for a limited amount of tokens per user (like 1 KSM or 10 DOT per user).
Those higher numbers mean that Binance is likely putting your money to work outside the staking. (or it's operating in loss, what I doubt!)
Anyway, in the last months, Binance managed to pay me the Staking Rewards they promised.
But the products are not available all the time.
In this comparison, I will use the average APY that I managed to get on Binance last semester.
By periodically checking on Binance offers, I managed to get:
average rewards of ~14.3% APY for DOT and ~15,5% APY for KSM.
⏳ Liquidity on Binance
When Staking Polkadot on Binance, you need to wait for the product to finish, i.e., 30, 60, or 90 days.
Thus, it then takes more days to unstaking your tokens than in any other place.
But there is an option.
If you don't want to wait for all the duration, you may redeem early your staked Dot, but of course, there is a price:
By redeeming early on Binance, you will lose all the rewards in the period plus pay a fee.
I know that doesn't sound good, but hey, it's just an option.
To have an unpleasant extra option is better than to don't have an extra option at all.
For example:
Suppose you have a financial emergency while your DOT tokens are Staked on Binance.
In this case, at least there is something that you can do to access your funds.
You may evaluate if it is worth losing some DOT to get liquidity.
Now, instead:
Suppose you have a financial emergency while your DOT tokens are Staked directly on the blockchain.
In that case, there is no way to access your funds before the 28 days.
💻 Usability on Binance
At first, staking with Binance may look a little confusing since you need to go through many products.
But after you learn the path, it's very easy to stake.
Login on Binance > Finance > Binance Earns > Locked staking or https://www.binance.com/en/pos
The complicated part is waiting and regularly checking to find available staking products.
Most of the time, the products are "Sold out".
🛡️ Security on Binance
The main risk is the custody since your tokens are with Binance, not with you.
The other risks, only related to staking, are lower than staking on-chain.
Binance sure knows how to properly Stake your DOT tokens on-chain.
In normal situations, I bet Binance would likely cover any loss (slash) they eventually cause to your tokens.
Thus, the most considerable risk is still not having custody of your assets.
If you are not taking that into account, then it's indeed safe to stake Polkadot on Binance.
Staking Polkadot on Kraken
Kraken is one of the largest and safest exchanges in the United States.
🔑 Custody on Kraken
When staking Polkadot on Kraken, you do not have custody of your assets and need to trust in the exchange.
🤑 Staking Rewards on Kraken
Kraken is easier than Binance, offering just a single staking option.
Kraken estimated reward on staking Polkadot and Kusama is 12% APY.
Kraken explicitly says this APY is only an estimate.
However, I could verify that my Staking Rewards on Kraken indeed were, on average, 12% APY in the last months.
⏳ Liquidity on Kraken
That's where Kraken shines!
The exchange has the best Liquidity!
When Staking Polkadot on Kraken, you have total liquidity on your assets.
On Kraken, you may Stake and Unstake your DOT and KSM in minutes.
Fast, easy and no penalties!
💻 Usability on Kraken
Kraken also has the best usability.
The exchange offers the easiest way to Stake Polkadot, requiring only a few steps.
You also may leave your tokens there for an indefinite time.
You don't need to worry if a staking product is already finished or not, as happens in Binance.
🛡️ Security on Kraken
Like on Binance, your main risk is not having custody of your assets.
Despite that, Kraken is a reputable exchange and will likely keep you safe from them wrongly staking your DOT.
If you are not taking custody risk into account, then it's indeed safe to stake Polkadot on Kraken.
Staking Polkadot on-chain
When you stake using Fearless, Ledger Live, or Polkadot.JS, you are staking on-chain.
Staking Polkadot on-chain is more complex than staking on an exchange.
When you Stake DOT on-chain, you need to choose good validators.
You also need to stake a minimum amount of tokens in order to receive Staking Rewards.
At this moment, the minimum amount needed to Stake Polkadot on-chain is 40 DOT.
The minimum amount to Stake Kusama is almost lower as 0 KSM.
Thus, when staking in Kusama, you only need to pay attention to respect the existential deposit.
When Staking Polkadot or Kusama on-chain: Custody, Staking Rewards, and Liquidity do not depend on which wallet you are using.
Custody Staking on-chain: You have custody of your assets. Your keys, your coins!
Staking Rewards on-chain: I managed to get on average APY 13.5% on Polkadot and 14.7% on KSM.
Staking Rewards depend on how you choose your validators.
However, it doesn't depend on which wallet you are using choose.
Liquidity: 28 days on Polkadot and 7 days on KSM.
When Staking Polkadot or Kusama on-chain: Usability and Security depend on which wallet you are using.
Still, there are similarities among the wallets:
Usability on-chain: It takes more steps to Staking on-chain than staking on a exchange.
Security on-chain: It's more security than on exchanges, since you do not need to trust your funds to anyone.
Staking Polkadot on Fearless
Fearless Wallet is a native mobile app.
🔑 Custody on Fearless
When you Stake Polkadot on Fearless, you do have custody of your assets.
🤑 Staking Rewards on Fearless
Staking on-chain, I managed to get on average APY 13.5% on Polkadot and 14.7% on KSM as Staking rewards.
⏳ Liquidity on Fearless
Liquidity: 28 days on Polkadot and 7 days on KSM.
💻 Usability on Fearless
Fearless has a beautiful layout and also has alerts that may help you, like Rewards Payout.
It works on a clean mobile app, and it's enjoyable to use.
🛡️ Security on Fearless
Fearless security relies on your smartphone security.
When creating an account on Fearless wallet, your Seeds are temporarily displayed on your device's screen.
If people manage to capture your smartphone screen (e.g., by a virus), they will know your seed and then have full control of your account.
I indeed recommend you to try it, especially if you are still learning how to Stake Polkadot on-chain.
But I also recommend you use this wallet only for staking small balances.
If you want to Staking on-chain a high amount of DOT, I suggest looking for the next two options, where you may operate using a hardwallet.
UPDATE:
There were rumors at Reddit that Fearless is developing a solution to accept hardwallet.
I confirmed the information directly with Fearless's team member Anton Khvorov.
There is also a detailed road map on Fearless's website:
This is great news!
By using hardwallet, we will be able to achieve the maximum security level on Fearless as we already can achieve on Polkadot.Js + Hardwallet.
Fearless's team is also bringing other fantastic features as Staking Analytics and Multi-asset mode.
I will cover everything in detail once it's launched!
Staking Polkadot on Ledger Live
Ledger Live is the wallet from Ledger.
Ledger Live is a platform where you can use your Ledger hardwallet.
But you may also use your Ledger hardwallet on others platforms, like Polkadot.js.
🔑 Custody on Ledger Live
When you Stake Polkadot on Ledger Live, you do have custody of your assets.
🤑 Staking Rewards on Ledger Live
Staking on-chain, I managed to get on average APY 13.5% on Polkadot and 14.7% on KSM as Staking rewards.
⏳ Liquidity on Ledger Live
Liquidity: 28 days on Polkadot and 7 days on KSM.
💻 Usability on Ledger Live
At first glance, Stake DOT In Ledger Live is a middle term between Stake on Fearless and Stake on Polkadot.JS.
Ledger Live works on Desktop, has a clean layout and a user-friendly display.
However, many users reported problems with Ledger Live, like not showing the correct balance on the portfolio.
I also couldn't stake using Ledger Live some days after upgrades on the Polkadot network.
Thus despite looking more user-friendly than Polkadot.js, Ledger Live is still unstable, so I can't say it has better usability.
Also, Ledger Live does not support Kusama, although Ledger hardwallet supports the KSM token.
🛡️ Security on Ledger Live
Despite the reported usability problems, they don't bring additional risks.
Even if Ledger Live completely stops existing, you'd be able to access your funds in other wallets.
But there is indeed a slight disadvantage on security when staking with Ledger Live compared to Polkadot.JS:
When Staking DOT on Ledger Live, the same address is set for both the Stash Account and Controller Account.
This doesn't mean that it's unsafe to stake on Ledger Live, especially since you will be using a hardwallet.
However, it would be safer if you could use different addresses for Stash Account and Controller Account when Staking Polkadot on Ledger Live.
Polkadot's official guide explicitly advises using separate addresses for Stash Account and Controller Account.
(I will write a dedicated post on this subject, so feel free to subscribe if you want to learn more about it)
Staking Polkadot on Polkadot.js
Polkadot.js (or Polkadot-js or Polkadot{.js}) is Parity's team official wallet.
🔑 Custody on Polkadot.js
When you Stake Polkadot on Polkadot.js, you do have custody of your assets.
🤑 Staking Rewards on Polkadot.js
Staking on-chain, I managed to get on average APY 13.5% on Polkadot and 14.7% on KSM as Staking rewards.
⏳ Liquidity on Polkadot.js
Liquidity: 28 days on Polkadot and 7 days on KSM.
💻 Usability on Polkadot.js
Straight to the point: Staking on Polkadot.JS is more complex than any other way.
Still, it's doable for anyone. You don't need to be a rocket scientist either to know how to code.
You will just need to follow more steps than when Staking Polkadot on others platforms.
🛡️ Security on Polkadot.js
The complexity of Staking Polkadot on Polkadot.JS brings an advantage:
It's the most secure way to Stake DOT.
And the reason is: when you Stake Polkadot on Polkadot.JS, you can still use Ledger hardwallet.
But you don't have the restrictions of Ledger Live.
On Polkadot.js, you may choose separated addresses for Stash Account and Controller Account, even when using Ledger Hardwallet.
I suggest using Ledger hardwallet for the Stash Account and a standard account address for the Controller Account.
This will bring a high level of security and improve your usability.
Results of my experience on each place Staking Polkadot
Finally, these are the results of my experience Staking Dot on those places:
Conclusion – Which are the best strategies when choosing places to Stake Polkadot?
Based on my previous experience, today I suggest 3 types of strategy, based on what you want to achieve:
Staking Strategy (A): Max Gains, no matter what
If you do not care about anything else, and just want to maximize your Rewards, then go with Binance + Kraken.
Binance will bring the highest Staking Rewards, especially if you get the 90 days staking product.
After the staking product finishes on Binance, you will need to wait for the next product to be available.
While you wait, use Kraken to keep staking DOT with liquidity.
Staking Strategy (B): Keep it Simple, but small gains
If you just want the easiest way to Stake Polkadot, go with Kraken.
You will not need to choose nominators or regularly look for products.
You will also have the liquidity on your DOT to sell them when you want or to use them for crowdloans.
Staking Strategy (C): Best security + medium gains
If you want max security and medium gains, go with Polkadot.js + Ledger hardwallet.
You won't have good liquidity.
But you will sleep very well at night knowing that your assets are in the best possible security.
Which strategy am I implementing to choose where to Stake Polkadot?
I always split my DOT tokens between some of the strategies above.
In the first months Staking Polkadot, I used 70% of my DOT tokens on strategy A, 20% on B and 10% on C.
I was learning to Staking Polkadot, dealing with small balances, and seeking max gains.
I was also willing to invest more time to keep tracking for the best staking products on Binance.
More recently, I'm using 80% of my DOT tokens on strategy C and 20% on strategy B.
I'm choosing this to improve my security since now I'm staking higher balances.
And I'm also looking for some liquidity.
I'm aiming to participate via crowdloan at the first parachain auction on Polkadot!
What about you?
Where do you Stake Polkadot?
Which strategies do you use?
Do you know another good place to Stake Polkadot?
Leave a comment below. I will appreciate it!
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Cheers!
