Polkadot Delegation Process

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The Polkadot Delegation Process

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Important Notes: 

  • Customers can choose whether to compound rewards or not by choosing specific payment destinations.
  • Compounded rewards are subject to a 28 day bonding period. Not compound reward are liquid
  • Validator fee 5%
  • Reward is distributed on chain in each era (~24h)
  • Reward is distributed to customers once a week by Blockdaemon
  • Customers can set Blockdaemon as a staking proxy to manage the Controller account for staking related activities while Stash Account remains in customers' control. 
  • Validators are paid approximately the same rewards regardless of total DOTs nominated to each validator.  Where Blockdaemon is designated as a staking proxy for the customer, Blockdaemon applies best practices to balance nominations efficiently with the intent to maximize customer rewards. Blockdaemon provides no guarantees on rewards earned through its best efforts.

Client generated Stash and Controller Accounts 

(We recommend using Ledger or Polkadot extension as Polkadot will sunset account generation page)

The Stash Account is a cold wallet that holds funds. It decides how much fund is bonded and have its stored funds bonded to a Controller Account

The Controller Account is directly controlled by the client and acts on behalf of the Stash Account to nominate and validate. It also sets preferences such as payout accounts and commission and acts as signing accounts that dictate governance. 

 

Bond Tokens via Polkadot-JS UI 

Selecting the amount the client wishes to bond 

Choose payment destinations for reward distribution, such process will be executed with the Controller Key while the tokens will be bonded in Stash key

  • If choosing “Stash account (increase the amount at stake)”, reward will be compounded, bonded and hence subject to 28 days of bonding period
  • If choosing “Stash account (do not increase the amount at stake)”, “Controller account” or “Specified payment account” for payment destination, reward will not be bonded and will be liquid

Once bonded, staked principal will be subject to 28 days of bonding period

Nominate a validator via Polkadot-JS UI

Client (nominator) can nominate up to 16 validators 

If run your own validator, need at least 1.804MM DOT (as of May 2021)

Once selected validators, nominations will be active in the next era (~24h), which will be the period when validators are elected for block production. 

Only the elected validator and its pool will receive rewards

Reward Distribution

The reward is distributed to validators in each era (~24h) 

Total network block rewards are paid the same amount to validator pools regardless of total amount staked in the individual validator pool, meaning pools with less stake will generally pay more to the nominators than pools with more stake. 

5% of total reward from Blockdaemon’s validator pool is paid to the Blockdaemon Validator as commission

The remainder is paid proportional to amount staked to client (nominator) and validator 

Reward compounds or not

If the client chooses payment destinations specified in step 2.b.i, rewards are compounded and subject to a 28 days of bonding period. 

If the client chooses payment destinations specified in step 2.b.ii, rewards are not automatically compounded, but such settings can change at any point and time. 

Claiming rewards via Polkadot-JS UI (manual reward trigger and unbond)

Rewards are claimed and distributed to nominators by the Blockdaemon team once a week.

The client is able to self claim his/her rewards more often by using the polkadot-js UI. The client will be responsible for paying the transaction fees for the claim, if done this way.

If the client chooses to compound reward in step 2.b.i, the selected amount of reward will be subject to a 28 days unbonding period, during which the unbonded DOTs cannot be transferred nor accrue staking reward.

Staking Proxy Account

With the controller account’s permission, a staking proxy account can sign for the controller account in staking and governance votes but not transfer funds. At any time the controller account can replace its staking proxy account. 

Polkadot era rewards are validator proportional, not stake proportional. Client doesn’t have to set Blockdaemon as a proxy. Where Blockdaemon is designated as a staking proxy for the client, we apply best practices to balance nominations efficiently with the intent to maximize client rewards. Blockdaemon provides no guarantees on rewards earned through its best efforts.

Resources:

Guide: Setting Blockdaemon as Proxy for Validation.

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