How to Become a Polkadot Validator and Make Money
Polkadot is quickly becoming a formidable blockchain. How do you become a validator on the network and what does it pay?
May 18 2021, Published 2:10 p.m. ET
The latest blockchain ecosystem making a name for itself, Polkadot (DOT) has steadily gained popularity. Rivaling other blockchains—most notably Ethereum—Polkadot has been gaining crypto investors looking to score with its cryptocurrencies. Polkadot has validators flocking to establish themselves in the promising staple in the blockchain space.
Polkadot was founded in 2020 by Ethereum co-founder Gavin Wood with Robert Habermeier and Peter Czaban. Like Ethereum, Polkadot is a blockchain that allows other developers to build projects off the baseline technology. It’s designed to operate two types of blockchains—a main network, called a relay chain, where transactions are permanent, and user-created networks, called parachains. Parachains can be configured for any number of uses and funnel back into the main blockchain so that parachain transactions can benefit from the same security of the relay chain.
Validators are one of four different roles within the Polkadot blockchain.
The Polkadot Relay Chain uses a variation on a PoS (proof-of-stake) system called NPoS (nominated-proof-of-stake). This system allows anyone who stakes DOT to secure the cryptocurrency in a particular contract that performs one or more of the following roles necessary to its operation—validators, nominators, collectors, and fisherman.
Validators confirm data in parachain blocks, participate in consensus, and vote on proposed changes to the network. Nominators secure the Relay Chain by selecting validators. They delegate their staked DOT tokens to validators allocating their votes. Collectors run nodes that store a complete history for each parachain and aggregate parachain transaction data into blocks for addition to the Relay Chain. Finally, Fishermen monitor the entire Polkadot network and disclose suspicious behavior to the blockchain validators.
Nominators select validators
With Polkadot gaining traction amid the masses of other cryptocurrencies and blockchains, many crypto enthusiasts wonder how they can become Polkadot validators. However, it’s as easy as simply knowing how to run code and mining crypto as in other PoW systems.
Nominators are responsible for appointing their stake to the validators. By assigning their stake, nominators can elect the active set of validators and share in the rewards that are paid out.
Once nominated and outfitted with a cache of tokens to get started, validators must follow a specific technical script to get up and running. Polkadot provides a guide on what network, hardware, and code is needed to set up and secure themselves in the parachain network properly.
How much can Polkadot validators make?
Validators on the Polkadot blockchain can earn DOT tokens as rewards for their work. For every era—a period equal to 6 hours in Kusama and 24 hours in Polkadot—validators are paid proportionally to the number of era points collected. Era points are rewards for payable actions like issuing validity statements for parachain blocks, producing a non-uncle block in the Relay Chain, producing a reference to a previously unreferenced uncle block, and producing a referenced uncle block.
Validators can keep a percentage to reimburse themselves for the cost of running a validator node. Otherwise, all of the rewards are shared based on the stake behind each validator. This includes the stake of the validator itself, plus any stake bonded by nominators.