Navigating The Big Unlockening: Polkadot’s Ideal Staking Rate Unveiled #StakeDOT

Unlocking DOT tokens from the first batch of auctions is a momentous event set to unfold within the Polkadot ecosystem. Scheduled for October 24th, this event, known as The Big Unlockening, marks the release of a substantial number of DOT tokens locked into crowdloans for prime parachain slot auctions.

In response to this vital moment, Polkadot is making significant adjustments, with the most noteworthy one being the ideal staking rate. This change extends beyond mere numerical adjustments; it plays a pivotal role in reshaping how staking rewards are distributed within the Polkadot network. It incentivizes users to stake the unlocked DOT without lowering the average staking rewards, which would otherwise be impacted by the addition of part of the 100M unlocked DOT to staking.

Whether you’re already a DOT holder or considering entering the world of Polkadot staking, these changes hold profound implications. Let’s now dive into the details.

The Big Unlockening

Now, with the impending crowdloan unlock event, let’s call it The Big Unlockening, a wave of +100M DOT tokens will be released from the crowdloan lock within October 24th. To ensure that these tokens can be absorbed without diminishing staking rewards, the Polkadot community has decided to raise the ideal staking rate from 52% to 60% on October 22nd.

The batch of first 5 auctions, source: parachains.info

What does this mean for you, the DOT holder?

A higher ideal staking rate allows more tokens to be locked into the network, which ultimately enhances the network’s security and stability. So, if you’ve been considering staking your DOT, there’s no better time than now. The change in the ideal staking rate is a forward-looking move that promises increased opportunities and a more robust network for all DOT holders.

It’s not just about staking; it’s about being part of a dynamic ecosystem that’s adapting and thriving.

This change is also aimed at addressing an immediate concern — making room for the unlocking tokens from lease periods 6–13 and 7–14. While it might appear as an ad-hoc response to a single event, this adjustment is in line with the broader direction of Polkadot and its upcoming changes.

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Polkadot’s Ideal Staking Rate Increase

Staking is at the heart of Polkadot’s consensus mechanism. It’s not just a way to earn rewards; it’s a fundamental building block that ensures the network’s security and efficiency. At its core, staking involves DOT holders locking up their tokens to participate in network consensus and validation.

The ideal staking rate, often expressed as a percentage, plays a crucial role in determining the network’s overall health. It represents the ideal portion of the total supply of DOT tokens that should be actively staked within the network. In simpler terms, it’s the perfect balance between staking and using DOT tokens for other purposes.

When this rate is too low, it signifies that fewer people are staking, so it can have an impact on network security, that's where incentives come into play and motivate people to stake again. A higher staking rate means fewer rewards for stakers, so they might use their DOT tokens in DeFi or in crowdloans instead.

The Current State of The Staking Rate

Currently, the Polkadot network is operating with an ideal staking rate of 52%. This means that in the ideal scenario, 52% of the total DOT supply is actively staked within the network, while the remaining 48% is available for various purposes, be it crowdloans or DeFi.

Actual token circulation, source: polkadot.subscan.io

While the ideal staking rate is 52%, the actual staking rate of DOT is 49,7% according to Subscan.

Preparing for Crowdloan Unlock

The first batch of auctions on Polkadot was driven by the hype, so there was over +100M locked DOT from +100k crowdloan contributors. The crowdloan unlock scheduled for October 24th is a significant event, as those DOT tokens will be unlocked to crowdloan participants. But what will users do with those DOT tokens?

Users have 4 options with unlocked DOT:

  1. Sell: That can obviously create sell pressure and put the DOT price lower. But, will people sell their DOT tokens, which were worth $30 each at the time of the crowdloan start? Now, almost at an all-time low? Some might sell, but most probably majority won't. From an investor point of view, today's prices seem more like a buying opportunity, rather than the selling one.
  2. Stake: Staking directly with validators or in nomination pools might be a good way to accumulate more DOT now in the bear market times. Getting +17% more tokens each year + compounding interest is a good strategy from the mid & long-term perspective.
  3. Liquid stake: Holders can put their DOT tokens into liquid staking protocols such as Bifrost, Acala, or Parallel Finance and get the same profit as while staking, but with the least effort.
  4. Use in DeFi: Users can put their DOT or even the Liquid Staking Derivatives (LSDs) such as vDOT to work. By lending or yield farming, they can get extra yield.

The Benefits of Delegating to Polkadotters Validator

As DOT holders looking to stake, the upcoming changes have a direct impact on your potential rewards. Staking your DOT with a reliable community validator like Polkadotters becomes even more enticing. By participating in the Polkadot staking ecosystem, you can maximize your investment and secure your financial future.

Now, let’s explore why Polkadotters is an excellent choice for delegating your DOT tokens for staking:

  • Community Engagement: Polkadotters is not just a validator; we are also community builders. Since mid-2020, we have been actively organizing events, meetups, and creating educational content, contributing to the growth of a vibrant Polkadot community.
  • Proven Track Record: Polkadotters boasts an impressive track record as active validators on Polkadot and Kusama, along with multiple parachains such as Astar, Bifrost, or HydraDX.
  • Performance: Polkadotters’ validators are run on powerful bare metal servers, enabling high block production and resulting in a competitive Annual Percentage Rate (APR) for stakers.
  • Decentralization: We prioritize decentralization by avoiding public cloud services like AWS or Azure. Some of our validators are already running on servers in the Czech Republic, with plans to migrate the rest soon.
  • Support for OpenGov: Polkadot’s on-chain governance is a key feature, and we fully embrace its spirit. We keep our supporters informed about the latest referenda, encouraging participation to ensure the community’s voice is heard.
  • Sense of Humor: While we take our responsibilities seriously, injecting a bit of fun into everything we do is the secret spice we add on. We believe that the journey to the moon should be an enjoyable one and we invite you to join us.

Polkadotters are also founding members of the Dot Validators Alliance, focusing on a decentralized, community-led society. The DOT Validator Alliance is managed as a DAO. Other members of the DOT Validator Alliance are Stakenode, Sik | Crifferent.de, and BLD nodes | ChadStakeKing. They are also worth nominating if you care about decentralization and the community approach.

PS. You may (or may not) be aware that in NPoS on Polkadot, there are up to 16 options for the validator you are nominating DOT tokens. Don't hesitate to choose more than Polkadotters, as it might affect your rewards. The more you choose, the more the chances of maximizing your rewards are. And of course, you better go with community validators such as those DOT Validator Alliance members mentioned above, rather than big centralized entities such as Binance with 13 validators. Support decentralization by choosing more small fish in the pond.

Conclusion

The increase in the ideal DOT staking rate from 48% to 60% in Polkadot represents a proactive step towards the upcoming event — The Big Unlockening. It offers an opportunity for DOT holders to stake their tokens that will be withdrawn from past crowdloands and enjoy competitive rewards.

By selecting Polkadotters as your validator, you not only benefit from the staking rate adjustment but also gain access to a trusted, community-oriented validator with a strong track record. As the Polkadot ecosystem continues to expand, now is the time to take advantage of these changes and stake your way to success.

With this change, the annual reward for DOT stakers of approximately 17–18% will remain unchanged. And that's what matters when you are a DOT holder.

So if you consider staking your unlocked DOT tokens, you don’t need to worry about lowering the staking rate due to the increasing the % of people staking. With the inflation rate sitting at 7.4%, staking seems to be still a profitable game for all DOT hodlers.

  • Enhance Polkadot’s governance process by delegating your DOT or KSM to POLKADOTTERS, dedicated community supporters within the Polkadot ecosystem, enabling seamless participation in on-chain governance through Nova wallet or Polkadot Delegation Dashboard
  • Support Polkadotters Shrimp and Polkadotters Octopus on Polkadot and be a part of a more secure Web3 future

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Polkadotters | Kusama & Polkadot validators

Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS