Polkadot (DOT)

Polkadot’s native token, DOT, is used to stake, pay transaction fees, and to participate in on-chain governance.

Initially, DOT is being staked to earn new issuance (“inflationary”) subsidies. It means that the supply of DOT will increase and stakers will capture the newly issued DOT. Generally, you will earn around 14% annually on your staked DOT, but it is subject to change.

Stakers will also capture fees from network transactions, and as Polkadot transaction volume increases, DOT stakers will earn more than just new issuance subsidies. DOT also gives stakers the right to vote on policy decisions on how the Polkadot protocol will operate and distribute treasury funds.

The main drivers of the DOT’s value could be more than transaction fees. Since DOT is required to lock up in parachain bidding, a new side chain will be required to procure and lock these DOT tokens in competition with other side chains. DOT-holders are also expected to be able to get early exposure to the assets of new side chains by lending their DOT for this bidding process.

Owning staked DOT is ownership of the Polkadot network, making DOT stakers entitled to setting/changing the rules of the Polkadot protocol.

From the moment you initiate the unbonding process, it takes 28 days to unstake. During this time you will not earn rewards. When the process is complete, you can transfer/trade your DOT tokens.

Staking rewards have been enabled with the launch of the Polkadot mainnet on May 26th 2020.

Once triggered, rewards on Polkadot may be automatically distributed every era (ie. 24 hours). Figment is never in control of your rewards. However, you will not receive your rewards until a claims transaction is sent, which any nominator may do every 24 hours.

Rewards are not staked automatically, which means you will need to lock and nominate your rewards in order to compound them.

Your potential rewards depend upon validator performance. When your validator is down, you will not be earning rewards. If your validator is not performant, your rewards will be reduced.

Yes, a portion of your staked DOT can be destroyed if the validator(s) you nominate are involved with too much stake going offline simultaneously or equivocation events (aka double-signing). Validators will be slashed a fixed percentage of their stake and not a fixed amount of DOTs. This means that more DOTs will be slashed from validators with a higher stake. This further incentivizes nominators to choose validators with a lower stake.

Figment has partnerships with a number of top-in-class custodians. Please contact support@figment.io for more inquiries. The Polkadot protocol takes control of your DOT tokens while you are staking.

If you unbond your tokens, this process will take 28 days before the protocol returns your tokens to you. While your DOT tokens are staked, you may participate in on-chain governance by voting on different proposals.

Polkadot uses token voting for on-chain governance. Governance proposals are discussed on the forum.