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The blockchain
February 21, 2024
The blockchain

Unleashing the power of POLYX crypto staking: the benefits and mechanics 

Staking POLYX, the network’s utility token, supports node operators in securing the blockchain. In exchange, stakers earn staking rewards in the form of POLYX.

Crypto staking has emerged as a popular method in blockchain ecosystems for users to actively participate in network operations and earn rewards in crypto tokens. 

On Polymesh, users can stake POLYX, the network’s utility token, to support node operators in securing the blockchain. In exchange, stakers earn staking rewards in the form of POLYX to use for utility in the ecosystem or re-staked for greater rewards over the long term. 

This blog post briefly explains the mechanics and benefits of POLYX crypto staking and staking rewards. It also touches on best practices and methods to stake POLYX. 

What is POLYX crypto staking?

Understanding POLYX crypto staking begins with understanding Polymesh’s consensus mechanism, called nominated proof of stake

Nominated proof of stake, or NPoS for short, dictates how distributed operator nodes (known as validators on other networks) find consensus for the continuation and growth of the blockchain. Operator nodes write transactions, gather them into blocks, and vote on blocks proposed by others for writing to the blockchain. On Polymesh, only licensed financial entities can be node operators and run these nodes. 

In nominated proof of stake, the incentives of node operators and stakers are aligned for secure operations via crypto staking. POLYX crypto staking lets users benefit from their POLYX tokens in exchange for locking them as collateral investments to support network security. In return, stakers earn rewards in the form of the POLYX token.

Staking uses rewards and fines to create a financial incentive for participants to maintain network integrity alongside a deterrent for harmful behavior. Typically the more tokens staked on a network, the stronger its security and the higher the attack resistance. 

How does POLYX crypto staking work? 

Polymesh node operators stake POLYX tokens to increase the chance of their node being selected in a given era. If successful at producing blocks, they’ll earn rewards in the form of POLYX. If they exhibit malicious behaviour or fail to act, they’ll be fined instead. 

Users can actively participate in the Polymesh network and stake their POLYX tokens on selected node operators. Stakers nominate specific operator nodes to bond their POLYX tokens to, then share in a percentage of these operator nodes’ rewards.

At the time of posting, 500M POLYX is locked in staking.

Learn more about how staking works in our Staking Explainer

How are POLYX crypto staking rewards calculated?

POLYX staking rewards are calculated based on several factors, including the number of tokens staked, the staking return reward rate, commission fee rates for node operators, and the number of stakers. 

Factors that influence the reward rate include the availability of the POLYX token, the amount of POLYX currently used in staking, and the number of stakers. The ideal ratio for staking POLYX is identified as 70%, so block rewards will be higher when there is less than 70% of POLYX used in staking and lower when the amount of POLYX used in staking exceeds 70%. 

Minimum requirements or thresholds 

From a technical point of view, the minimum number of POLYX that can be initially bonded in POLYX crypto staking is 1 token. However, this minimum requirement could change in the future should a proposal pass through Polymesh governance

Additionally, when you un-stake POLYX tokens, they’ll be locked for a certain period. If you request to withdraw them, you’ll have to wait 28 days for them to appear back in your wallet for you to unlock them. 

What are the benefits of participating in POLYX crypto staking?

Staking POLYX tokens on node operators actively engages users in the Polymesh network, enhancing its security and decentralization. In exchange, stakers benefit economically from staking rewards. 

POLYX stakers share in the block rewards that are dispersed to their nominated, active operator nodes. These staking rewards let stakers accumulate additional POLYX tokens, providing a consistent return on investment.

Stakers can use POLYX staking rewards as a way to earn passive income, unlock more utility in the Polymesh network, and offset costs for other onchain actions such as paying transaction fees or signaling on proposals in governance. 

As the POLYX utility token is integral to Polymesh, it holds long-term value for the ecosystem. Staking can help stabilize the price of the POLYX token by reducing the circulating supply, potentially benefiting stakers and POLYX token holders over the long term and impacting the growth and stability of Polymesh. 

Why participate in POLYX crypto staking directly on Polymesh instead of other platforms? 

Users interested in staking cryptocurrency should understand the various options to make the most informed investment choices. 

Staking POLYX allows users to benefit from staking rewards and offers a potential impact on token stability and price appreciation. 

Stakers can manage and monitor staked assets in POLYX crypto staking via the mainnet app or through the Polymesh Portal, which ensures transparency and ease of access to earned rewards. These interfaces also make it easy for users to stay informed about overall network performance, and staking parameters such as the current era, reward rate, and other key data. 

Staking directly on Polymesh (instead of via an exchange) with the mainnet app or the Polymesh Portal also brings additional benefits, including: 

  • Lower fees: There are no additional fees set by a third-party 
  • Higher rewards: Stakers can maximize their rewards and earn the highest amount possible as the only entity that takes commission is the block-producing operator 
  • More flexibility: Stakers can select to stake on operator nodes of their choosing instead of having a third party select where to bond or stake their POLYX tokens

Polymesh’s onchain governance model ensures the ecosystem is shaped collectively by those with a vested interest, including stakers. Stakers play a pivotal role in Polymesh governance as they hold POLYX and can use it to signal voting preferences on important network proposals, upgrades, and changes. This includes changes to the staking protocol itself, such as the 28-day unbonding period or the maximum number of operator nodes. 

For more information about Polymesh governance, visit polymesh.network/governance

Get started staking today

The first step to POLYX crypto staking is to get POLYX.

To stake directly on Polymesh via the mainnet app or Polymesh Portal, you’ll also need a Polymesh wallet address and a verified on-chain identity. Check out how-to stake on the Polymesh Portal to learn more.

For a high level overview of staking on Polymesh, visit polymesh.network/staking.

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