NEAR’s token economy is built around the NEAR token, a unit of value on the platform that enables token holders to use applications on NEAR, participate in network governance, and earn token rewards by staking to the network.
Adjusted Compound Reward:
NEAR Protocol uses Proof-of-Stake (PoS) consensus to secure and validate transactions on the blockchain. The blockchain is run by a decentralized network of Validators, a community of operators who run the servers needed to keep the network operational.
Validators earn NEAR Token rewards for producing new blocks in the form of a static inflation rate of 4.5% each year.
Token holders who are not interested in being a Validator themselves can stake to a Validator’s staking pool and earn a portion of token rewards too. This incentivizes token holders to stay involved with the community and support Validators who are keeping the network running smoothly.
Five things to know if you want to stake your tokens today
If you’re interested in staking, we suggest getting connected with NEAR community on Discord. Here some important things to know:
- Where to Stake: NEAR ecosystem is still evolving, guides and tooling for staking are still being created and wallets are being updated continually to improve your experience. In addition to the official NEAR wallet, you can also stake using Dokia Capital Staking application, and Moonlet’s Wallet.
- How to Stake: There are two main ways to stake tokens: via your existing lockup contract (if you have one), or transferring tokens from exchanges to your personal wallet. Both require that you plan your token custody, as introduced by the token documentation here. Also, remember to leave at least 35 unstaked NEAR on your lockup contract, to pay for the storage and the gas fees, until the vesting is complete.
- Staking for Decentralization: Staking is not only about the rewards, it is the basis for security and stability of the NEAR Protocol. To avoid centralization, split your stake between smaller staking pools instead of putting everything in the largest one. Community members like Zavodil Validator have created excellent alternatives to NEAR’s official explorer, embedding metadata from the active staking pools to help you choose which Validators to Stake with.
- Choosing a Validator: You will notice each validator has a “Pool Fees” amount listed. This % is the amount of fees the Validator will keep to manage their operation. For example, if 100 token rewards are created, 10% of them (10 tokens) will be kept by the validator and 90% will go to the token holders that staked to that Validator. That said, Zero fees are not always good. Being a Validator requires time from qualified professionals operating high-quality infrastructure – which are expensive to maintain. If something so valuable is offered for free, ask questions. Also, Validators can change their fees at any time, so make sure to keep an eye on the fees in your pools and join Validator’s community chats or mailing lists for updates.
- Unstaking: You can unstake your tokens anytime, and the minimum staking period is only 12 hours. However, you have to wait four epochs (equivalent to about two days) before being allowed by the protocol to withdraw your funds from the staking pool into your wallet. This waiting period is also necessary if you want to unstake and restake to a different Validator. It’s worth mentioning that staking is done via smart contracts, so it is possible that a bug in the Validator’s code may have an impact on the funds staked into that pool.
More information about staking NEAR you can find here and here.