Nominators play a crucial role in a blockchain network that uses the Nominated Proof-of-Stake consensus mechanism. Nominated Proof-of-Stake is used in blockchains such as Polkadot and Kusama.
Who Or What Are Nominators?
Nominators are participants in the staking subsystem of the Polkadot ecosystem. They appoint their stake to validators on the network. By doing this, they can select the active set of validators and share the rewards that are paid out. Compared to validators, nominators’ role in the Polkadot ecosystem is passive. A validator is an active participant in the network, supporting block production and finality mechanisms. Unlike validators, nominators don’t need to run a node or worry about online uptime.
However, nominators have other responsibilities, such as performing due diligence on the validators they elected. When nominating validators, a nominator must pay attention to their own reward percentage and the risk of slashing in the event that their chosen validator gets slashed.
Why Should You Nominate?
There are several reasons to consider becoming a nominator. Becoming a nominator makes you a part of the Polkadot movement, putting you in the company of diverse professionals and enthusiasts striving to build the next generation of the internet: decentralized, privacy-focused, and trustless. Becoming a nominator also means you play a crucial role in keeping Polkadot secure. Your bonded balance can be used to vote in Polkadot OpenGov, helping shape the future of the network.
Becoming a nominator also means you will begin understanding how Polkadot works. Nominators can also open their own nomination pool, allowing others to chip in, secure the network, and earn rewards. This helps build your reputation as a trusted nomination pool operator.
Understanding The Role Of A Nominator
Nominators play a crucial role in securing the Relay Chain by staking their DOT tokens and nominating validators. Becoming a nominator allows you to earn more DOT. While becoming a validator also allows you to earn DOT, it requires experience and technical know-how because you have to set up a node and run it 24/7.
By nominating one or more validators, nominators can earn DOT tokens and become nominators for the validators they have chosen. As a nominator, you must pick your validator carefully. If the chosen validator acts against the interests of the network, they will be slashed, resulting in the nominator losing their DOT tokens. However, if the validator functions according to the rules, both get a share of the staking rewards.
When nominators stake their DOT tokens, the tokens become bonded (locked). Nominators can stop nominating at any time. However, this action will only come into effect in the next era and does not automatically unbond funds. Unbonding takes effect after the unbonding period, which is 28 days long on Polkadot.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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