Validators that are successfully elected and produce blocks are rewarded with the native DOT token. Nominators who back a validator and receive such a block reward share in the return. These rewards are distributed automatically to the nominators at a protocol level. Validators are paid the same regardless of how much stake they have, meaning pools with a lower stake will pay proportionally more to nominators than pools with larger stakes. This incentivizes nominators to distribute their stakes to smaller pools, in order to maximize their rewards. This intends to align what’s best for the network (avoiding control by a few powerful validators) with what’s best for the individual (maximizing financial rewards).
While staking rewards remain constant, the amount of rewards distributed to nominators will also be influenced by the commission fee the validator charges. This is a variable fee set by the validator to cover their operating costs. Lower commission validators will distribute higher rewards to nominators. Rewards are recorded approx. every 4 hours on Polkadot and calculated per era, every 24 hours. In Polkadot’s native web wallet, rewards can be claimed by triggering a payout for all unclaimed eras.
Polkadot also has a built-in limit of 256 nominators per validator, to which a validator can pay rewards. These are determined by the top amounts of stake allocated to the validator. Nominators who fall outside the 256 threshold receive no rewards for supporting a validator.
Updated 2 months ago