HDX STAKING ENDED IN APRIL 2022, but will be reinstated in October or November, 2023.
Key Takeaways
Polkadot/Kusama ecosystem staking is more complicated than other blockchains. So, to summarize:
- DO NOT bond all your HDX. Leave a few tokens to pay for transactions, like claiming rewards.
- Only nominate nodes with a verified on-chain identity, a website, and a way to contact them.
- Nodes top out and have a maximum of 165 nominations. This prevents nodes from becoming too large and dominating the network.
- Staking APY is HIGHER with smaller nodes and LOWER with larger nodes. This keeps the network decentralized. Large nodes have high total stake and small nodes have low total stake.
- Every 24 hours (1 era) the Phragmen algorithm decides which validator nodes will be in the ACTIVE SET and earn block rewards. INACTIVE nodes do not earn block rewards.
- Your entire stake is split between the ACTIVE nodes you’ve nominated, so nominating an INACTIVE node does not hurt you. You’ll earn block rewards as long as you have at least 1 active node.
- Only the top 64 nominators on any node earn block rewards. The smallest stakes on the oversubscribed node will be dropped from the active set and won’t earn rewards. Stakers on oversubscribed nodes COMPETE WITH EACH OTHER to earn block rewards.
Nominating fewer validator nodes is the solution. You’ll then have a larger stake with each one. - When a node you’ve nominated becomes oversubscribed, make sure your stake is well above the lowest of the 64 active nominators. That way you won’t have to worry about getting bumped out of earning rewards.
- The larger your bag of HDX, the more validators you should nominate. Large stakes can nominate up to 16 validators (100k HDX or more). Small stakes should nominate fewer validators, maybe 1 to 3.
- Stake with the small to medium sized nodes in the active set of validators, based on the total number of tokens staked on the node. This will get you the highest yield. Go back and read #4 again.
- Avoid 0% commission nodes, because they’re likely to become oversubscribed quickly and then you might not earn block rewards. Plus, 0% commission is the bait that dishonest node operators use.
Take pride in paying your validator. It will generally buy you reliability, honesty and support. You want your validators to run the best equipment. Paying commission allows them to buy it. - Nominate 1 inactive node. This does NOT penalize you in any way, because your entire stake is divided up between the active nodes. Please re-read #6 in this list. Click here to view the inactive set of validators.
What Is HydraDX?
r goal is to completely change how decentralized exchanges operate. DEX’s, like Uniswap are a place where buyers and sellers come together to trade tokens. The DEX is a market and HydraDX aims to be the dominant marketplace.
Uniswap doesn’t own any tokens. Its inventory is supplied by investors who want to collect trading fees on their idle crypto holdings. If you have ETH sitting around in your wallet for example, you can contribute to a DEX liquidity pool and provide ETH for
HydraDX HDX Staking Tutorial
In the DotSama ecosystem ONLY active validators earn block rewards and ONLY the top 64 nominators on each node earn block rewards. Validators compete with each other to make it into the active set. Nominators compete with each other to be in the top 64 spots on each validator node.
Pro Tip: The staking yield is HIGHER with SMALLER nodes and LOWER with LARGER nodes. The system incentivizes stakers to nominate active validators with a smaller HDX stake, so nodes will wind up with a similar total stake. Again, this helps decentralize and strengthen the network.
How to choose HydraDX validators?
Polkadot’s goal is total decentralization. Keep that in mind as you read the bullet points below.
This stuff is confusing. Read it several times if you have to. Every ecosystem has its own lingo, so know that to nominate means to stake with a validator.
- Only nominate nodes that have a verified on-chain identity (NOT just an address). The community caught around 10 anonymous nodes stealing block rewards from delegators. They use 0% commission as the bait. They raised their commission to 100% just before signing a block and then immediately lowered it back to 0% to keep deceiving nominators. If the validator only has an address and not a name, keep looking.
- Make sure the nodes you select have a website and email address, in case you need to contact them. If the validator only has a Twitter handle, that’s a hobbyist not a pro, so keep looking.
- Avoid 0% commission nodes for 2 reasons: 0% is the bait that dishonest node operators usually use and 0% commission nodes are likely to become oversubscribed quickly.
When your validators become oversubscribed, YOU’LL BE COMPETING with their other nominators to get into the top 64 spots on the node and earn block rewards.
If the other nominators on the oversubscribed node have more tokens staked with the node than you, you will be bumped out of earning block rewards. No one will notify you if that happens. - All nodes eventually become oversubscribed, so check in on your stake from time to time.
- Avoid nominating too many oversubscribed nodes, unless you have an enormous stack of HDX. Once a node has greater than 64 nominators they are oversubscribed.
Validator nodes are also capped at 165 nominations. This prevents any single node from becoming too large. Huge nodes are bad for network security.
ONLY THE TOP 64 NOMINATORS ON ANY NODE EARN BLOCK REWARDS. This is a point we wish to emphasize and reemphasize.
- If the validator you like is oversubscribed, it’s OK to still nominate them. Just remember that the Phragmen algorithm divides your stake up between your active nodes.
The smallest stakes on oversubscribed nodes get bumped out of earning block rewards. - What’s the solution? ONLY NOMINATE 1 to 3 NODES, unless you have a huge stack of HDX. On the staking page you can see how many nominators have been bumped from earning rewards in red. Click the red drop down arrow to see the size of their stakes. See the image below.
- Remember, stakers on oversubscribed nodes COMPETE WITH EACH OTHER. Click the drop down arrows next to the nominators on the validator node you’d like to stake with. (Images below)
You’ll see the minimum amount you need to stake to be in the top 64 spots and earn block rewards. If the lowest active stake on the oversubscribed node is 2000 HDX for example and you’ve got 25,000 tokens, nominate no more than 10 nodes (25,000/2500=10).
It’s much smarter to make sure that your stake would be well above the minimum, so you aren’t in danger of getting bumped from the top 64.
- Staking yield is HIGHER with small nodes and LOWER with large nodes (ie: the validator’s total HDX stake). DO NOT NOMINATE THE LARGEST VALIDATORS.
- Consider nominating one inactive node to help the network decentralize. The system is designed so this won’t negatively affect you, because your entire stack is distributed between your active nodes.
But, by nominating an inactive node you give that validator a chance to make it into the active set at some point. AND, once they make it back into the active set they will be your HIGHEST YIELDING node.
Remember, staking yield is HIGHEST with SMALL active nodes and LOWEST with LARGE active nodes. Nominating an inactive node is smart. If the inactive node makes it into the active set, it will have THE HIGHEST YIELD of all active nodes. - Write down or copy the names and wallet addresses of the nodes you’d like to nominate.
How to Become a Nominator and Stake Your HDX
Nominators help secure the network by staking their tokens with validator nodes. You “nominate” validators to represent your stake and in so doing earn more HDX.
Remember, every token is a “vote.” Staking your tokens assigns their voting rights to your validator. Those voting rights allow your validator to sign blocks and vote on network proposals for you.
1. Make sure you’ve installed the Polkadot JS browser extension and have funded your wallet with your HDX tokens. Open up the Polkadot JS browser extension, click the 3 dots to the right of your wallet address, click the drop down box and select HydraDX Snakenet, or “Allow use on any chain.”
Then, navigate to the staking page. It will look like the image below.
2. Select “Account Actions” and you’re ready to bond funds so that you can stake. See the image below.
3. Click the + Stash button and fill in the required fields. Select your account with HDX tokens as “stash” and “controller.” Your stash account and controller account will be the same.
Stash and controller used to be different, but that feature has become depricated.
Value Bonded: Enter the amount of tokens you’d like to stake. Do NOT bond all your tokens. BE SURE TO LEAVE AT LEAST 10 HDX TOKENS TO PAY FOR FUTURE FEES. You’ll need a little HDX to claim your block rewards.
Now you’re ready to nominate validators!
4. Click the + Nominator button and a large box pops up. (See the image below). This is where you stake your bonded funds to your chosen validator or validators.
5. Navigate to the “Staking Overview” page (Image below).
Scroll down the list and check out the validators you have to choose from.
Only nominate 1 to 3 validators, because only the top 64 largest staking positions on any node earn block rewards.
You may nominate up to 16 validators to help the network decentralize, but that’s only recommended for those with enormous stacks of HDX (6-figures or more).
Remember, if you stake 10,000 HDX with say 5 active validator nodes, each active validator might then be allocated 2000 of your HDX. The Phragmen algorithm decides how many of your tokens to place with each node you've nominated.
This is important to understand, because you don’t want your stake spread too thin by the Phragmen algorithm.
Otherwise you won’t have enough tokens staked on each node and you may get bumped from the top 64 spots and not earn block rewards.
6. Navigate back to “Account Actions” on the staking page. Then click the 3 dots to the right of your wallet info. A drop down box will appear. Select “set nominees.” (Image below)
7. Enter the name or wallet address for each validator you’d like to nominate into the search box.
BLOCKS UNITED 7JLU869sNxmmS4BTjtcFzhyJXUzi9U5G7aRbvMV2M7ZixV6u
You’ll then see that node appear in the left window pane called, “candidate accounts.”
Click on the validator you’d like to nominate in the “candidate accounts” box and they’ll instantly be moved into the right pane called, “nominated accounts.”
When you’re finished click, “Nominate” in the lower corner and sign the transaction. (Image below)
8. Navigate back to the “Account Actions” page and you’ll see your nominations to the right of your wallet. (Image below)
HDX Staking Guide
Remember, ALL NODES can easily become oversubscribed. It’s normal, because each node is only allowed to have 165 nominations.
Don’t stress if your nominated nodes become oversubscribed. Simply renominate fewer nodes. (Please continue to stake with us at Blocks United)
Please know that it takes 28 days to unbond your tokens.
The Polkadot ecosystem is more complicated than other blockchains.
Additionally, the Polkadot JS browser extension isn’t user-friendly, like other wallets. So, don’t be disappointed if you don’t understand right away and need to re-read the HydraDX HDX staking tutorial above.
The newest and arguably best wallet for the Polkadot and Kusama ecosystems is called, Talisman.
In a nutshell, Polkadot wants to be decentralized and doesn’t want any validator nodes being substantially larger than their counterparts.
Huge nodes are bad for network security, so the system encourages you to nominate multiple nodes and even inactive nodes.
Blocks United validator address: 7JLU869sNxmmS4BTjtcFzhyJXUzi9U5G7aRbvMV2M7ZixV6u
COMPOUND YOUR CRYPTO and grab one of our nominator spots!
Click here to view the official HydraDX documentation.
If you have questions or need any guidance at all, please fill out the contact form on our homepage and we’ll do our best to get back to you within a couple hours.
Frequently Asked Questions
HydraDX has been called the, ‘multi-headed monster of liquidity pools.’ The Omnipool will hold all the tokens traded on the DEX. That means that liquidity providers can supply a single token, whereas competing DEXs, like Uniswap require liquidity in pairs.
If you want to provide only a single token to Uniswap, you can’t.
Unlike current DEXs, the HydraDX protocol will own tokens. It will not rely solely on the contributions of crypto investors.
HydraDX will also be cross chain, so investors from the various blockchain ecosystems can come together.
HydraDX has chosen Polkadot as its home, because Polkadot was designed to communicate with other blockchains.
HydraDX will have two tokens, HDX for governance and LRNA to pay transaction fees. The protocol will hold 50% of its liquidity in the LRNA token. In time, the other 50% will be any token you can think of.
This 50/50 split is controlled by code. If you go to HydraDX and supply $1000 worth of ETH, the protocol will create $1000 worth of LRNA to match it. When you decide to withdraw your $1000 worth of ETH from the HydraDX liquidity pool, it will then destroy $1000 worth of LRNA tokens.
This keeps the supply of HDX governance tokens stable so token holders don’t get diluted, while the supply of LRNA will fluctuate wildly.
HDX holders get a cut of the platform’s trading fees, get to vote on where remaining fees go, and get to vote on which assets get added to the platform’s liquidity.
When an investor visits HydraDX to purchase LRNA tokens, the protocol takes possession of whatever token was used to swap for the LRNA. That’s how it builds its own inventory of tokens, which will become huge over time.
This is quite different from current DEX’s, like Uniswap and Quickswap. Those DEX’s rely on investors for liquidity and don’t own an inventory of tokens.
HydraDX’s inventory of tokens will have a market value, and that’s what will give the HDX and LRNA tokens their value. As its inventory grows, so too should the value of the HDX and LRNA tokens. This will allow, cheaper, faster, more efficient trades.
The protocol uses two tokens so whales can’t control governance. On other protocols, like Uniswap, liquidity contributors are paid in the UNI token and can then vote on governance proposals. If whales contribute huge amounts to LPs they can then control governance, drain yield reserves and just wreak havoc. The two-token system at HydraDX will prevent this.
HDX can be purchased on the centralized exchange, Kraken. It can also be swapped into using the HydraDX app.
The protocol is too new to give an accurate price prediction. However, DigitalCoinPrice believes the token will cross $0.016 in 2024.
Nothing we say is financial advice or a recommendation to buy or sell anything. Cryptocurrency is a highly speculative asset class. Staking crypto tokens carries additional risks, including but not limited to smart-contract exploitation, poor validator performance or slashing, token price volatility, loss or theft, lockup periods, and illiquidity. Past performance is not indicative of future results. Never invest more than you can afford to lose. Additionally, the information contained in our articles, social media posts, emails, and on our website is not intended as, and shall not be understood or construed as financial advice. We are not attorneys, accountants, or financial advisors, nor are we holding ourselves out to be. The information contained in our articles, social media posts, emails, and on our website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided in our articles, social media posts, emails, and the resources on our website are accurate and provide valuable information. Regardless of anything to the contrary, nothing available in our articles, social media posts, website, or emails should be understood as a recommendation to buy or sell anything and make any investment or financial decisions without consulting with a financial professional to address your particular situation. Blocks United expressly recommends that you seek advice from a professional. Neither Blocks United nor any of its employees or owners shall be held liable or responsible for any errors or omissions in our articles, in our social media posts, in our emails, or on our website, or for any damage or financial losses you may suffer. The decisions you make belong to you and you only, so always Do Your Own Research.
