Welcome to the world of Polkadot, or better known as the world of “parachains.” Founded by Gavin Wood, also co-founder of Ethereum, Polkadot is one of the most influential projects in the space and currently ranks 11th in market capitalization.
It has a complex ecosystem, but today, we won’t delve into that. If you want more information on what Polkadot is and how it works, we recommend this article. And if you want to know how to mine DOT, you can find our article here.
How can I earn DOT?
You might be confused because we’ve already written an article about DOT mining. However, in this case, we won’t go into details about the consensus of its protocol and how to be a validator, nominator, etc. Again, we recommend that you read the previous article since there are other ways to earn DOT, and that’s our focus today.
1. Other Staking Methods
Native staking is what validators, nominators, etc., do, but there are other ways to generate passive income in DOT.
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Third-party decentralized protocols.
This option is widely used by crypto natives because it offers benefits such as no limit on the amount to stake, and it’s a flexible contract you can withdraw whenever you want. While each protocol offers different benefits, they compete with each other, incentivizing them to offer a quality product.
Keep in mind that there are certain risks since they depend on a protocol external to Polkadot and its liquidity. Also, there are issues with centralized liquidity pools. Always do thorough research before staking.
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Staking with Custodial Exchanges
Many centralized exchanges offer staking for various cryptocurrencies, and DOT is no exception. While it may seem like the most convenient option because you don’t have to move your funds to a decentralized wallet, it has significant disadvantages, such as:
- Not your keys, not your coins. As they are custodians of your cryptocurrencies, they can freeze, censor, and even delist tokens as they see fit. Not to mention the risk of bankruptcy.
- They often have lower returns.
- Penalties for withdrawing funds before the established time can be high in some cases.
- It doesn’t promote decentralization in the space.
2. Participate in the Ecosystem.
Polkadot has one of the richest ecosystems in the crypto world, and one of its main innovations is how it incentivizes the community to participate in it. So, how can we generate tokens through our participation?
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Participating in Parachains
Parachains are parallel blockchain fragments connected to Polkadot’s main network, and they have their own set of features and functionalities. One of the key concepts in Parachains is the ability to offer native tokens (different from DOT) that can have their own use cases and utility within that specific parachain.
Some Parachains may offer rewards in the form of their native tokens (or DOT) to those who participate in them in various ways, such as providing liquidity, conducting transactions, or participating in the parachain’s governance. These rewards can be a way to incentivize participation and usage of the parachain.
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Propose Activities to the Treasury
The Treasury is a fundamental component within the Polkadot structure. It refers to a fund of DOT used to finance projects, initiatives, and improvements on the network proposed by community members.
When users participate in the Polkadot network and make transactions, fees in the form of DOT are generated. A portion of these fees is allocated to the treasury. The main purpose of this treasury is to finance the ongoing development and evolution of the network, as well as projects and proposals that benefit the community.
Any activity or project can be funded by the treasury. This includes, but is not limited to:
- Infrastructure
- Cross-Chain Applications
- Network Security
- Community activities such as meetups, hackathons, etc.
- Software development
- Academic and non-academic research.
It’s worth noting that treasury management is a decentralized governance system in which any holder can participate in voting.
3. Faucets and Other Applications
Faucets are the simplest way to get free DOT. They are applications or websites that give us cryptocurrencies in exchange for performing a small action such as watching an ad, completing a survey, and more. It generally takes no more than 5 minutes.
It’s important to note that these rewards are mostly small and short-term. But by just completing a small survey, you can save the gas fee with the reward.
If you have any questions, we always recommend reaching out to communities in your country or language to ask your questions. They are the real experts, and with such a large community, I’m sure more than one person will be happy to help you.
Conclusion
While there are various ways to earn DOT, we always recommend that each person does their own research before making any decisions. The key is to stay educated about the different options and take advantage of opportunities that best suit your needs and investor profile.
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