Polkadot Staking Report

While total validator count varied very little between 917 and 990, total nominator count experienced a significant rise in November 2022 and reached a peak of 47,672 on December 5, 2022, before gradually decreasing and ending up at 44,241 on May 31, 2023. In terms of stake amount, validator stake and nominator stake did not correlate. Validator stake mostly stayed between 1.59M and 1.90M DOT before March 17, and increased to the range of 1.91M-2.13M DOT afterward. On May 4, nominator stake lost 103.40M DOT whereas validator stake gained 102.46K DOT, pulling validators’ share of total stake from 0.31% to the maximum 0.39%.

As mentioned above, the active set of 297 validators change every day on the brink of a new era. A look at daily new active validators revealed an average count of 13. Even at its peak on May 4, there were only 48 new validators added to the active set, which makes up 16.16% of the total set. This points to a lack of diversity; in fact, since November 2022, the total number of unique active validators only increased from 297 to 591 whereas total validator count had reached 987 by May 31.

Note that from February 23, 2023 onward, the share among validators with unchanged, decreased, and increased total stake experienced much more volatility compared to that in the previous period, partly due to more dramatic fluctuations in new active validators.

In every era, the lowest total stake among active validators is indicative of how vulnerable the Polkadot network is. Since November 2022, the two most drastic drops in minimum total stake occurred on November 25, 2022 (from 1.79M to 1.53M DOT) and May 4, 2023 (from 1.78M to 1.41M DOT), which coincided with the two major declines in total stake. The network went through its most vulnerable point on December 27, 2022, when the minimum total stake came down to 1.24M DOT.

It is worth noting that the number of validators with zero self-stake was comparatively high, accounting for 76.69% of all active validators in one era on average. Theoretically, if these validators behave dishonestly, the slashes are entirely on nominators, and data suggested that validators’ self-stake was a criterion to which nominators paid attention when choosing validators. On May 31, 2023, 200 active validators with zero self-stake received 8,552 nominations in total, an average of 42.55 nominations per validator, whereas the other 97 validators received 13,703 nominations, an average of 141.27 nominations per validator. Most nominators tended to back validators whose self-stakes were less than 10K DOT. This pattern is understandable considering that popular validators will get slashed more harshly than those with lower stake backing them.

Additionally, validator commission appeared to be another criterion for nominators to select validators. It came as no surprise that nominators were in favor of validators with low commission in order to receive rewards. On May 31, 2023, 167 validators with less than 15% commission received 21,299 out of 22,255 nominations, a notable 95.70%. On the other end, there were only 765 nominations for 120 validators with 100% commission, of which 113 validators had zero self-stake. Setting up a validator with both zero self-stake and 100% commission is a tactic commonly used by whales to deter other nominators and thus maximize staking rewards for themselves.

The number of oversubscribed validators went on a downward trend in the last two months of 2022. A more dramatic reduction occurred in mid-January, when, through Polkadot’s upgrade to runtime 9340, the maximum number of rewardable nominators per active validator was changed from 256 to 512. Only 0-3 validators were considered oversubscribed each day since January 14, 2023, compared to 15-45 validators prior to the runtime upgrade, a remarkable 15-time decrease.

As there are limits on the number of nominators able to earn staking rewards (at most 22,500 nominators across all validators in one era, with a cap of 512 nominators per validator), the threshold to receive nominator staking rewards – called minimum active nominator stake – is dynamic. Within seven months from November 2022, this threshold almost doubled from 187.35 DOT to 363.98 DOT (the latter value had not changed since May 3, 2023). Every 21-40 days there was a noticeable jump of 15.01 DOT on average. It is thus recommended practice that token holders join active nomination pools to earn uninterrupted rewards.

For nominators who were not earning rewards, a new feature called fast unstake might be a solution. Implemented on Polkadot on March 28, 2023 with the passing of referendum 111, fast unstake allows nominators to withdraw immediately if their stake has been inactive for at least 28 days on Polkadot. An average of four unique accounts used this feature each day. Up to May 31, a total of 122.23K DOT was withdrawn via fast unstake, of which 20.25K DOT was associated with 10 unique accounts on May 12 alone.