# Nomination Pools

Nomination Pools are live on Polkadot!

Nomination pools are a new feature for Polkadot’s staking system that allows users to pool their DOT tokens together on-chain to nominate validators and receive rewards, significantly improving the system’s scalability. Now, anyone with as little as 1 DOT can receive rewards for staking natively on Polkadot.

• There are currently members. (There can be a maximum of members.)
• There are currently pools. (There can be a maximum of pools)
• No limit on members per pool.
note

Learn the key differences between Staking directly vs Joining a Nomination Pool.

Have questions on Nomination Pools?

Please join the Polkadot Discord for asking general questions about Nomination Pools. If you are a developer, please join our nomination pools support channel.

Nomination pools are one of the key features from the roadmap of staking improvements on Polkadot. They are designed to permissionlessly allow members to pool their funds together and act as a single nominator account.

Due to the current runtime constraints, Polkadot can only handle nominators comfortably in the electing set. As one of the objectives of the NPoS algorithm is to maximize the overall stake on the network, it can be inferred that the staking system on Polkadot favors nominators with a larger stake. Only the nominator accounts which back the validators in the active set are eligible for receiving staking rewards. This leaves out nomination intents from the accounts with lower token balance than the min-active nomination and places them in a waiting queue to enter electing set. Nomination pools will be handy for members who want to participate in the staking system with a stake much lower than the dynamic min-active nomination threshold on the network. All operations are constant space and time complexity relative to the number of members, eliminating any theoretical upper bound on the number of members the system can handle and thus scaling the number of accounts that can participate and earn rewards in the staking system on Polkadot. In summary, each nomination pool is viewed as a single nominator from the NPoS system point of view.

Why aren't the members in the nomination pools called delegators?

The term delegator is associated too much with Delegated Proof of Staking (DPoS) and since Polkadot implements Nominated Proof of Staking (NPoS), naming them as delegators would be misleading. The term member is our generic replacement for delegator. In action, members are quite similar to delegators and do delegate their nomination power to the pool.

The pool’s earnings are split pro rata to a member's stake in the bonded pool (and thus, the staking rewards for members will be the same as if they were a nominator). Importantly, slashes are also applied proportionally to members who may have been actively bonded.

## Key Components​

• Bonded Pool: Tracks the distribution of actively staked funds.
• Reward Pool: Tracks rewards earned by actively staked funds.
• Unbonding Sub Pools: Collection of pools at different phases (i.e. eras) of the unbonding lifecycle.
• Members: Accounts that nominate to the pools.
• Point: Unit of measure for a member’s portion of a pool's funds. All pools start with a point to Planck ratio of 1. Over time, if the pool receives rewards, they increase in value, and if the pool is slashed, it decreases in value.

## Pool Member Lifecycle​

### Join a pool​

A member delegates funds to a pool by transferring some amount to the pool’s bonded account with the join extrinsic. The pool then increases its bond with the new funds. A member is afforded the ability to bond additional funds or re-stake rewards as long as they are already actively bonded. Note that a member may only belong to one pool at a time.

The current minimum bond to join a pool on Polkadot is .

info

The funds nominated to a pool will not be visible in the member's account balance on Polkadot JS Apps UI. This is because the member funds are transferred from their account to the pool's account. This pool account is not accessible by anyone (including the pool root or depositor) and only the pool's internal logic can access the account.

Use Non-Transfer Proxy Accounts to join Nomination Pools

Only non-transfer proxies can be used to participate in nomination pools. staking proxies cannot be used as they cannot make calls to the nomination pools pallet.

Check the "How to join a pool" section in this support article for guidelines.

### Claim rewards​

The member can claim their portion of any rewards that have accumulated since the previous time they claimed (or in the case that they have never claimed, any rewards that have accumulated since the era after they joined). Rewards are split pro rata among the actively bonded members. Check the "How to claim rewards" section in this support article for guidelines.

### Unbond and withdraw funds​

At any point in time after joining the pool, a member can start the process of exiting by unbonding. unbond will unbond part or all of the member's funds. After unbond has been called and the unbonding duration has passed ( eras which correspond to days on Polkadot), a member may withdraw their funds with withdrawUnbonded. Withdrawing effectively ends a member's relationship with their pool, allowing them to join a different pool if desired. Check the "Withdraw unbonded funds" section in this support article for guidelines.

Unbonding transaction automatically triggers withdrawal of rewards

When there is a change in the bonded balance, the accumulated rewards in the pool thus far are automatically withdrawn to the account. The rewards are then accrued based on the updated bonded balance.

### Limitations of Nomination Pools​

• A member cannot vote (e.g. in Referenda or for Council members) with their nominated funds. This may be changed in the future once accounts are afforded the ability to split votes.
• For a member to switch pools, all funds from the account must be unbonded. This process takes 28 eras.
• A member can partially unbond the staked funds in the pool (at most 16 partial unbonds).

### States​

• Open: The pool is open to be joined by anyone.
• Blocked: The pool is blocked; no joiners are permitted.
• Destroying: The pool is in the process of being destroyed. Once in this state, the pool may never revert to any other state; it can only proceed to be destroyed. All members can be permissionlessly unbonded; this allows the pool to be dismantled regardless of any individual member’s proactivity.

### Roles​

• Depositor: Creates the pool and is the initial member. The depositor can only leave the pool once all other members have left. Once they leave by withdrawing, the pool is fully removed from the system.
• Nominator: Can select the validators the pool nominates.
• State-Toggler: Can change the pool’s state and kick (permissionlessly unbond/withdraw) members if the pool is blocked.
• Root: Can change the nominator, state-toggler, or itself. Further, it can perform any of the actions the nominator or state-toggler can.

## Pool Lifecycle​

### Creation​

The depositor calls the create extrinsic, setting the administrative roles and transferring some funds to the pool to add themselves as the first member. As stated above, the depositor must always be a member as long as the pool exists; they will be the last member to leave, ensuring they always have some skin in the game. A significant stake from the depositor is always a good indicator of the pool's credibility.

The current minimum bond to create a pool on Polkadot is .

The pool’s ‘nominator role’ selects validators with the nominate extrinsic. On Polkadot JS Apps UI, navigate to Network > Staking > Pools and click on Add Pool button.

The UI automatically assigns ID to the pool and allows for entering the name of the pools as well as the deposit to be bonded.

When creating a pool using Polkadot JS Apps UI, all the roles are mapped to the Depositor account by default. If any of these roles need to be assigned to a different account, create the pool using create extrinsic available on Developer > Extrinsics > nominationPools on Polkadot JS Apps UI.

### Upkeep​

The nominator can update the pool’s validator selection. On Polkadot JS Apps UI, navigate to Network > Staking > Accounts page and click on Pooled button. If you have any pooled accounts with the role of nominator, you will notice the option to set nominees. Select the validators to nominate like you would normally using a nominator account.

The state-toggler can update the pool’s state to blocked through setState extrinsic and then kick members by calling unbond and withdrawUnbonded. (The state can also be toggled back to open).

### Destruction​

A pool can be pushed into the “destroying” state via one of:

• The state-toggler sets the pool to “destroying”.
• Any account can set the pool to destroying if over 90% of the pool's active bonded balance has been slashed.
• When a pool is in ‘destroying’ state, unbond and withdrawUnbonded become permissionless, so anyone can help all the members exit.
• Once the depositor withdraws, no members belong to the pool, and all the pool’s resources are wiped from the state.

## Nomination Pools - Slashing​

Suppose the staking system slashes a pool’s underlying nomination account. In that case, the slash is distributed evenly across the bonded pool, and the unbonding pools from slash era+1 through the slash apply era. Thus, any member who either a) was unbonding or b) was actively bonded in the aforementioned range of eras will be affected by the slash. In other words, a member who may have been actively bonded during the offence is slashed pro rata based on its stake relative to the total slash amount.

Unbonding pools need to be slashed to ensure all nominators who were in the bonded pool while it was backing a validator that committed an offense are punished. Without these measures a nominator could unbond right after a validator equivocated with no consequences.

This strategy is unfair to members who joined after the slash because they get slashed as well but it spares members who unbond. The latter is much more important for security: if a pool's validators attack the network, their members need to unbond fast! Avoiding additional slashes gives them an incentive to do that if validators get repeatedly slashed.

## Nominating vs Joining a Pool​

Nominating is the action of choosing validators. It does not simply involve bonding tokens. Nominating is an active task, which implies that you regularly monitor that your stake is backing an active validator in all the eras and check if you are receiving your staking rewards. More importantly, ensure that the validators you chose always act in the best interests of the network protocol and have less chance of getting slashed. To nominate, you need a minimum of , and to receive rewards, you need at least a balance greater than the minimum active bond. Depending on your validators, if your active validator is oversubscribed, you will earn rewards only if your stake is within that of the top nominators. If the validator misbehaves, It is worth noting that your stake is subject to slashing, irrespective of whether you are in the top nominators or not.

As the minimum active bond is a dynamic value, it can make your nomination inactive when the threshold goes above your bonded balance. Hence, to be eligible to earn rewards while nominating, you would need to stake a much higher balance than the minimum active bond.

Nomination pools are a way to participate in staking with as little as 1 DOT and earn staking rewards. Nomination pools differ from custodial solutions (like staking through central exchanges) because they are non-custodial, native to Polkadot's protocol, permissionless, transparent, and run in a decentralized way by the community. Before joining a nomination pool, you must ensure that the pool is earning rewards and nominating the validators that match your preferences. Participating in pools is more of a set-and-forget action than nominating by yourself. The pool operator maintains the list of validators nominated by the pool, and so, in a way, you are trusting the pool operator to act in your best interests. However, it is advised to check the validators nominated by the pool from time to time and change the pool if necessary.

NominatingJoining a Pool
Minimum 100 DOT to nominate.Minimum 1 DOT to be a member.
Rewards can be compounded automatically or sent to any account.Rewards can be manually claimed to the pool member's account and be bonded in the pool again to compound them.
If the active validator gets slashed, all active nominators are subjected to slashing, also those that do not receive rewards due to the oversubscription issue.If the active validator gets slashed, all pool members are subjected to slashing.
Can bond and stake DOT indefinitely.Can bond and stake DOT until the pool exists.
Unbonding period of 28 days. Can switch validators without unbonding.Unbonding period of 28 days. Need to unbond before switching to a different pool.
Maximum uncapped.Maximum uncapped.
Should bond more than the minimum active nomination in an era to be eligible to earn staking rewards, although it can depend on multiple other factors outlined in the linked document.A nomination pool earns rewards in an era if it satisfies all the conditions mentioned for the nominator (as the nomination pool is just a nominator from the NPoS system perspective).
Staked tokens can be used for participation in Governance.Staked tokens cannot be used for participation in Governance.
Rewards payout can be triggered permissionlessly by anyone (typically done by the validator).Rewards must be claimed by the pool member.
Bonded funds remain in your account.Bonded funds are transferred to a pool account which is administered by the network protocol and is not accessible to anyone else.
Nominator manages the list of staked validators (up to 16).Nominations managed by the pool operator.