Polygon Staking: How To Stake MATIC And Earn Money (2024)

What Is Polygon Staking?

Polygon staking refers to locking your tokens on the Polygon blockchain for a defined period to make it more secure and to validate transactions. In return, you earn rewards for your service.Crypto stakingrepresents a practical way of earning passive income from your existing crypto assets.

How Much Can I Earn By Staking Polygon?

You can earn up to 20% interest or more depending on how you stake your MATIC tokens. If you’re using acentralized exchange, different ones offer different interest rates. Different validators offer different rates for Polygon staking.

Staking Polygon – What To Know

What Is MATIC Slashing, And How Does It Work?

Slashing is a mechanism that governs the behavior of validators on the Polygon blockchain. If a validator is unavailable when needed or acts maliciously, the rewards allocated to that validator get cut over time orslashed, and they may be ejected from the network.

If the validator you allocate your MATIC tokens to is found wanting, the rewards allocated to that validator get cut, and, in turn, your own staking rewards. If the violations persist, the validator could be ejected from the Polygon network, preventing you from earning further rewards.

How Does Polygon Allocate Staking Rewards?

The Polygon network has allocated 12% of its supply of 10 billion tokens for staking rewards. These 1.2 billion tokens were allocated to jumpstart the network’s operation for the first five years, with the goal of transaction fees sustaining the network in the long run.

Polygon allocates a fixed amount of rewards to validators. The reward gets distributed proportionally to all stakers within a validator — the higher the number of tokens you stake, the higher your reward.

The Future Of Staking Rewards On Polygon

Polygon began its five-year staking reward program in 2019. The number of tokens allocated as rewards decreases each year, according to the timetable below:

Hence, stakers should expect to receive fewer rewards as time goes on.

Polygon holders who don’t stake their tokens would see an annual dilution in value due to the inflation rate, which is the percentage of the total number of tokens created each year and added to the supply.

The current inflation rate for MATIC is around 5%. You should expect this rate to decrease as time goes on, given the current supply of MATIC tokens — 8.7 billion — is near the maximum supply of 10 billion.

How To Stake Polygon

There are four main ways to stake Polygon and earn rewards on the blockchain. These methods include:

• Staking via a centralized exchange—Locking up your tokens on a centralized exchange and having the exchange handle the process for you.
• Delegate directly to a validator—You can delegate your tokens to a public validator. The validator stakes on your behalf and gives you your share of the rewards at the end of the staking period.
• Liquid staking—A process that lets you stake funds to earn rewards while still having access to those funds. It frees staked Polygon tokens from lockup periods.
• Run your own validator node—If you have the resources, you can rent a cloud server to act as a validator for the Polygon network. You must make sure your server is always available to validate transactions, or else your rewards will be slashed and you could be ejected from the network after multiple violations.

Staking Via A Centralized Exchange [Easy]

Centralized crypto exchanges make it easy to stake your assets similar to how you buy or sell cryptocurrencies. The exchange will stake tokens on your behalf and collect a commission for the service.

How To Pick A Centralized Exchange

The first thing to consider when selecting a centralized exchange for staking is the interest it offers. Different exchanges offer different rates, and you ideally should select the ones with the highest rates. However, you should also consider ease of use, lockup periods, and availability within your region.

Pros And Cons Of Staking MATIC Via A Centralized Exchange

Step 5: That’s it! You’ll start reaping passive rewards on the amount you stake.

Delegating Your Polygon To An Existing Network Validator [Intermediate]

You can allocate your tokens to an existing validator and earn rewards based on that validator’s success. The tokens you delegate will be locked up and illiquid during their staking period.

How To Choose A Network Validator

There are various considerations to watch out for in a network validator. They include:

• Uptime: You should pick a validator that runs 24/7/365. Validators that aren’t available when needed will see their rewards slashed and could be kicked out of the network.
• Availability.Ensure the validator has a website and valid way to contact them when issues arise.
• Verification.Use validators that have verified on-chain identity. The ones that have just an address and no other info could be scams.
• Skin in the game.Look for validators that have their own tokens staked alongside that of other users. Having skin in the game incentivizes the validators to keep their nodes running.

Pros And Cons Of Staking MATIC Via A Network Validator

How To Stake Your Polygon Directly With A Network Validator

Step 1:Head to thePolygon web walletand log in with your crypto wallet (e.g., MetaMask).

Step 2:Click on the “All Validators” tab at the top left of the screen, and you’ll see a list of validators.

Step 3: Choose a validator and click the “Delegate” button. Select the amount of MATIC you want to delegate and provide permission to transfer the funds from your wallet.

Step 4: Approve the delegation transaction and click Delegate. You should see a “Delegation Completed” message.

Liquid Staking MATIC [Intermediate]

Liquid staking entails delegating your MATIC tokens while still having access to them, unlike other types where your tokens are locked up and illiquid for the staking period.

How to pick a staking pool

There are several factors to consider when picking the best staking pool, including:

• Performance: Look for a pool powered by servers with 100% uptime. The longer the pool stays operating, the higher the rewards.
• Size: An ideal pool shouldn’t be over-saturated. Larger pools tend to pay out smaller rewards.
• Fees: Find a pool with low fees to maximize the rewards you earn.
• Transparency: An ideal pool should provide performance data and reports on how they operate.

Pros And Cons Of Liquid Staking Polygon

How To Liquid Stake Your MATIC

Step 1:Head to your liquidity staking protocol (e.g., Lido Finance) and select the option to stake MATIC.

Step 2:Connect your wallet to transfer the MATIC tokens you wish to stake. Swap your MATIC for staked MATIC tokens.

Step 3: Confirm the staking transaction after receiving the staked MATIC.

Step 4: Head to thePolygon web wallet, click on “Polygon Bridge”, and transfer staked MATIC from your wallet to the Polygon chain. This step is necessary because stMATIC tokens aren’t hosted on the Polygon blockchain, so you have to bridge them to obtain MATIC tokens you can transact with on the Polygon chain.

Boost MATIC Staking Rewards

You can then use liquid staked tokens to earn extra rewards in addition to Polygon staking rewards. Once you’ve gotten your stMATIC by following the instructions above, you can increase your rewards by depositing them to Adamant Finance’sstMATIC vault. This way, you’ll earn both staking rewards from your original MATIC and yield from your stMATIC.

An Example

For instance, if you’re earning6%APYonLidowith your staked MATIC, and take your stMATIC tokens and stake them on Adamant Finance’s stMATIC vault which provides a 5% APY, you’ll earn a total of11% APYon your tokens.

Note that your Lido rewards aren’t paid out in MATIC but instead in stMATIC tokens. The same thing applies to Adamant Finance. But, the good thing is that you can swap your stMATIC for MATIC and vice versa using an exchange.

The table below demonstrates the example of our combined APY:

How To Use The Polygon Bridge

The Polygon bridge is a channel that lets you transfer tokens between the Polygon and Ethereum blockchains with ease.

When you bridge tokens across the Polygon bridge, there aren’t any changes to the circulating supply of that token. Instead, tokens that leave the Ethereum blockchain will be locked, and the exact number will be minted on the Polygon chain as pegged tokens on a 1:1 ratio.

When you bridge the tokens back to the Ethereum blockchain, the pegged tokens on Polygon will get burned, and the assets previously locked on the Ethereum blockchain will be unlocked.

Follow these steps below to use the Polygon bridge:

Step 1: Head to the Polygon Web Wallet and tap “Polygon Bridge.” You’ll need to connect with a compatible cryptocurrency wallet, such as MetaMask.

Step 2: After connecting your wallet, you should be redirected to the Polygon Bridge interface. To send your tokens from the Ethereum blockchain to Polygon, click on theDeposittab and choose the name of the token you want to send. ClickTransferto proceed.

Step 3: Read the notes and clickContinuewhen you’re ready.

Step 4: Confirm the estimated gas fee and clickContinueagain.

Step 5: Review the transaction details, such as the number of tokens and estimated fees.

Step 6: You’ll receive a prompt to sign and approve the transfer from your wallet. ClickConfirmto proceed.

Step 7: Wait for the tokens to arrive in your Polygon wallet.

Run Your Own Validator Node [Advanced]

A node is a computer or server active on a blockchain network. You can spin up your own node that’ll help verify transactions on the Polygon network. In return, you’ll get staking rewards and a cut of transaction fees on the network.

What You Need To Run Your Own Network Validator Node

You can run a node on your own server or rent a cloud server from big providers like Amazon Web Services (AWS) and Microsoft Azure. We would recommend using a big cloud provider because they’re more reliable and deliver the best uptime.

The minimum hardware requirements for a Polygon node are 32 GB RAM, 8-core CPU, and 2TB storage.

Pros And Cons Of Staking MATIC Via Your Own Validator Node

How To Stake Your Polygon On Your Own Network Validator Node

Step 1:Prepare your hardware, such as a personal computer or cloud service.

Step 2:Install the required software (AnsibleorHeimdall) to set up a Polygon node with the hardware.

Step 3: Configure the nodes.

Step 4: Set the owner and signer keys.

Step 5: Start the validator node.

What You Need to Run Your Own Network Validator

Every Polygon validator must stake at least one MATIC token, which isn’t a strenuous requirement. There are also other responsibilities, such as maintaining high uptime for your servers, checking node-related processes daily, and keeping an ETH balance on the signer address.

Note that Polygon currently supports a maximum of 100 validators, which makes the competition to become one pretty intense. The better you adhere to its requirements, the higher your chances of becoming a validator.

Hardware Requirements

The hardware requirements to become a Polygon validator aren’t excessive. Some consumer-grade hardware is fit for the task. Note that you must run two nodes – asentryand avalidator– on separate machines.

You can read more about the requirements on thePolygon.technologywebsite.

Cloud Providers

You must not use a personal machine to run a validator node. A cloud service that lets you rent space on a remote machine is an optimal alternative. It may be more expensive, but you don’t have to worry about the uptime and maintaining the machines.

Some popular cloud providers include:

• Amazon Web Services (AWS): This is the biggest cloud provider in the world, with an extensive network of data centers in over 20 countries. Polygon recommends the “m5d.4xlarge” AWS instance for people that want to run validator nodes.
• Blockdaemon: This cloud provider was built for institutional stakers. It offers a “White Label Validator” service that lets you run a Polygon node with your own name, and you’ll retain control of the validator keys.
• OVH: This is a general cloud provider that you can also use to run a validator node. Polygon recommends the “infra-3” instance on this cloud service for validators.

To Sum It Up

We’ve shown you what staking entails and how to stake tokens and earn rewards on the Polygon blockchain. There are four main methods, each with their advantages and disadvantages. We’ve provided tips on how to make the best of these methods and earn as many rewards as possible.

Staking is a practical way to earn passive income from your crypto assets that would otherwise be sitting idle in your account.

Frequently Asked Questions