Polygon Staking: How To Stake MATIC And Earn Money
Key Takeaways
- Staking is one of the main benefits of the MATIC token.
- You can earn annual interest of up to 20% by staking MATIC.
- Staking MATIC is a practical way of earning passive income.
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 staking represents 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 a centralized exchange, different ones offer different interest rates. Different validators offer different rates for Polygon staking.
Staking Polygon – What To Know
| Staking Information | Details |
|---|---|
| MATIC Staking Minimum | 1 Matic |
| Staking Lockup Period | Depends on the platform |
| Staking Options Available | Exchange, delegating, liquid staking, running a validator |
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 or slashed, 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
Pros
- Easy to do
- You can receive reward deposits directly to your crypto account
- No need for any equipment to join a staking pool
Cons
- Long lockup periods
- Can’t sell your crypto during lockup
- Risk of cyber threats to the 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
Pros
- Lower commissions than centralized exchanges
- Easy to set up
- You can receive airdropped tokens
Cons
- Fewer rewards compared to running your own validator
- Dishonest validators can steal your rewards
- Lesser returns if your validator gets penalized
How To Stake Your Polygon Directly With A Network Validator
Step 1: Head to the Polygon web wallet and 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]
Stader
4.3Pros
- Committed to decentralized staking
- MATIC staking on Polygon
- 40+ Protocol integrations to enhance yields
Cons
- Limited liquidity for Stader liquid tokens
- Primary liquidity pools pair liquid tokens with Stader SD token
- Support for MATIC staking on Polygon: Staking MATIC must be done on the Ethereum network, which can be costly. Stader Labs introduces the ability to stake MATIC on the Polygon network, opening a yield opportunity for smaller positions.
- DeFi integrations: Put your staked assets to work in other DeFi protocols to boost your yield. Options vary by chain and include liquidy pools, lending platforms, and yield optimizers.
- Newbie-friendly UI: If you know the basics of working with a DeFi wallet like MetaMask, Stader makes it a breeze to stake assets like MATIC and ETH with a liquid token.
DeFi can be intimidating if you’re new to the space, but Stader’s user interface and flow for basic liquid staking help both newcomers and seasoned pros put their crypto to work in a jiffy. Smart contract audits from Halborn and Certik help ensure the code is solid, reducing the risk of exploits.
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
Pros
- Can sell your cryptocurrencies during the staking period
- Can earn yields and staking rewards concurrently
Cons
- Limited pools available
- Staked assets are susceptible to market fluctuations
- High fees
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 the Polygon 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’s stMATIC 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 earning 6% APY on Lido with 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 of 11% APY on 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:
| Staking APY | Rewards Paid | |
|---|---|---|
| Staking With Lido | 6% | stMATIC tokens |
| Staking With Adamant Finance | 5% | stMATIC tokens |
| Total Return | 11% |
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 the Deposit tab and choose the name of the token you want to send. Click Transfer to proceed.
Step 3: Read the notes and click Continue when you’re ready.
Step 4: Confirm the estimated gas fee and click Continue again.
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. Click Confirm to 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
Pros
- Higher staking rewards
- Your nodes make the network more secure and reliable
- You can vote on decisions governing the network
Cons
- Difficult to set up
- Requires sophisticated hardware
- Risk of cyber attacks, especially if running on personal hardware
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 (Ansible or Heimdall) 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 – a sentry and a validator – on separate machines.
| Minimum system requirements | Recommended system requirements | |
|---|---|---|
| RAM | 32 GB | 64 GB |
| CPU | 8-core | 16-core |
| Storage | 2 TB SSD | 3-4 TB SSD |
| Bandwidth | – | 1 Gbit/s |
You can read more about the requirements on the Polygon.technology website.
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
You can earn up to 20% or more in annual interest by staking MATIC, but the exact rate depends on the method you choose.
Yes, you can stake Polygon directly from your MetaMask wallet to earn rewards.
Running a validator node is the best way if you want to maximize your rewards.
These are the tokens allocated by the Polygon network — 12% of total supply — to stakers that help maintain the network.
Yes, there is a MATIC staking calculator accessible on the Polygon wallet.
Staking pools allow multiple people to combine their tokens to earn rewards that the pool then distributes proportionally.
