How To Stake Polygon And Earn Rewards?

Polygon (MATIC) is a blockchain, particularly layer 2, built on the Ethereum network. The aim of building Polygon was to improve transactions and tune down the transaction fees on dApps in development. Polygon’s native token is MATIC which is also used for staking. The staking process is non-custodial in Polygon, which means stakeholders have complete control of their private keys.

It can be a great idea to stake polygons to generate passive income. Furthermore, staking is a method that doesn’t require you to sell MATIC in order to profit. All control over your coins rests in your wallet. For staking MATIC, you will have to move your coins to a Polygon compatible staking exchange and lock them up for a certain period of time. Although staking comes with a risk of loss, if done correctly, it can be a fantastic source of passive income. The following discussion will explore the easiest ways to stake MATIC and discuss whether you should do it.

What is Polygon (MATIC) staking?

The process of staking enables stakeholders to generate passive income without moving the digital asset. Prior to getting started with MATIC staking, it is crucial to comprehend how Polygon (MATIC) functions. The Polygon framework can be used to create scaling solutions for Ethereum and Ethereum-compatible blockchain networks. It is designed to maximize a blockchain project’s flexibility and scalability while leveraging the Ethereum blockchain’s structural, interoperability, and security advantages.

Proof of Stake (PoS) is a sidechain that is used by the Polygon Network. Processing transactions and adding new blocks to a blockchain are the responsibilities of a particular kind of cryptocurrency consensus mechanism called PoS. In a PoS model, validators stake money as MATIC to help secure the network and receive rewards in exchange for their locked money. The staked MATIC serves as collateral that could be forfeited if a validator acts dishonestly or carelessly.

The validator is in charge of periodically producing and propagating new blocks, as well as making sure that newly created blocks are propagated validly across the network. In other words, the MATIC staked by validators and their contribution to the network’s health and longevity is crucial.

How can you earn MATIC by staking?

Staking MATIC has a range of potential returns. The amount of MATIC that is validated and the rewards that the network is offering at the time determine the staking rewards that are given. The protocol rewards will be higher when there are fewer MATIC stakes, which will encourage more MATIC to go online. On the other hand, if more MATIC is bet, the reward will be scaled back. In December 2022, APR of 5.3% is obtained by staking approximately 33% of the current MATIC supply.

MATIC Staking Risks

MATIC staking entails a high degree of risk. You must fully comprehend, take into account, and accept the risks associated with staking before making your decision.

The potential loss of your staked MATIC is a serious risk associated with slashing. A protocol-level punishment for validator or network failure is called slashing. In other words, the network will destroy some of a validator’s coins if they violate the rules.

Another major risk is that until the lockup period is over, you won’t be able to sell your MATIC to lock in profits or stop further losses. Investors can take part in liquid staking, a type of staking that lets you earn rewards without giving up access to your money.

Is Staking MATIC Worth it?

Staking, though not without risk, can be a great way to generate passive income from idle MATIC while also promoting network security. If you choose to participate in staking, embrace the risk. After all, money and risks go hand in hand. There are multiple exchanges and wallets that help stakeholders earn over 6% APR on MATIC through regular staking, liquid staking or yield vaults.