What is MATIC?
MATIC is the native currency for the layer 2 network Polygon. MATIC is used for paying transaction fees and staking to become a validator. MATIC is currently the 19th largest Cryptocurrency by market cap at $4.8 billion.
So what on earth is Polygon?
Polygon is a layer 2 blockchain that was built to run alongside Ethereum to help with the scaling issues Ethereum has. Polygon does this by running on Proof of Stake (POS) which allows them to lower transaction fees by using validators to process transactions rather than miners. Ethereum is the opposite, the network uses miners to process transactions which is called Proof of Work (POW) this is a much costly way to push transactions through.
As Ethereum started gaining more and more traction especially as the NFT boom happened Polygon started to grow. As the traffic on Ethereum got too much for it to handle and gas fees started jumping into the hundreds of dollars per transaction we saw a lot of traffic and protocols start to utilize Polygon. Built to run alongside Ethereum as a layer 2 Polygon was able to handle this extra traffic while maintaining a low transaction cost and a fast transaction speed.
As Ethereum works towards Ethereum 2.0 where they will make the switch from Proof of Work to Proof of Stake this leaves investors wondering if Polygon will have a use case in the future as Ethereum figures out its scalability issues. Ethereum 2.0 has been promised and in the works for years now and they believe it will be launched this year. I would take that information with a grain of salt as it is a very ambitious project that is not guaranteed to work.
As of recently Ethereum 2.0 was pushed out on the test network so they are definitely getting some traction towards the final goal.
Why stake your MATIC
You can stake MATIC for a couple of reasons, becoming a validator or to earn daily rewards.
By staking your MATIC you can earn a % return either daily and compound it or yearly. Staking rewards depend on which DeFi protocol you stake your MATIC with.
As of writing this article the rewards for staking as a validator is 14.3% APR. Polygon has allocated 12% of its 10 billion token supply to reward stakers and validators. These 1.2 billion tokens are being used as a jump start to get the staking system under way. Polygon plans to have the protocol be able to sustain itself in the long run.
What is staking?
Staking is a way to earn rewards with your cryptocurrency. Lots of investors invest purely for the gains they can make when the price of said coin goes up. Staking allows you to earn another avenue of return just by holding your cryptocurrency.
Staking can seem technical and daunting when you first look into it but it is a simple process really. Think of it like an interest bearing savings account at the bank. You stake your Cryptocurrency in a staking pool and you get paid out rewards.
But how are you able to be paid out rewards? When you stake your coins the blockchain actually puts those coins to work. For example with MATIC when you stake your coins they are then used to verify transactions and create new blocks on the blockchains, this is due to Polygon being a Proof of Stake network.
Becoming a validator
As A validator you are helping the Polygon network stay secure while also earning rewards. The amount of rewards you receive are dependent on how much MATIC you have staked and the amount of transactions happening on the network.
Validator nodes on the Polygon blockchain verify transactions and add new blocks to the network. In return validator nodes receive rewards.
Creating a validator node does not require any expensive hardware however operating systems such as Linux servers are preferred rather than Windows as a Linux server boasts much higher security.
What if I don’t want to create a node? Can I still stake?
You may not wish to commit to creating a node yourself but you still want to stake your MATIC, what are your options?
Luckily you can delegate your MATIC to a validator which helps to strengthen that node. Currently there is no minimum amount of MATIC required to do this. Validators (owners of the nodes) can however set their own minimum and it is up. Validators may also charge a commission in exchange for them running a node.
So how do I actually stake my MATIC?
Step 1: Buy your MATIC tokens
If you don’t already have MATIC tokens in your wallet you will need to buy them. MATIC is available to trade and most exchanges including Binance, Coinbase and Kucoin. You can also buy MATIC through decentralized exchanges such as Uniswap.
Step 2: Send your MATIC to wallet
There are a handful of wallets that accept MATIC and will connect to the majority of staking protocols however the most popular is Metamask. You will need to add the Polygon network to Metamask before you send any tokens there.
Step 3: Choose your staking platform
Now it’s time for you to decide where you are going to stake your MATIC. In this article we will be using Polygons official platform to delegate MATIC to someone else’s node. This is the easiest and lowest cost entry into staking with Polygon.
Head over to the official Polygon website. Here is the link to the delegation section.
Step 4: Connect your wallet
Once you are on Polygons delegation platform click the “Connect Wallet” button in the top right.
Step 5: Choose your staking pool
Now you are connected to the staking platform and have your MATIC in your chosen wallet you can choose which validator node you want to delegate your MATIC to.
You can view all the available pools including the commission % and how much MATIC is staked.
Step 6: Delegate
Once you have chosen which node you would like to delegate to, go ahead and click the “Delegate” button and you are away.
Staking MATIC on exchanges
If you are not too worried about becoming a validator or delegating to one you can also simply stake your MATIC on an exchange such as Binance.