This is article 3/11 in part II of our series How To Build Wealth and Grow Crypto Assets and Income by Staking.
Key Takeaways
- Decide that staking is a method that works for you to accumulate assets.
- Research to find projects that have long-term growth potential and solid fundamentals.
- Buy tokens to stake. We run validators for MATIC, ATOM, and KAVA.
- Decide whether custodial or noncustodial staking works best for you.
- Stake, claim your rewards regularly, and then restake your rewards to compound your stacks.
Staking offers an excellent opportunity to earn portfolio income. If this is new to you, don’t worry. We will provide direction, focusing on ATOM, KAVA, and MATIC staking for potentially building long-term wealth.
We want to help you achieve the self-reliance and autonomy you value.
What is staking?
Staking is the process of locking up a certain amount of cryptocurrency to support the operations of a blockchain network. You delegate your tokens to a validator that secures the network and validates transactions. Additional tokens are paid out as “staking rewards.”
Why stake ATOM, KAVA and MATIC?
ATOM, KAVA, and MATIC are three promising projects with excellent fundamentals and potential for growth.
ATOM: Cosmos (ATOM) is a decentralized network of independent, scalable, and interoperable blockchains. Cosmos aims to solve the issue of blockchain interoperability, enabling seamless communication between separate blockchains through the Inter-Blockchain Communication (IBC) protocol.
The Cosmos ecosystem consists of various blockchain projects called “zones,” which operate independently and can connect to other zones using a central “hub.” By staking ATOM, you help secure the Cosmos Hub, participate in the ecosystem’s governance, and earn income through rewards.
KAVA: Kava is a DeFi platform built in the Cosmos ecosystem, offering financial services such as borrowing, lending, and liquid staking. It features a multi-chain architecture, which enables users to interact with multiple blockchains from a single platform.
KAVA is the native token used for governance and to pay transaction fees. Staking KAVA tokens pays rewards and allows you to participate in the platform’s future.
MATIC: Polygon (MATIC) is a Layer 2 scaling solution for the Ethereum network, addressing issues like slow transaction speeds and high fees. Polygon can process 65,000 transactions per second for just pennies.
Polygon is a sidechain and uses a Proof of Stake (PoS) consensus mechanism to improve Ethereum’s scalability. Staking MATIC helps secure the network, so you earn rewards. Stakers contribute to the future of both Polygon and Ethereum’s development.
Staking allows you to leverage the potential growth of ATOM, KAVA, and MATIC. It also allows you to enjoy the benefits of portfolio income, compounding wealth, and hopefully financial independence.
How to Start Staking
Please check out our MATIC, ATOM, and KAVA staking tutorials to watch the videos or read detailed instructions.
In a nutshell, to begin staking follow these simple steps:
1. Acquire the tokens: Purchase ATOM, KAVA, or MATIC tokens from a reputable cryptocurrency exchange. To buy from fiat currency you may need to use a centralized exchange, like Coinbase or Kraken.
Centralized exchanges, like Binance, Coinbase, and Kraken offer custodial staking services. If you are disorganized and lose things easily, then custodial staking on an exchange might be best.
However, we discourage people from staking with centralized exchanges and encourage people to self-custody their assets.
Read our article: Why You Should Not Stake ATOM With Coinbase for the details.
2. Choose a wallet: Cryptocurrencies live on the blockchain, but the private keys that allow you to move them around live in wallets, more appropriately called, keychains.
Withdrawing your tokens from an exchange and taking custody of your assets has risks too.
Our article: How To Self-Custody Your Crypto is a must-read.
Most wallets support staking. Ledger and Trezor are popular hardware wallets. Browser extensions and app wallets, like Metamask and Keplr, are decent options too, especially when Ledger is connected to either of them to hold your private keys offline.
3. Delegate and stake your tokens: Follow the specific instructions for ATOM, KAVA, and MATIC to delegate and stake your tokens. Once staked, your tokens begin earning rewards and accrue until you claim them.
Conclusion
By staking ATOM, KAVA, and MATIC tokens, you can generate income and take more control of your future. Staking is a strategy that may ultimately enable you to achieve freedom and flexibility in life.
Reinvesting your staking rewards creates a powerful compounding effect. This strategy not only diversifies your income streams, but also minimizes your reliance on traditional income sources.
To learn more, check out the next article The Compounding Power of Staking Rewards.
Frequently Asked Questions
Staking supports networks by helping validators to produce blocks and verify transactions. Stakers are called delegators on most networks and they are paid more crypto tokens for staking.
Risky is a relative term. As a strategy to generate yield on your crypto, staking is a conservative strategy. The main risks in crypto staking include:
- Lock-up periods that might mean you will not have immediate access to your assets if you need to sell or trade them.
- Slashing risk means that if you are staking with a validator that gets slashed, you lose some of your staked tokens too.
- Dishonest validators who steal your rewards.
- Smart contract exploitation that results in stolen funds.
Noncustodial staking is preferred and done either directly within your wallet, like Ledger or Keplr. Or, by connecting your wallet to a staking dashboard, like Polygon.
Custodial staking is done at centralized exchanges, but the SEC is cracking down on centralized exchanges that offer staking. Check out our article: The Best and Worst Places to Stake ATOM Tokens.
Some blockchains, like Polkadot require a minimum of 250 DOT tokens to begin staking. Fortunately, you can start staking with only a single MATIC, ATOM, or KAVA token.
That’s an impossible question to answer, because “best” is a relative term. Younger networks generally have a higher staking yield to incentivize participation, often 20%-60%. Mature networks, like Ethereum have a much lower staking yield around 4%-5%.
The key is to invest in projects with long-term growth potential. Then, stake your tokens for as long as you are able. Claim your rewards and restake them often to compound your holdings.
The more you stake, the more tokens you will likely earn. The longer you stake, the more tokens you will likely earn. The more often you claim your rewards and restake them, the faster you will compound your stack.
The number of tokens you earn while staking depends on validator performance, validator commission, network activity, the percentage of outstanding supply that is staked, and the inflation rate.
The fiat value of your tokens can fluctuate wildly. Crypto is the most volatile asset class.
Nothing we say is financial advice or a recommendation to buy or sell anything. Cryptocurrency is a highly speculative asset class. Staking crypto tokens carries additional risks, including but not limited to smart-contract exploitation, poor validator performance or slashing, token price volatility, loss or theft, lockup periods, and illiquidity. Past performance is not indicative of future results. Never invest more than you can afford to lose. Additionally, the information contained in our articles, social media posts, emails, and on our website is not intended as, and shall not be understood or construed as financial advice. We are not attorneys, accountants, or financial advisors, nor are we holding ourselves out to be. The information contained in our articles, social media posts, emails, and on our website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided in our articles, social media posts, emails, and the resources on our website are accurate and provide valuable information. Regardless of anything to the contrary, nothing available in our articles, social media posts, website, or emails should be understood as a recommendation to buy or sell anything and make any investment or financial decisions without consulting with a financial professional to address your particular situation. Blocks United expressly recommends that you seek advice from a professional. Neither Blocks United nor any of its employees or owners shall be held liable or responsible for any errors or omissions in our articles, in our social media posts, in our emails, or on our website, or for any damage or financial losses you may suffer. The decisions you make belong to you and you only, so always Do Your Own Research.
