Unlock Over 5% APY in Liquid Staking Without the High Ethereum Fees

Are you looking to earn low-risk returns with the added benefit of flexible access to your funds? If so, you might find that staking ETH directly on Ethereum can quickly become impractical, especially due to high gas fees which can eat into your profits unless you’re investing large amounts.

For instance, even with an appealing 3.5% APY in liquid staking and relatively modest gas fees (about $5 for both staking and unstaking), you’d need to stake at least $300 for an entire year just to break even on transaction costs alone. Hardly an ideal scenario, right?

So, what’s the savvy investor’s solution for dipping in and out of staking with ease?

Enter the world of Layer 2 solutions. We explored two promising options on the Polygon (MATIC) network, each with unique benefits.

Staking for stMATIC at 4.5% APY

Initially, one might consider using Lido for stMATIC, but since their smart contracts are on Ethereum, you’d face those hefty gas fees. The workaround? Utilize liquid stMATIC pools on Polygon. You can effortlessly swap MATIC for stMATIC using a DEX aggregator like Kyberswap: KyberSwap

Unstaking stMATIC? Instead of bridging to Ethereum and incurring high gas fees again with Lido on Ethereum, simply reverse the process using the liquidity pools on Polygon.

Staking for MATICx at 5.2% APY

Alternatively, consider staking for MATICx where the smart contracts are native to Polygon. Stader Labs offers a straightforward platform to connect your wallet, stake MATIC, and receive MATICx in return, which you can check out here: Stader Labs.

Unstaking is just as easy — revisit Stader to reverse the process.

Skeptical About MATIC’s Long-Term Value?

If you’re cautious about the long terms prospects of Polygon, you might consider hedging your MATIC exposure. How? By shorting an equivalent amount of MATIC which you staked on a derivatives DEX like dYdX: dYdX Trading. This strategy could also yield additional returns from funding rates, right now the annual rate is 5.3%.

Remember, shorting involves liquidation risks. If MATIC’s price were to say double on 1x leverage, you’d need to rebalance your position by unstaking and selling some MATIC to add more collateral to your short. This rebalancing is crucial, and having low network fees is a significant advantage here.

If the price of MATIC falls, however, your short position will naturally offset the losses on your long positions.

Sounds complex? You might want to explore Thane’s ‘Hedged Staking’ strategy, which integrates hedging and automatic rebalancing, simplifying the process for you. Get early access now!

By using these strategies, you can navigate the landscape of crypto investments with more agility and less exposure to high transaction fees.