Staking involves holding funds in a cryptocurrency wallet to support the security and operations of a blockchain network. Simply put, staking is the act of locking cryptocurrencies to receive rewards. If you are new to staking, please read the introduction to staking.
Staking can be a compounding machine if you manage it correctly and take a more active approach when handling investment. This article will outline an advanced staking strategy to maximize your staking rewards and achieve the highest APY possible.
Key pillars of the strategy
The strategy revolves around the following steps:
- Compound your stake by re-investing staking rewards daily
- Review collators performance through stakeglmr.com
- Revoke delegation once a week to re-allocate your stake to the highest APY collator
Implementing the strategy
The Moonbeam staking application has the following constraints:
- Revoking a delegation takes 7 days
- When delegating your stake, it takes 2 rounds (12 hours) for rewards
- You effectively forgo two rounds of rewards so that you can have the option of delegating to a new collator every week
- Once you have revoked a delegation, you cannot delegate any more stake to that collator until it is unstaked (7 days later)
- You still earn staking rewards once you have revoked your delegation (so you keep earning GLMR for the next 7 days)
- You need to manually execute after 7 days
Step 1: Choose a collator
Navigate to stakeglmr.com and follow the steps outlined in this article which explains how to choose a collator. Make sure the collator has the lowest total backing along with the highest blocks per round over the past week.
Step 2: Split stake in half
Assuming you have a stake of 1000 GLMR, split the stake in half and delegate it to the top two collators according to the method explained in how to choose a collator. The reason for this is twofold:
- Once a delegation is revoked, you cannot delegate to that collator until it is unstaked
- That means that for you to compound your stake, you are going to still need another active stake so that you can delegate staking rewards
Stake1: You delegate the stake and then immediately revoke it. After 7 days, you will have the ability to delegate it to a new collator offering the highest APY. This stake then becomes the one that you compound for the next 7 days (day 7 – 14) by reinvesting the staking rewards daily.
Stake 2: You delegate the stake and then compound it daily until day 7. Then you revoke the delegation (at day 7) and wait until you receive the stake after day 14. At this point, you start the process again.
Step 3: Review market conditions
This strategy allows you to rebalance your portfolio on a weekly basis. If you feel that the market is getting overheated you have the option to sell some of your GLMR on the open market. This solves a common illiquidity problem when staking your crypto.
Step 4: Always make sure your collator is in the active set
Only collators that are part of the active pool in a collator set will be receiving staking rewards. Whales can sometimes move their delegated stake which can result in a sudden drop/rise in the APY being produced while also knocking you out of the top 300 delegators which means you will no longer receive staking rewards.
Step 5: Repeat this process every week
This strategy needs to be actively applied to your delegated stake and should not take longer than 30 minutes per week. It will compound your staking rewards significantly as you patiently stack your GLMR.
Staking doesn't have to be a strenuous and tiresome process. When you have a simple and effective strategy, you will reap the rewards of your diligence.
If you haven't done so already, check out our staking + analytics dashboard at stakeglmr.com