Lido Staked Matic

Lido Staked Matic, also known as stMATIC, is a liquid staking solution for MATIC tokens on the Polygon network. The history of stMATIC is closely tied to the development of Lido Finance, a decentralized liquid staking service that was founded in December 2020 by Vasilii Shapovalov, Konstantin Lomashuk, and a team of experienced developers.

Lido Finance initially focused on Ethereum staking and introduced the financial derivative stETH, which made staked funds liquid. This innovation marked the beginning of the liquid staking industry. The first version of the protocol allowed users to stake funds in the deposit contract, but it did not support withdrawals. The second version, released after the Merge update, introduced support for withdrawals and made Lido a complete alternative to staking platforms of all kinds.

Lido later expanded its services to the Polygon network, creating Lido on Polygon. This service allows users to stake their MATIC tokens in a decentralized and secure manner, earning stMATIC tokens that can be used within the wider DeFi ecosystem on both Ethereum and Polygon networks. stMATIC tokens are ERC20 tokens that represent the user's share of the total supply of MATIC tokens within the Lido-on-Polygon system. The value of stMATIC changes over time as rewards are accrued and claimed.

Today, stMATIC is supported by various DeFi applications across Ethereum and Polygon networks, including Balancer, Curve, Beefy, Dystopia, Kyber, and Quickswap. Users can stake their MATIC tokens through the Lido interface and bridge them to the Polygon network using the Polygon PoS bridge or Stakeall Finance.

Lido Staked Matic (stMATIC) is a liquid staking token that allows users to stake their MATIC tokens without needing to lock them up or maintain the required infrastructure. Here's how it works:

1. Unlocking Tokens: Users unlock their MATIC tokens by approving the stMATIC contract to spend the amount to be staked from their balance. This is done by clicking the "unlock" button and confirming the transaction.
2. Staking: After unlocking, users click the "Stake now" button and confirm the transaction. The Lido on Polygon protocol receives the submitted MATIC tokens and calculates the current ratio between MATIC and stMATIC tokens. The corresponding amount of stMATIC is then sent to the user.

• Non-Rebasable Token: The balance of stMATIC tokens in the user's wallet remains the same, but the value of the token increases over time as staking rewards are accumulated.
• Redeemable: stMATIC tokens can be redeemed for MATIC plus accrued staking rewards after an unbonding period of approximately 9 days.

• Accumulation: Rewards are accumulated daily and redistributed among node operators (5%), Lido DAO (2.5%), and the Treasury (2.5%).
• Unstaking: To unstake, users submit their stMATIC tokens and receive a non-fungible token (NFT) as a voucher for MATIC token claim after the unbonding period.
• Claiming: After the unbonding period, users can submit their NFT to Lido on Polygon, which gets burned, and they receive their MATIC tokens back.

• DeFi Applications: stMATIC can be used within various DeFi applications on both Ethereum and Polygon networks, such as lending, market making, and liquidity provision.
• Exchanges: stMATIC can be exchanged for MATIC through exchanges that offer liquidity, such as Quickswap's stMATIC-MATIC pool.

• Liquid Staking: Users can stake their MATIC without locking them up, allowing for continued participation in DeFi activities.
• Daily Rewards: Users receive daily staking rewards.
• Full Transferability: Users maintain full control and transferability of their stMATIC tokens.

Overall, Lido Staked Matic (stMATIC) provides a convenient and liquid way to stake MATIC tokens, earning rewards while maintaining flexibility within the DeFi ecosystem.

Lido Staked Matic (stMATIC) offers several strengths:

1. Liquid Staking: stMATIC allows users to stake their MATIC without needing to lock assets or maintain the required infrastructure, making it a liquid staking solution. This enables users to continue participating in DeFi activities related to lending and market making.

2. Flexibility: stMATIC can be used freely across DeFi ecosystems on both Ethereum and Polygon, providing a wide range of use cases. It can be bridged to the Polygon network and is supported by various DeFi applications.

3. Auto-Compounding: stMATIC auto-compounds, meaning users do not need to manually claim and restake their rewards, making it a convenient option for staking MATIC.

4. Daily Rewards: stMATIC offers daily staking rewards, providing users with a regular income stream.

5. High Correlation to Market: stMATIC is highly correlated to the overall market, making it a good option for users who want to track market trends.

6. No Lock-up or Minimum Deposit: There are no lock-up or minimum deposit requirements when staking through Lido, making it accessible to users with varying amounts of MATIC.

7. Redeemable for MATIC: stMATIC is redeemable for MATIC plus accrued staking rewards following an unbonding period, ensuring users can recover their original assets.

These strengths make stMATIC an attractive option for users looking to stake MATIC and participate in DeFi activities.

Lido Staked Matic (stMATIC) carries several risks, including:

1. Smart Contract Risk: stMATIC is an ERC20 token that relies on smart contracts, which are vulnerable to bugs, security issues, and potential exploitation by attackers, leading to loss of funds.

2. Counterparty Risk: When staking through Lido, users entrust their funds to a third-party staking provider, which can be susceptible to hacks, insolvency, or malicious actions, resulting in loss of funds.

3. Slashing Risk: Staking on Ethereum involves the possibility of being "slashed" if validators act maliciously or do not follow network rules, leading to a loss of staked funds.

4. Liquidity Risk: While stMATIC is a liquid token, there is no guarantee that it will always be liquid or tradable. Decreased liquidity can make it difficult to trade stMATIC tokens.

5. Depeg Risk: stMATIC's price can deviate significantly from the price of MATIC due to market volatility, liquidity issues, and market demand fluctuations, leading to potential losses for stMATIC holders.

6. Yield Risk: The yield on stMATIC is subject to changes in the Senior/Junior ratio and the total value locked (TVL) in the pools, which can negatively impact the APY.

7. Sustainability Risk: The sustainability of the offered APY cannot be guaranteed in the long term, as it is influenced by Lido and Idle incentives, which may change over time.

8. Junior Tranche Risk: By entering the Junior tranche, investors bear the losses first to protect Senior tranches, which can have a minimal but still present impact.

9. Liquidity Risk on staking MATIC: Liquid staking on Beefy plus Balancer LPing requires locking up MATIC tokens for 30 days, making them unavailable during that period, which can be a significant risk.

These risks should be carefully considered before staking MATIC on Lido or using stMATIC in various DeFi applications.

• Vasilii Shapovalov: Co-founder of Lido, instrumental in creating the liquid staking solution for Ethereum and Polygon.
• Konstantin Lomashuk: Co-founder of Lido, part of the team that developed the protocol and its derivatives like stETH and stMATIC.
• Stani Kulechov: Investor in Lido, also the CEO of Aave, supporting the growth of the liquid staking ecosystem.
• Kain Warwick: Investor in Lido, founder of Synthetix, contributing to the development of decentralized finance (DeFi) applications.
• Rune Christensen: Investor in Lido, creator of MakerDAO, promoting decentralized governance and staking solutions.
• Shard Labs: Partner in bringing Lido to Polygon, enhancing the staking experience and DeFi use cases for MATIC tokens.