Staked MATIC (stMATIC)
Staked MATIC (stMATIC)
Please review the risk warning at the bottom of this article and please do your own research before using the rhino.fi stMATIC Invest product.
Staked MATIC Overview
The Polygon Network (POS) operates what is known as a proof-of-stake consensus mechanism to secure its Ethereum side-chain. Anyone who has MATIC tokens can stake those tokens to run validators, which in turn process network transactions in return for a share of transaction fees and Polygon Network inflation rewards. MATIC holders can also delegate their MATIC tokens to entities who run validators on their behalf, meaning anyone can participate in securing the Polygon Network and earning a share of rewards, even without significant technical knowledge.
Any MATIC tokens that are staked, either directly with validators or delegated, are subject to a nine-day un-staking delay - meaning that usually you need to wait nine days before you can withdraw your staked MATIC tokens back to your Etheruem wallet. This is where Lido Finance and the stMATIC token solve several problems, as detailed below.
stMATIC is what is known as a liquid staking token. Created by a project called Lido Finance, stMATIC allows anyone to participate in Polygon POS Network staking (therefore earning network fees and inflation rewards) as well as receiving a receipt token (stMATIC) that can be used freely to access DeFi opportunities.
stMATIC can also be traded/sold in order to avoid the nine-day un-staking delay window if you would like to quickly exit your staking position - for example if you would like to swap your MATIC tokens for another token without having to wait nine days.
Staked MATIC (stMATIC) Risk Warning
When you stake your MATIC for stMATIC on rhino.fi you are exposing yourself to certain risks, which include but are not limited to:
Lido Finance smart contract risk.
Polygon Network (POS) technical risk.
Lido DAO security and key management risk for the treasury that controls the MATIC staked in the Polygon network.
Validator slashing risk.
stMATIC de-peg risk. stMATIC may trade lower or higher then un-staked ETH due to demand fluctuation, liquidity issues or technical constraints, exposing you to slippage when entering or exiting an stMATIC position.
More information regarding the risks of stMATIC can be found on the Lido Finance FAQ
Staked MATIC FAQ?
How is interest earned on my stMATIC?
Polygon Network (POS) inflation rewards and transaction fees accrue to your stMATIC tokens. This is reflected by an increase in the value of the stMATIC token over time so that one stMATIC token is worth more than one MATIC token.
You can see the stMATIC/MATIC exchange rate fluctuating over time by checking the stMATIC/MATIC market in the rhino.fi Trade section.
What are the fees for staking my ETH for stMATIC on rhino.fi?
In order to cover the cost of rebalancing and gas fees, rhino.fi charges a 0.2% unstaking fee on the amount of stMATIC that you unstake. Although no-one likes fees, no fees are charged to stake, meaning that you do not pay anything to start participating in the stMATIC opportunity on rhino.fi.
Why does the amount of interest that I have earned sometimes decrease and increase more than I expected?
The accrued interest calculation on the rhino.fi Invest dashboard and Supply/Remove page reports the difference in value between the price of your stMATIC tokens at the current time vs the price at which you supplied your MATIC. If the accrued interest calculation is not reporting what you expected, then the cause is likely due to one of the following reasons:
stMATIC is a rebasing token which changes price once per day at approximately 12pm UTC. You may simply need to wait until after 12 pm UTC to notice a change in the accrued interest calculation.
When you invest in the stMATIC token (either on rhino.fi or directly with Lido Finance), you are exposed to the stMATIC/MATIC price - i.e. the price at which you can sell your stMATIC tokens back into MATIC.
The main stMATIC/MATIC market is a Balancer Finance pool which, at the time of writing, has $13m in liquidity. This large amount of liquidity should be enough to ensure that stMATIC/MATIC trades close to fair value for trade sizes under $1m until the balancer pool and other liquidity sources scale. However, fluctuations in the stMATIC/MATIC price can occur in the short term, which will impact your accrued interest calculation on rhino.fi.
Updated on: 14/07/2022