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Lido on Polygon – Largest liquid staking protocol

Shard Labs Nov 29

Lido, the largest liquid staking protocol on Ethereum, Terra and Solana, is expanding to Polygon!

Shard Labs is bringing Lido to Polygon to enable users to stake MATIC token in a decentralized and secure way and use them on the secondary market — all of it with a simple click of a button on the UI. This integration will boost the entire ecosystem.

Overview

Lido on Polygon is a DAO governed liquid staking protocol for the Polygon PoS chain. It allows users to stake their MATIC tokens on the Ethereum mainnet and immediately get the representation of their share in the form of stMATIC token without maintaining staking infrastructure. Users will get staking rewards and still control and utilize their stMATIC tokens in secondary markets on Ethereum mainnet and Polygon.

MATIC tokens will be delegated across validators that are registered and accepted by the DAO inside Lido on Polygon protocol.

Node operators don’t have direct access to the delegated assets. They are just providing infrastructure and getting rewards in return. Assets are controlled by Lido on Polygon core smart contracts exclusively.

The goal is to help with Polygon decentralization and integrate stMATIC with the variety of protocols and DeFi applications on Ethereum mainnet and Polygon PoS chain.

In short, Lido on Polygon is enabling users to:

  • Stake their MATIC tokens in a decentralized and secure way
  • Use their stMATIC on the secondary market
  • Do all of the above simply and easily with a click of a button on the UI

Additional value Lido on Polygon can bring to the Polygon ecosystem is decentralizing stake distribution, and getting more capital efficiency in the ecosystem — enabling staked MATIC to participate in DeFi on Polygon.

stMATIC token

stMATIC is an ERC20 token that represents the account’s share of the total supply of MATIC tokens inside Lido on Polygon system. It is a non-reusable token, which means that the amount of tokens in the user’s wallet is not going to change. During this time, the value of this token is changing, since the amount of MATIC tokens inside the protocol is not constant.

stMATIC will be supported by a variety of DeFi applications across Ethereum and Polygon networks.

Governance

The Lido Decentralized Autonomous Organization manages Lido on Polygon by deciding on key parameters (e.g., setting fees, managing node operators, upgrades, etc.) through the voting power of governance token holders.

Also, the DAO will accumulate service fees and spend them on insurance, research, development and protocol upgrades.

How does it work?

The end-user process is quite simple. The user will only have to interact with UI web application that will be available on polygon.lido.fi.

The UI will be built in collaboration with Lido team in order to make it as similar as possible to the already familiar https://stake.lido.fi/.

User will be able to submit his MATIC tokens, Lido on Polygon will calculate the current ratio between MATIC and stMATIC and send that amount of stMATIC to the user.

Stake MATIC form preview

MATIC tokens are then delegated across Polygon validators that are part of Lido on Polygon protocol.

Accumulated rewards are distributed once a day between node operators (5%), Lido DAO (5%), and the rest (90%) is redelegated.

Reward distribution

Upon withdrawal, user submits his stMATIC tokens, receives a NFT token as a voucher for MATIC token claim after the unbounding period (approximately 9 days).

Withdrawal form preview

After the unbounding period is finished, the user will see in UI that his withdrawal request is ready to claim. Calling the claim function will result in his NFT getting burned and in return, he is going to receive MATIC tokens.

Lido on Polygon history & timeline

We started prototyping and brainstorming architecture around Lido on Polygon sometime around July 2021. There were multiple iterations of the protocol architecture and a couple of MVPs before we settled on the final design in September.
The development process is now slowly coming to an end, at least the part related to the Lido on Polygon core smart contracts. We are doing final preparations for submitting the codebase to audit.

The expected deployment of fully audited code is in Q1 2022. There will be a testnet RC version deployed on Goerli network.

Our code is fully open-source, and you can check it out here: https://github.com/Shard-Labs/PoLido

How to contribute?

There are multiple ways to be part of this project:

  • Become a Lido on Polygon node operator by running a Polygon validator node
  • stMATIC token integration in your DeFi application
  • Take a look at our Github repository, write requests, investigate the code
  • Spread the word 🙂

This article was originally published by Shard Labs on Medium, where people are continuing the conversation by highlighting and responding to this story.

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