Add Lido's staked MATIC (stMATIC) as collateral to borrow MIM

💡Idea Discussions
1

Rationale

A proposal to list Lido’s stMATIC on Abracadabra (Polygon) as collateral.

Relevant Links

Summary

Lido allows users to earn staking rewards on their MATIC without locking MATIC or maintaining staking infrastructure. This is done through the stMATIC token. stMATIC tokens represent a tokenized staking deposit and can be held, traded, or sold.

Motivation

Abracadabra is a fast-growing multichain protocol that would make a strong partner with the launch of stMATIC. There is also a strong interest in using stMATIC to earn additional yield without taking a lot of risk.

The addition of stMATIC on to Abracadabra can work to attract a larger audience to both Abracadabra and Lido. More MATIC staked with Lido would subsequently benefit the decentralization and security of the Polygon network, to the benefit of the community as a whole. stMATIC would likely bring new borrow demand to Abracadabra as market participants look to borrow against their staked MATIC.

Context and Background

The Lido Protocol was announced in November 2020. The testnet was released in late November on Ethereum.

Lido today has 3 products (ETH, stSOL, stLUNA) managed by 4 teams in separate organizations. Across these products is a multi billion dollar TVL and has pushed Lido to 6 on DeFi Llama rankings. stMATIC is the 4th product launch in collaboration with Shard Labs.

Shard Labs is a global remote R&D blockchain company with rapid growth results from motivated, determined, and hard-working experts from all around the world. Specialized in full-cycle services that cover every aspect of blockchain technology.

Proposed Risk Parameters

We propose similar risk parameters as the yvcrvstETH collateral on Ethereum

  • LTV: 75%
  • Liquidation fee 12.5%
  • Borrow fee .5%
  • Interest .5%

Liquidity and Risk Considerations

  • stMATIC inherits all of MATIC’s market risk, so they should be considered together for the purpose of evaluating market risk
  • stMATIC value is defined and backed by the value of Matic.
  • stMATIC liquidity is ensured by Lido’s strategy incentivizing a consistent stMATIC peg
2 Likes
2

We already support vycrvsteth on ETH main so I don’t see why this cannot be adopted.

@squirrel can give us some indication on what he belies would be appropriate borrow and interest rates.