This article aims to define liquid staking, and evaluate the different liquidity staking options (Lido, ClayStack, Stader etc..) according to three different metric measurements. Bonus: How do people use these “liquid” derivatives? Do you see any trends?
What is a Liquid Staking?
In liquid staking, tokens are delegated to a service that stakes on your behalf without you losing access to them. When you stake funds with liquid staking, you can access them even while they are staked. While the funds remain in escrow, they’re not “locked” and inaccessible, like they would be if they were staked on PoS.
It is necessary to lock up coins for a specified period of time when you stake them. Coins cannot be sold or transferred during this period. You won’t be able to react quickly if the market crashes during your lock period. Basically, liquid staking allows you to add money and remove it whenever you want (usually at a lower interest rate).
This dashboard provides an overview of how Liquid Polygon Staking will take place on different platforms.
How Do You Liquid Stake?
Here in this we can find different Liquid Staking Platforms – Which are Lido, ClayStake and Stader
1. Lido(What is Lido and what problems does Lido solve?)
Lido, the largest liquid staking protocol, launched support for MATIC in conjunction with Shard Labs in March 2022. It is not necessary to maintain infrastructure or make minimum deposits. The number one staking protocol on Ethereum is Lido. Ethereum’s transition to proof of stake (PoS) began on December 1st, 2020, with the launch of the Beacon Chain. As a result, holders of Ethereum tokens were able to earn rewards by staking their tokens to protect the Ethereum network. However, staking is not something a typical ETH cryptocurreny holder can do because it requires extensive technical knowledge to make it work. Here are some issues associated with staking ETH tokens.
1.Technical expertise: It is important for a person to have the ability to install and update software all the time so as to stay current with the latest release of the stake module. The failure to run the software due to power outages or other issues results in a loss of rewards and in the worst case, staked Ethereum.
2.No unstaking:Due to the fact that Ethereum 2.0 has not yet been launched and no deadline has been set, once ETH tokens have been staked they cannot be withdrawn until Ethereum 2.0 is launched.Because there is no deadline for Ethereum 2.0 network launch, no one knows when they will be able to withdraw their funds. Probably by the end of 2023, maybe even earlier. All depends on how quickly Ethereum core developers complete the transition from Proof of Work to Proof of Stake.
3.ETH Token requirements:In order to serve as a validator and stake tokens, one must have ETH tokens worth 32 ETH.At today’s ETH price it is more than 100,000 USD investment one must make to start earning staking rewards .Lido tackles all these problems head on and solves them elegantly. With LIDO, anyone can stake ETH tokens even if they only have a fraction of them. Lido’s liquid staking solution for Ethereum is backed by the biggest providers.
How Lido Works?
In essence, Lido is an Ethereum smart contract that allows ETH holders with less than 32 ETH to pool their funds and earn rewards. Pooled funds are distributed among selected operators of Ethereum validators that are required for staking operations. Lido also solves the liquidity problem of ETH stakers by issuing a special ERC20 token, stETH, at a 1:1 ratio when users deposit their ETH for staking. StETH tokens can be traded, transferred, and used in major Defi protocols, just like ETH. If a user wishes to unstake their ETH, they can sell stETH on Curve for ETH and use it however pleases them.
When staking with Lido on Polygon, users receive stMATIC tokens as soon as they submit MATIC. Lido will calculate the current stMATIC/MATIC ratio and send the correct amount to the user. MATIC tokens are then delegated across Polygon validators that are part of Lido on Polygon. The Withdrawal can be happened with a waiting period is around 3-4 days.
Claystack, a decentralized platform which operates one of the oldest validators for the Polygon network, went live on the mainnet in March 2022.ClayStack is a next-gen crypto staking platform allowing its users to stake their tokens and participate in the DeFi ecosystem at the same time. ClayStack allows you to liquidate staked assets across multiple chains using a decentralized liquid staking platform. As part of the DeFi ecosystem, you can stake your assets and use the derivatives issued as part of your staking. Through ClayStack, staking your MATIC will get you rewards in csMATIC. The Withdrawal can be happened with several days or instant (given sufficient liquidity) with a 0.5% fee.
Staking with ClayStack has several benefits. Among them are:
- Security: Smart contracts audits by the leading blockchain security firm @chain_security( ChainSecurity provides security audits and develops tools to protect web3 projects).
- Transparency: All the actions of the protocol can be easily tracked on-chain.
In what ways does ClayStack work?
A liquid-staking protocol like ClayStack (such as csMATIC) issues tokens with value that accrue over time. These tokens can be used for staking rewards, DeFi participation, and network security. CSTokens are liquid-staked tokens that allow you to unlock the liquidity of your staked capital. These tokens give you the following benefits:
- Easy staking
- A sustainable reward system based on PoS.
- Access to instant liquidity.
- You will be able to participate in DeFi and compound your yield.
Stader Labs offers liquid staking of MATIC on both Ethereum and Polygon mainnets. It is a secure & smart staking across: HEDERA, POLYGON, BNB, NEAR, FANTOM. The Stader platform provides an easy-to-use staking management system for digital currencies. In addition to building protocols and products that enhance security and decentralization, liquidity, and governance of major DPoS blockchain networks, Stader is the distribution layer of staking. In essence, MATICX represents the share of your MATIC pool that you deposited with Stader. MATICX is newly minted once you stake MATIC on a Stader smart contract, based on the market exchange rate. The Withdrawal can be happened with a waiting period is around 3-4 days.
For this dashboard, we consider Lido, ClayStack, and Stader platforms to calculate Liquid Staking on Polygon. These platforms show us,
- MATIC staked across all three providers (Lido, ClayStack, and Stader)
- Next, we can see the growth of liquid MATIC Staking across these platforms
- We can then examine how wallets are interfacing with these staking services
- A comparison between staked and unstaked amounts in Lido
- Staked Amount vs Unstaked Amount for ClayStack Staking
- A comparison of Stader Staking Activity – Staked vs Unstaked
- In what ways do liquid staking tokens get used by users?
Insights And Visualization
From the below graph, we can see the net MATIC staked across all providers (Lido, ClayStack and Stader) on a monthly basis since March 2022. It is clear from this chart that most of the staked volume by these providers lies between 0M and 1M. Maximum Stake Volume of 31.9M was observed in September 2022 and minimum Stake Volume of 5.03M was observed in March 2022 . Total Stake Volume increased from March 2022 to August 2022 . Total Stake Volume in September 2022 is higher than normal
Below is a graph showing the growth of liquid MATIC staking since March 2022. As far as Matic staking is concerned, all three stake providers are correlated with each other. In the week of September 11-17,2022, a maximum MATIC stake was made by Stader protocol. In the week of September 11-17,2022, a maximum MATIC stake was noticed which we can see is made by Stader protocol. According to Stader protocol, 39.22 million MATIC stakes were staked during September 11-17, 2022. All staking providers (Lido, ClayStack and Stader) showed an increasing trend in liquid Matic staking from March 2022 to September 2022.
From the below graph we can see the active wallets which are interacting with the staking services since March 2022. It is 1.96 where the average wallets are lowest (Stader Liquid Staking) and 10.27 where the average wallets are highest (Lido Liquid Staking). In the beginning, ClayStack observed maximum wallets, but later we noticed a decline in active wallets. There is a decrease in average wallets in W13, 2022 and a rise in average wallets in W11, 2022. In the picture below, we can see that the wallets that interact with the Stader Protocol are almost stable.
We can see from the graph below how the staked and unstaked amounts of staking activity are developing with Lido Protocol. This graph shows a decreasing trend in staking. The total number of Staked Tokens between March, 2022 and Sept, 2022 was 71.16M. A maximum of 10.54M Staked Tokens were observed in July 17-23, 2022. We see a decrease in total stacked tokens between March 2022 and September 2022. The total number of stacked tokens in W29, 2022 is higher than usual. The total number of un staked tokens between W9, 2022 and W38, 2022 was -24.95M. The maximum number of unstaked tokens was observed from July 24-30, 2022. There has been an increase in unstaking over the past few weeks, which may be due to crypto market volatility.
We can see from the graph below how the staked and unstaked amounts of staking activity are developing with ClayStack Protocol. Compared to the initial weeks, this graph shows a decreasing trend in stake. In recent weeks, we have noticed that this protocol is being staked heavily. There were 2.28M Staked Tokens between March, 2022 and Sept, 2022. A maximum number of stacked tokens of 547.29K was observed in April 17-23, 2022. The total number of staked tokens decreased between March 2022 and August 2022. In September 2022, we can see a sudden increase in staking by this protocol. A total of -608.5K tokens remained unstaked between March, 2022 to Sept 2022. The maximum number of unstaked tokens was recorded between July 31 and August 6, 2022. By looking at this ClayStack protocol, we can see a decreasing trend in unstaking activity.
According to Stader protocol, we didn’t see much staked and unstaked amount at first. A sudden peak in stakes was seen by this Stader protocol between September 11-17 2022. A high rewards alert for MaticX on @QidaoProtocol ft. @Manhattan_fi and @ArrakisFinance could explain this spike in stakes with Stader protocol. From the tweet below, it is clear that this is the case
⚠️ HIGH REWARDS ALERT ⚠️— Stader Polygon | MaticX – Liquid Staking (@stader_polygon) September 12, 2022
Grab a ~67% APR with MaticX on @QidaoProtocol ft. @Manhattan_fi and @ArrakisFinance
Unveiling a step-by-step guide to help you benefit from this strategy right now
A thread 🧵👇
The below graph shows what are users doing with their liquid staking tokens. On ClayStack, users are performing more ‘transfer tokens’ with their staked tokens. However, on Lido and Stader, the users are more likely to perform ‘DEX Swaps’, followed by ‘Transfer Tokens’ with their staked tokens.
- Based on the above analysis, the maximum stake volume of 31.9M was observed in September 2022 and the minimum stake volume of 5.03M was observed in March 2022. Between March 2022 and August 2022, the total stake volume increased. September 2022 has a higher total stake volume than usual.
- We noticed a maximum MATIC stake during the week of September 11-17,2022, which was made by the Stader protocol. The Stader protocol indicates that 39.22 million MATIC stakes were staked during September 11-17, 2022. Lido, ClayStack, and Stader all showed an increasing trend in liquid Matic staking from March to September 2022.
- Based on the number of active wallets which are interfacing with these staking services, ClayStack observed a maximum at the beginning, but a decline later. We can see that the wallets that interact with the Stader Protocol are almost stable.
- Between March 2022 and September 2022, Lido stacked 71.16M tokens. We saw a decrease in total stacked tokens between March 2022 and September 2022 by Lido. Additionally, there has been an increase in unstaking by Lido over the past few weeks, which may be related to the volatility in the crypto market.
- Compared to the initial weeks, with ClayStack shows a decreasing trend in stake amount. Over the past few weeks, we have noticed that this protocol has been heavily staked.
- At first, we did not see much staked or unstaked amount according to Stader protocol. This Stader protocol experienced a sudden spike in stakes between September 11-17 2022. This spike in stakes with Stader protocol could be explained by a high rewards (67%) alert for MaticX on @QidaoProtocol in collaboration with @Manhattan_fi and @ArrakisFinance.
- According to the above analysis, what do users do with their liquid staking tokens, It has been observed that ClayStack users are performing more token transfers with their staked tokens. As compared to Lido and Stader, users on these platforms are more likely to perform DEX swaps and transfer tokens with their staked tokens.
with addys as ( SELECT lower('0x9ee91f9f426fa633d227f7a9b000e28b9dfd8599') as contract_address, 'Lido Liquid Staking' as provider UNION SELECT lower('0x38b7bf4eecf3eb530b1529c9401fc37d2a71a912') as contract_address, 'ClayStack Liquid Staking' as provider UNION SELECT lower('0xf03a7eb46d01d9ecaa104558c732cf82f6b6b645') as contract_address, 'Stader Liquid Staking' as provider ), stake_evnts as ( SELECT tx_hash, block_timestamp, date_trunc(day, block_timestamp) as date, raw_amount / 1e18 as tokens, provider, ORIGIN_FROM_ADDRESS as wallet, case when from_address = '0x0000000000000000000000000000000000000000' then 'Stake' when to_address = '0x0000000000000000000000000000000000000000' then 'Unstake' end as action, case when from_address = '0x0000000000000000000000000000000000000000' then raw_amount / 1e18 end as staked_tokens, case when to_address = '0x0000000000000000000000000000000000000000' then -1 * (raw_amount / 1e18) end as unstaked_tokens FROM ethereum.core.ez_token_transfers INNER JOIN addys USING (contract_address) WHERE ( from_address = '0x0000000000000000000000000000000000000000' or to_address = '0x0000000000000000000000000000000000000000') ), results as ( SELECT date, provider, count(distinct wallet) as wallets, count(distinct tx_hash) as events, sum(NVL(staked_tokens, 0)) as staked_token_vol, sum(NVL(unstaked_tokens, 0)) as unstaked_token_vol, staked_token_vol + unstaked_token_vol as net_stake_vol, avg(NVL(staked_tokens, 0)) as avg_staked_amount FROM stake_evnts GROUP BY date, provider ) SELECT * FROM results