Sunset stMATIC on Polygon instance
01Summary
Freeze the stMATIC reserve on Aave V3 Polygon to prevent new supply and borrow positions following Lido's decision to sunset stMATIC. Users can still repay, withdraw, and be liquidated. This responds to stMATIC's discontinued yield accrual and low adoption on Aave.
- Type
- parameter change
Key changes
- Freeze stMATIC reserve on Aave V3 Polygon to prevent users from increasing supply or creating new borrow positions(high)
- Maintain functionality for repayments, withdrawals, and liquidations of stMATIC(high)
- Respond to stMATIC yield accrual suspension and Lido's sunset of stMATIC token on Polygon(high)
Notable concerns
- 25.79M stMATIC (valued at $14.29M) currently supplied requires transition to other assets
- Leveraged position utility diminishes with suspended yield accrual
- Current 0% supply rate indicates insufficient borrow demand to generate yield for suppliers
Generated by Kvorum
02Description
Simple Summary
Given Lido’s recent announcement to sunset stMATIC (their Liquid Staking Token implementation on Polygon), we propose freezing the stMATIC reserve on the Aave V3 Polygon market. This freeze would prevent users from increasing supply or creating new borrow positions, while maintaining functionality for repayments, withdrawals, and liquidations.
Motivation
The Lido community, through LDO token holder voting, has decided to discontinue the stMATIC token on Polygon for two main reasons: limited user adoption and insufficient staking fee revenue to offset maintenance costs.
Between January 15-22, 2025, stMATIC withdrawals will be temporarily paused. Effective immediately, stMATIC will cease to accrue any staking yield throughout the sunsetting process. Users can redeem stMATIC for POL/MATIC through the Lido UI until June 16th, 2025. After this date, redemptions will remain possible indefinitely through direct smart contract interaction, as stMATIC will maintain 100% collateralization at all times.
Current presence on Aave
Due to the MATIC-correlated emode, stMATIC’s primary use case on Aave has been for leveraged positions. Following the suspension of yield accrual, this utility diminishes, leaving no advantages to holding stMATIC over POL directly. The current supply of 25.79M stMATIC (valued at $14.29M) represents a significant volume requiring transition. Notably, the current 0% supply rate indicates that borrow demand for stMATIC is insufficient to generate meaningful yield for suppliers.
Specification
Freeze the stMATIC reserve on the Aave V3 Polygon market.
References
- Implementation: AaveV3Polygon
- Tests: AaveV3Polygon
- Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
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04Actions
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