The MaticX/MATIC leveraged staking strategy enables users to safely leverage MaticX’s staking rewards & supply APY*. This strategy is powered by CIAN, an automation platform for web3, which primarily focuses on staking derivatives and protection/optimization tooling. STADER and CIAN have recently established a strategic partnership aiming to accelerate the evolvement of the MaticX ecosystem.

What are the benefits of MaticX in DeFi?

MaticX is the Matic’s staking derivative provided by Stader, one of the top liquid staking protocols on Polygon, Hedera, BSC, and more. The relation between MaticX and Matic is analogous to that between stETH and ETH.

On POS networks like Polygon, users can stake native tokens (Matic) to increase the network security in exchange for a staking reward. The rise of liquid staking on Stader now allows users to stake native tokens through them to the network for extra benefits: no constraints in the number of tokens & hardware, most notably, receiving staked assets (MaticX) for increased flexibility and extra yield.

What are the steps involved in leveraged staking?

This strategy supports AAVE V3 as the main lending platform.

When applying CIAN’s leveraged staking strategy, the following steps will be executed simultaneously within one transaction:

For this example, let’s assume that the leverage is 3x, that we have 1000 Matic, and that the exchange rate between MaticX and Matic is of 1.

1. Stake* 1000 Matic in Stader to receive 1000 MaticX & passive staking yield;

2. Deposit MaticX in AAVE V3 lending market;

3. Flashloan 2000 Matic from Balancer (leveraged 3x);

4. Stake* the flashloaned 2000 Matic in Stader to receive MaticX, thus extra staking yield;

5. Deposit the extra 2000 MaticX in AAVE V3 lending market;

6. Using 3000 MaticX as collateral, borrow 2000 Matic to repay the flashloan.

Leveraged staking supports both MaticX & Matic as a principal. If users choose MaticX, the system will automatically skip the first step listed above.

*If the Matic/MaticX swap rate is 0.2% superior than the stake rate, the system will swap instead of staking on Stader.

How to calculate the leveraged staking strategy’s APY?

The positive return rate comes from the supply APY (AAVE) + staking rewards (Stader) + CIAN APY. The negative return rate comes from Matic’s borrow interest on AAVE. Here is the formula:

Assuming that the:

• Principal: Matic
• Exchange rate Matic/MaticX: R
• Leverage: 3x

What are the different costs related to leveraged staking?

1. CIAN will charge no fee during the promotional period (up to 6 months);

2. When executing a leveraged staking strategy, 0% of the total Matic flashloaned will be charged since the system is using Balancer;

3. Normal gas fees incurred by each transaction on AAVE and Stader;

4. Matic borrow interest rate on AAVE;

5. When closing a leveraged staking strategy, users might lose a certain % of their initial position due to exchange fees, and MaticX/Matic exchange rate on DEXes (variable).

It is quite important to understand that, when using such leveraged strategy, it’s highly advised to intend on holding that position for a while. By doing so, users will give enough time for the high APY to cover their entry & exit costs.

How to use leveraged staking on CIAN?

1. Select the Polygon chain. Connect your wallet (e.g. Metamask). Create your CIAN smart-wallet.

2. Go to Settings. Select EIP-2612. Enter a period (days) for which you allow CIAN to automate your tasks. Sign.

3. Click on Automated strategies and select “MaticX/Matic Leveraged Staking”.

4. A) Deposit some Matic (location: “gas contract”) to cover all automation-incurred gas fees (minimum deposit of 5 Matic). We recommend keeping at least 8 Matic in your “Gas Contract” for security purposes.
B) Select the principal: MaticX or Matic. Select the source: MetaMask Wallet or Smart Wallet. Finally, enter the amount.
C) If you want to receive notifications concerning your strategy (e.g. changes in APY, gas fees warning, strategy updates, etc.) you may enter your E-mail address and enable the option. Click on execute.

5. Go to “My Strategies” to check your position status.

6. To permanently close your position, you can, at all times, click on “Withdraw”. Your principal and earned yield would then be redirected to your Smart Wallet. Please be aware that some external costs will apply: flashloan fees, exchange fees, and MaticX/Matic exchange ratio on DEXes (variable).

What risks are related to leveraged staking, and how can they be mitigated?

1. Increase of Matic’s borrowing rate
If the demand for Matic in AAVE increases, the borrowing rate might also increase. Assuming that the borrowing rate was to drastically surpass the supply rate, users may suffer losses over time.

Solution: If users notice that the leveraged staking strategy’s APY is slowly approaching zero, they may choose to close their position. (CIAN’s notification system can help prevent this event)

2. Liquidation
As the price of MaticX on AAVE is determined by the exchange rate on Stader Liquid Staking, liquidation is unlikely to happen. However, if the loan interest increases as time goes by, we could see the LTV rising which may ultimately cause a liquidation.

Solution: CIAN’s automation primitive — Flash Repay (this feature will eventually be implemented).
Assuming that the interest rate was to rapidly rise, thus slowly increasing the LTV close to the liquidation limit, Flash Repay would automatically return the LTV to the preset collateral ratio via a flashloan, thus avoiding liquidation.

About STADER

Stader a non-custodial smart contract-based staking platform that helps you conveniently discover and access staking solutions. They are building key staking middleware infra for multiple PoS networks for retail crypto users, exchanges, and custodians.

Website | Twitter |

About CIAN

CIAN a decentralized automation tooling/utility platform. Through large-scale integration of blockchains/protocols and advanced automation. CIAN is defining a set of automated primitives that turn complex manual execution of typical onchain tasks/strategies into a simple 3-step task definition process for no-code users. CIAN’s objective — 80% reduction in operational complexity, and up to 60% increase in capital efficiency.

Website | Twitter |

Source

REQUEST AN ARTICLE

The post MaticX Leveraged Staking Strategy appeared first on Smart Liquidity Research.

sAVAX is similar to stETH and ETH. Users may stake native tokens (e.g. AVAX, ETH) to secure POS networks (e.g. Avalanche, ETH2.0) and obtain staking incentives from the network. With the rise of decentralized liquid staking protocols, users now have the option to stake tokens through them to the network for additional benefits, including receiving staked assets (such as sAVAX, stETH) for increased flexibility and extra yields and having no restrictions on the number of tokens or hardware.

• Value of sAVAX

sAVAX is transferable and, different than stETH, accrues the staking rewards automatically: claimable AVAX per sAVAX = (total AVAX staked + total staking rewards generated) / total sAVAX minted. Therefore, the amount of AVAX that could be unstaked from each sAVAX keeps growing continuously, regardless of where users’ sAVAX tokens were acquired, via BENQI through staking, via Trader Joe through swapping, or just via another address through simple transfer.

• Flexibility brought by sAVAX

A normal AVAX stakers sacrifice their exit opportunities due to the immobility of staked AVAXs. When staking through BENQI, sAVAX holders regain their exit flexibility through trading sAVAX at his/her own discretion. Right now, protocols like Trader Joe and Platypus provide sAVAX trading pools with decent liquidity.

• Earning extra yield with sAVAX:

sAVAX is being integrated by an expanding number of protocols as collateral & liquidity assets for a rising variety of application situations, which gives sAVAX holders flexible yield potential. Users that invest AVAX via BENQI get 2 forms of reward, adding up to nearly 20% APR:

1. AVAX staking rewards from Avalanche network (~7.2% at time of writing);
2. Earnings from single sAVAX yield strategies (from 2% to 18% depending on the strategy);
3. Earning from sAVAX-StableCoins yield strategies (from 12% to 60% depending on the strategy) *risk of impermanent loss*

sAVAX Yield Strategies: Expectation

The sAVAX ecosystem will likely reproduce and grow, which will result in an increase in sAVAX use cases and sAVAX yield tactics. However, more complexity results from greater variety.

Without significant blockchain coding skills or robust blockchain tools, certain high yield tactics could not be readily available to consumers. CIAN, a decentralized automation tools platform that just joined Avalanche, significantly lessens this issue. A rising number of automation primitives are available on CIAN to lower operational complexity, lower capital risks, and boost capital efficiency for users. For sAVAX, CIAN has partnered with BENQI to develop a set of automated yield techniques that, with the use of decentralized automation primitives from CIAN, significantly minimize users’ work without incurring any extra costs. The article’s conclusion contains further information regarding CIAN.

Mechanism and Use Cases of sAVAX

Decentralized Exchanges

Trader Joe is a prominent DEX on Avalanche. sAVAX’s holders can provide liquidity in the sAVAX-AVAX pool on Trader Joe to earn some swap fees and token rewards. Impermanent loss is ignorable owing to the price synchronization of this particular token pair.

Other sAVAX liquidity pools can be found in Platypus and Pangolin.

Lending

Lending protocols allow users to deposit sAVAX tokens as collateral to borrow other crypto assets. This gives users access to new yield strategies, while conserving their staking rewards. Users can borrow various assets using sAVAX as collateral on BENQI, and then utilize these assets to farm extra yields on other protocols.

Currently, BENQI, Yeti Finance and MoreMoney support sAVAX as collateral. More lending platforms are expected to join the movement in the near future with the expansion of sAVAX ecosystem.

About BENQI

Built on Avalanche’s highly scalable network, BENQI’s vision of bridging decentralized finance (DeFi) and institutional networks starts by launching BENQI on the Avalanche C-Chain. BENQI’s suite of yield-generating DeFi products consists of BENQI Liquidity Markets and BENQI Liquid Staking.

Website | Twitter

About CIAN

CIAN is developing a collection of automated primitives via extensive integration of blockchains/protocols and sophisticated automation that reduce difficult manual executions of common onchain tasks/strategies to a straightforward, three-step job description procedure for no-code users. The goal of CIAN is to reduce operational complexity by 80% while increasing capital efficiency by up to 60%.

Website | Twitter

SOURCE

https://cian-app.medium.com/mechanism-and-use-cases-of-savax-aca8df179b41

The post Mechanism and Use Cases of sAVAX appeared first on Smart Liquidity Research.