Liquid Staking Goes Live on Meter Network
Meterians,
We are thrilled to introduce liquid staking on Meter Network!
At Meter, we strongly believe in creating a decentralized Meter network and have taken concrete steps to fulfill this obligation through numerous incentive programs. We aim to;
- Promote higher decentralization to ensure liveness and security of the Meter ecosystem
- Showcase the efficacy of the ‘HotStuff Consensus’ by maintaining the speed and performance of the ecosystem while supporting a higher number of nodes
Why Liquid Staking?
Earlier, our focus security and decentralization came at the cost of lower participation in the DeFI Ecosystem. The staked MTRG were locked to secure the network with no additional utility.
This dynamic changes with the introduction of liquid staking!
Liquid staking enables the community to contribute to the security and decentralization of the Meter network, without the tradeoff of illiquidity and capital efficiency — earn rewards from staking as well as yield from DeFi protocols.
TLDR — Liquid Staking on Meter
Design Overview
The liquid staking solution built on Meter solves these problems — It makes staked MTRG liquid and allows participation with any amount of MTRG (compared to a minimum of 100 MTRG currently).
Users who stake their MTRG on the Meter Network will receive a token (stMTRG), which represents their staked MTRG on the Meter Network on a 1:1 basis. As a user’s staked MTRG generates staking rewards, the user’s MTRG balance on the liquid staking contract will increase. stMTRG balances will rebase correspondingly once every 24 epochs allowing the user to access the value of their staking rewards in the DeFI protocols.
Users can use stMTRG in all of the same ways that they can use MTRG: sell it, spend it and, since it is compatible to be used in DeFi, use it as collateral for on-chain lending or as liquidity on DEXes.
Structural components
The following is a broad description of the components of the Liquid staking protocol:
- Staking pool: protocol to manage deposits, staking rewards, and withdrawals along with the node operators registry
- stMTRG: liquid staking token that maintains balance corresponding 1-to-1 to your staked MTRG
- wstMTRG: wrapped liquid staking token for DeFI protocols that do not support rebasing
Staking pool
The staking pool is the core smart contract responsible for MTRG deposits and withdrawals; minting and burning stMTRG tokens; and delegating funds to node operators. Node operators’ manager logic is extracted to a separate contract.
Users will send MTRG to the staking pool contract to mint stMTRG in return. The MTRG will be distributed between node operators to maintain uniform distribution and deposited to be validated by their validators.
stMTRG token
stMTRG is an ERC20 token that represents staked MTRG in liquid staking. Tokens are minted upon deposit and burned when redeemed. stMTRG token balances correspond to the MTRG that are staked using the smart contract. stMTRG token’s balances are updated through rebasing at the end of 24 epochs when daily staking rewards are distributed.
What can you do with stMTRG?
- Hold stMTRG and accrue network rewards
- Exchange stMTRG for another token (no longer accrues staking rewards)
- Use stMTRG as collateral or liquidity to participate in a wide range of DeFi activities
wstMTRG token
For DeFI protocols that do not support rebasing, the liquid staking design introduces wrapped stMTRG which uses a floating conversion rate between wstMTRG token and the stMTRG tokens to reflect the value of accrued network rewards through rebasing. The conversion rate is computed as the total balance of stMTRG (increased due to rebasing) over the total supply of wstMTRG.
Simply stated, wstMTRG represents the user’s share in the staking pool.
User Example
If you deposit 100 MTRG to the Liquid Staking Smart Contract, you will receive 100 stMTRG as a certificate for staked MTRG.
Assuming staking rewards at 10% APR, the user will receive 0.03 MTRG as staking rewards at the end of 24 epochs. Rebasing of stMTRG means that the new balance held by the user is now 100.03 stMTRG.
If the user wrapped the 100 stMTRG to get 100 wstMTRG at the very beginning, at the end of 24 epochs the stMTRG held by the wstMTRG contract will be 100.03 corresponding to the 100 wstMTRG minted.
At the end of 6 months, when you decide to withdraw your stMTRG from the contract. Your wstMTRG has accrued 5 MTRG in network rewards. The conversion rate is now 1.05.
Your 100 wstMTRG is now equal to 105 stMTRG while redeeming the tokens.
Impact of Liquid Staking on Meter TVL
In our view, Liquid Staking has enormous potential to increase the TVL on Meter Network through a host of DeFI applications — DEXes, Lending and Borrowing along with Leverage Yield Farming and Derivative platforms in the pipeline.
Risks related to liquid staking
Smart contract risk
The Liquid staking is a smart contract code written on top of the Meter’s native staking design. Similar to any protocol providing a service, there is a potential for code vulnerabilities that are missed by third-party auditors.
This risk is mitigated through a rigorous smart contract and underlying native code Audit from Haechi.
Limited validator set
While in initial stages, there will be a limited validator set supporting liquid staking, we will gradually expand the active validator set to mitigate any concentration of staked MTRG. With over 350 validators, the risk that few validators would surpass a certain threshold of tokens staked and be incentivized to act maliciously by censoring transactions on the Meter network is highly unlikely.
Current Delegators on Meter Network
Delegators currently staking on Meter Network can participate in liquid staking as below:
VALIDATORS: If Node bucket has 2000 MTRG, validators cannot use any of these MTRG into liquid Staking. If the node bucket has >2000 MTRG, validators can do partial unbound of the additional MTRG to put into liquid staking.
DELEGATORS: Users currently delegating on Meter Network will have to unbound the MTRG and put into liquid Staking post unbound period of 7 days.
About Meter.io
Meter is a layer 1 blockchain with Freedom and Fairness as the first principle. It is highly decentralized, censorship resistant yet blazing fast and MEV resistant. Its native metastable gas token completes Satoshi’s vision of a sound money independent of the fiat system.
Meter Ecosystem
Explorer: Meter Scan | Bridge: Meter Passport, LayerZero | DEFI: Voltswap , Jioswap, Chee Finance, Sumer Money, Minimax Finance, GemPad, Optical Finance, iZUMi Finance | P2E: Business Builders, TreasureBlox, CryptoBlades, Zomland, DragonMaster, CryptoPolis | NFT Collections: MTRG SQUAD, Meter Punks, Meter Mallows, NFTBattles, Universal NFT, Angry Apes | NFT Marketplace: NFTing, Voltswap, TofuNFT, Meter Town | Domains: MTRG Domains, WEB3 Names | Miscellaneous: Golucky.io, Meter Miner, Daily Coin Crypto, LlamaPay, Blockraising | Infrastructure/ Tooling: Meter Multisig, Defillama, POKT, Sourcify, C14 (Fiat on-ramp), NFTs2me, Mises Browser | Oracles: Witnet, Band Protocol, Pyth
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