POL Liquid Staking

Polygon Improvement Proposals Proposal Ideas
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This is a temp check proposal to start discussing the prospect of creating a native Liquid Staked version of the POL token, enshrined in the protocol.

Roughly 40% of the POL supply is now staked, 3.4B / 8.6B POL. This represents roughly ~$700M USD worth of staked assets. According to coingecko, if this was all liquid staking instead of locked up, it would be the 8th largest LST in crypto.

Goals:

  1. Increase Utility of POL token for holders.
  2. Increase the amount of staked POL.
  3. Increase Governance participation.
  4. Increase liquidity and defi participation of POL holders.

Steps to implement:

  1. Discussion and call for proposals and feature requests from the community
  2. Write up technical requirements and assess feasibility with the Polygon engineering team
  3. Ratify the spec as a DAO with the intention to upgrade the governance/staking system if it is implemented correctly
  4. Implement the spec
  5. Upgrade governance contracts on mainnet
  6. Continued support and incentives for the integration of the liquid staked version of POL across Polygon, Ethereum mainnet, and potentially other networks as the DAO sees fit.
There are definitely trade-offs of creating an enshrined version of an LST for POL, versus letting the market decide. However, implementations like Tenderize's version of liquid staked POL have failed to gain break out traction, in my opinion, due to lack of direct support from Polygon. (https://forum.polygon.technology/t/amplifying-the-decentralization-of-matic-liquid-staking/12233)

So what do people think? Should the DAO pursue this as a community pushed project? I’m very interested in feedback at this extremely early stage. Thanks!

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personal opinion

  • agree that the LST market could use some more action
  • i like the free market, so would prefer the market to fix the problem
  • acknowledge that sometimes the market needs some help to start moving

so at the very least, I think it’s something worth discussing
even if we come with the conclusion that we should not enshrine an LST, any ideas we discuss could be valuable for others to improve existing LSTs or build new ones

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Same, theres definitely some trade-offs. Lido and Rocketpool and other cool LSTs might not exist if ethereum enshrined one.

Do you have other ideas for helping existing ones to grow or push growth there?

What about something like allowing a mainnet tx for POL staking to send a message to Polygon network, so anyone can issue an LST on polygon easily? It seems POL is not really used on mainnet as much as there is activity on polygon itself.

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Do you have other ideas for helping existing ones to grow or push growth there?

  • more utility through defi integrations: there is already work in progress to incorporate the existing LSTs into the new apps (Fluid, Compound/Morpho)
  • the LSTs should find ways to increase their yield (something that has been floated is for rev-sharing MEV rewards into the LST)
  • more BD/“community” awareness: as you said, a significant amount of POL is staked, but not through LSTs
  • but I think that at the end of the day, we need more novel experimentation with POL and LSTs

What about something like allowing a mainnet tx for POL staking to send a message to Polygon network, so anyone can issue an LST on polygon easily? It seems POL is not really used on mainnet as much as there is activity on polygon itself.

not sure I understand - can you expand on this?