1) The Strategy
The Maticx/Matic leveraged staking strategy aims to amplify Maticx’s staking yield by leveraging (6x) the amount originally deposited by recursively borrowing wMatic, using AAVE V3 as the core lending platform, and 1inch as the core swap aggregator.
To further cement security, CIAN’s recursive strategies come equipped with a monitoring module that can adjust the position’s collateral ratio to protect users against liquidation risk.
- Users may choose to deposit Maticx or Matic. The same choice applies upon withdrawal.
- This strategy’s total APY* is equal to the differential between Positive yields minus the borrowing rate.
- The positive yield comes from the Staking yield APR + Supply APR.
- The negative yield comes from the Borrowing rate (APR).
- The equation goes as follows:
TotalAPY = 6 x (maticxStakingYield + maticxSupply APR) — 5 x (maticBorrowRate) - Important note: This strategy incurs swap fees upon creation and withdrawal (due to gas fees & swap slippage, mostly incurred upon withdrawal). Therefore, a breakeven time applies. Depending on the onchain swap rate and strategy APY, the breakeven time may vary from 5–15 days. Users shall be informed before depositing in the vault.
2) Workflow
The following workflows present the step-by-step processes taking place in the backend upon users’ deposit/withdrawal.
All respective steps {A-F} & {A-E} are automatically executed within 1 block transaction. For the sake of clarity, let’s assume that 1 Matic = 1 Maticx:
- Deposit (1 Matic)
a. 1 Matic is converted to 1 Maticx using Stader’s staking contract (or swapped, depending on which approach is more cost-effective);
b. 1 Maticx supplied on AAVE V3 as Collateral;
c. Using this collateral, borrow 0.6 Matic;
d. 0.6 Matic is converted to 0.6 Maticx using Stader’s staking contract (or swapped, depending on which approach is more cost-effective);
e. 0.6 Maticx supplied on AAVE V3 as collateral (total 1.6 Maticx);
f. Repeat steps C, D & E until the position reaches 6 Maticx supplied as collateral on AAVE (6x). Since the user initially deposited 1 Matic, 5 Matic had to be borrowed in order to fully leverage his position.
The user ends up with 6 Maticx supplied, and 5 Matic borrowed.
2. Yield
Once the position is created, no further transactions are necessary for the yield to be generated***. As long as the borrowing rate doesn’t surpass the staking APR, the strategy will keep generating returns. Since the staking APR comes from Polygon’s validation fees, unless Polygon dies off, it is very unlikely to see this strategy become irrelevant.
**** The only extra execution possible is the readjustment of the collateral ratio in case of extreme market fluctuations. If the price of Maticx was to deppeg from Matic, this might cause a risk of liquidation to any active leveraged stakers. To prevent this risk, CIAN’s vaults come equipped with a liquidation protection mechanism that can partially deleverage the vault to counter liquidation. This specific mechanism is one of the prime reasons why many institutions choose CIAN as an investment tooling platform.
3. Withdrawal (1 Matic)
a. Having 6 Maticx as collateral and 5 Matic borrowed, to return user’s assets, the Matic borrowed first has to be repaid. To do so, first withdraw a small part of the collateral (e.g, 0.3 Maticx);
b. Swap 0.3 Maticx to 0.3 Matic on 1inch;
c. Repay 0.3 Matic from the active debt;
d. Repeat steps A, B & C multiple times until all the debt has been repaid, leaving 1 Maticx as collateral.
e. Withdraw the remaining collateral. 1 Maticx withdrawn to user’s EOA wallet, or, swap Maticx to Matic, and then send this Matic to user’s EOA wallet (if the user prefers receiving Matic).
3) General Questions
- Why aren’t there rewards for the Maticx/Matic (6x) RS currently?
SD rewards are separate incentive yields offered by Stader, distinct from the staking yield generated by MaticX.
There’s no need to worry if you don’t see any rewards under the [My Rewards] section. This section only shows incentive yields, not the returns from Staking and Supply. You’re still benefiting from the APY of the Maticx/Matic RS.
The current UI display might be misleading. We plan a significant UI change in Q1 2024, including updates on how yields are displayed and the composition of APY (staking APY + supply APY + incentive APY — borrow APY).
For now, you can estimate your yields by clicking the [withdraw] button and selecting to withdraw 100% of your position.
2. What’s CIAN’s track record when it comes to security?
In two years of operation, CIAN successfully underwent 5 commercial audits, gathered nearly $100m TVL, and never suffered from smart contract breeches. Despite offering high-leveraged strategies, CIAN users went through the FTX/UST sagas and left unscarred. To this day, CIAN never had 1 case of liquidation.
3. Can I lose money using CIAN?
Yes, early withdrawals can easily lead to -ve ROI. As every leveraged staking strategy comes with a breakeven period, regardless if users are using CIAN or investing manually, profit will only be achieved once execution/withdrawal transaction fees are covered. The breakeven period may vary based on Maticx’s staking APR, Matic’s borrow rate, and Maticx/Matic swap rate.
For any additional questions, please visit CIAN’s official DISCORD
