Stake Liquid SUI for Fixed Rate with Legato
As of March 2024, there’re ~8 billion SUI tokens staked across 100+ validators on the SUI network, resulting in liquid tokens worth $14 billion.
At Legato, we’ve built a protocol to serve liquid stakers with various vaults to meet specific needs. The vault we just launched helps secure APY for liquid SUI tokens, able to maintaining a staking rate of 3.3% for a year.
For example, when you stake 1 SUI in a vault with a maturity date 1 year from now with 3.5% APY, you will receive 1.035 vault tokens (PT). Then, you have 3 options:
- Holding 1.035 vault tokens for a year and redeeming for 1.035 SUI.
- Trading vault tokens on the Legato DEX for USDC or any other tokens.
- Migrating vault tokens to another vault that is not backward in time.
We will cover the details later, including steps to stake with our platform using SUI and/or liquid SUI tokens.
What is Liquid Staking?
Liquid staking is a new primitive in the Web3 originating from Ethereum during the transition between Proof-of-Work and Proof-of-Stake by Lido.
Before Lido, staking Ethereum on the beacon chain faced challenges such as a lock-up period where you needed to lock your assets for a year until you received staking rewards after the transition was completed.
Lido addressed this by setting up a staking pool connected with trusted validators. When users stake, they receive liquid stETH tokens that are tradable. Prior to the completion of the transition, this stETH can be provided as liquidity on DEX and earn passive income.
Back to SUI, after the SIP-6 updates, when staking SUI on the validator, users will receive liquid tokens of Staked SUI objects. While not entirely identical to stETH, we won’t delve into the details here.
How to Stake SUI with Legato
When staking SUI, as shown in the figure, the fluctuating staking rates may deter those seeking stable returns. Legato is here to help.
Get started by visiting legato.finance and navigating to the vault page. Here, you will find all available fixed-rate vaults for SUI staking, as shown in the attached screenshot below.
To lock-in a fixed staking APY on Legato, you can choose between using SUI tokens or liquid SUI. Each may have its own conditions and outcomes, which we can describe briefly below.
- Native SUI — When using native SUI to stake, the system will internally stake SUI tokens with one of the validators we’ve whitelisted.
- Liquid SUI — It’s a semi-NFT that you receive when staking with the SUI wallet or dApps. We support Staked SUI objects obtained from our whitelist validators.
We’ll use the vaults currently available today to demonstrate what you’ll get when staking for a fixed rate on Legato.
- SUI Fixed 3.3% Yield APR-24 — Assuming you stake 1 SUI on Jan. 1, 2024, you will receive ~1.01 PT-APR-24, which can be redeemed for SUI at the full amount of 1.01 SUI after Apr. 30, 2024.
- SUI Fixed 3.3% Yield JUL-24 — With this vault, when staking the same amount on the same date, you will receive ~1.015 PT-JUL-24, which can be redeemed for 1.015 SUI after Jul. 30, 2024.
We simplify staking by offering fixed rates for liquid stakers, mitigating market volatility. With vault tokens in a liquid form (PT), you have the option to exit at any time before the vault’s maturity date on the Legato DEX. We will allow anyone to provide liquidity on our DEX for additional rewards in the near future.
Each vault has its own PT tokens that represent the future value at the time of maturity date. The token price on the DEX may not reflect the real-time price, but it will shift over time and converge to the same value as when the vault matures.
The unique feature of Legato that sets it apart from other derivative solutions is that many of its vaults have a specific end date, while in the Legato system, there must always be a next vault in line.
When only one vault is active, the system automatically pauses, prompting us to deliver more vaults from time to time.
PT tokens always migrate to the next available vault that is not backward in time. Through migration, a long-term staker can burn PT and mint them into another vault without needing to unstake the assets locked in any vault, thereby ensuring that assets remain staked on the validator.
Stay tuned for many more DeFi vaults that we will be releasing in the near future. Follow us on social channels for further updates.
At Legato, we aim to develop tools for liquid stakers to optimize their portfolios and capitalize on market volatility.
We’re also looking for validators on the Sui network interested in exclusive fixed-yield vaults to stabilize the assets staked by providing liquid staking services on top of it. Contact us for further discussion.
Twitter/X: https://twitter.com/StakeLegato
