Exchange Rate Mechanism

The exchange rate between MAT and stMAT is the core mechanism through which staking rewards are delivered in a non-rebasing format. Instead of increasing stMAT balances, the protocol increases the value of each stMAT token over time.

Initial Rate

• The exchange rate starts at 1:1 upon deployment:

  • 1 MAT = 1 stMAT

• As staking rewards accumulate:

  • stMAT balances remain fixed (non-rebasing).

  • The exchange rate increases with each reward distribution event.

  • Users accrue value without needing to claim or restake.

Reward Distribution

• As the StakingPool generates rewards, the total MAT balance backing stMAT increases.

• This causes the exchange rate to rise, enhancing the redeemable value of stMAT.

• Over time, users are able to unstake stMAT for more MAT than they originally deposited, reflecting the accumulated rewards.

Calculation Method

The exchange rate is dynamically recalculated during key protocol operations (example: staking, unstaking) using the following formula:

exchange_rate = (total_MAT_balance - accumulated_fees) / total_stMAT_supply

Where:

• total_MAT_balance: Total MAT held by the protocol (including rewards).

• accumulated_fees: Protocol fees that must be excluded from user value.

• total_stMAT_supply: Total stMAT tokens in circulation.

This formula ensures that protocol fees do not inflate the exchange rate, maintaining accurate value accrual for stMAT holders.