Polygon Labs on Tuesday launched sPOL, the network's first native liquid staking token (LST), aiming to unlock more than 3.6 billion POL tokens currently locked in validator staking contracts.
sPOL allows stakers to receive a transferable, yield-bearing receipt token upon staking POL, which can then be deployed across DeFi as collateral, liquidity, or a building block for additional yield strategies, all while continuing to earn staking rewards.
Polygon's liquid staking penetration has lagged far behind Ethereum's, where over 43% of staked ETH sits in liquid staking derivatives. On Polygon, that figure remains below 5%, a gap the team attributes to a fragmented market where third-party LSTs charge fees ranging from 5% to 16%.
To bootstrap liquidity, Polygon Labs is seeding 10 million sPOL from its treasury at launch, with plans to progressively add 90 million more for a total commitment of 100 million tokens.
Fee Alignment
The launch arrives alongside a broader push to redirect value to POL stakers. In March, Polygon Foundation CEO Sandeep Nailwal backed PIP-85, a governance proposal that would distribute 50% of validator priority fees to delegators for the first time. Priority fees on the network have surged tenfold since the launch of the previous fee framework, PIP-65, with more than 5.4 million POL distributed to validators in February alone.
Under the current system, delegators who lock capital to back validators see little of that windfall. Validators participating in the sPOL program have agreed to return a portion of their priority fees to delegators, creating what Polygon described as a direct link between network activity and staker returns.
Mechanics
Existing stakers can migrate their positions to sPOL via the Polygon staking portal with no waiting period or interruption in rewards. All new POL staking will automatically issue sPOL.
The exchange rate begins at 1:1 and appreciates over time as staking rewards accumulate, meaning a holder's sPOL balance stays constant, but each token becomes redeemable for a growing amount of POL. Holders can redeem sPOL for the underlying POL plus accumulated rewards at any time.
The launch is part of Polygon's broader pivot toward payments infrastructure that began earlier this year with the Open Money Stack vision. The network recorded 493 million stablecoin transactions in February, its highest monthly total.
Polygon completed its migration from MATIC to POL in September 2024 as part of its Polygon 2.0 overhaul. Despite strong network usage metrics, the POL token remains down 94% from its post-migration highs.
This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.