$stCHZ is the liquid staking token users receive when they deposit $CHZ into Kayen’s liquid staking protocol. The “st” prefix stands for “staking”, using the abbreviation that’s widely favored by blockchain networks to distinguish liquid staking tokens (LST) from the underlying token being staked.
In short, whenever you stake $CHZ on Kayen, you will receive the corresponding value of $stCHZ tokens. The $CHZ is temporarily unusable elsewhere while it is being staked, whereas the $stCHZ remains liquid, meaning it’s freely tradable and transferable.
But what’s the point of all this and what can you do with $stCHZ while your locked $CHZ is earning staking rewards? Let’s break it down.
Understanding $stCHZ
$stCHZ is an ERC-20 liquid staking token. It’s issued when you deposit $CHZ into Kayen’s liquid staking protocol and represents your share of the underlying $CHZ being staked through Chiliz Chain’s native staking system.
When you deposit $CHZ into Kayen, you receive $stCHZ immediately in the same transaction. The protocol delegates the underlying $CHZ to selected Chiliz Chain validators, where it begins earning network staking rewards.
The $stCHZ you have been issued in return, meanwhile, sits in your wallet. But it doesn’t have to stay in your wallet. Because $stCHZ is a liquid staking token (LST), it can be used like any other token: you can trade it for a different token for example, use it to provide liquidity, or simply hold onto it.
Many $stCHZ holders will choose to actively use it, because the beauty of an LST is that it can be utilized to earn additional rewards over and above those accruing on the underlying staked capital ($CHZ). Indeed, this is the primary benefit of liquid staking: your underlying $CHZ can remain staked while you retain a liquid token representing the position.
In simple terms, Kayen allows you to stake $CHZ and stay liquid. The only question to settle is what to do with that liquidity.
What can I do with $stCHZ?
Although you’re free to use $stCHZ in a variety of ways, it’s important to note that it represents your receipt for the $CHZ you have staked in Kayen. You will need to return that $stCHZ in order to receive your $CHZ back when you wish to unstake, after which there is a 2-3-day unbonding period before you will receive your $CHZ. Bear that in mind if you’re considering swapping $stCHZ for a different asset.
If you’d rather not wait for the unbonding period, you can also exit instantly by swapping $stCHZ for $CHZ in the $stCHZ-$CHZ pool. Be aware that an instant swap executes at the current market price (plus the pool’s swap fee), which may differ slightly from the protocol exchange rate, whereas redeeming through Kayen always pays the full exchange rate.
You can hold, transfer, trade or provide liquidity with $stCHZ wherever it is supported, with holding being the simplest option. You retain the $stCHZ while its exchange rate reflects the staking rewards earned by the underlying pool.
You may also transfer $stCHZ to another compatible wallet. Rewards follow the token, so the current holder owns the associated claim on the underlying staked $CHZ.
A more dynamic option, if you’re looking to maximize your capital, is to use your $stCHZ to provide liquidity by pairing it with $CHZ in a Kayen liquidity pool. The upside to this is that in addition to earning a portion of all swap fees in the $stCHZ-$CHZ pool, you will earn bonus points as part of Season 01 of the Stake to Score campaign, which runs for four weeks from July 30.
Participants who stake $CHZ on Kayen will be eligible for a leaderboard in which the top finishers earn a share of a 350,000 $CHZ prize pool. A number of bonuses are available for performing certain actions including buying $stCHZ and providing $stCHZ-$CHZ liquidity.
Why your $stCHZ balance stays constant
While you are staking $CHZ through Kayen, you’ll earn staking rewards. However, these are not awarded in the form of additional $stCHZ tokens. Instead, each $stCHZ gradually becomes redeemable for more $CHZ through a rising exchange rate.
This means that the number of $stCHZ tokens in your wallet will remain fixed unless you deposit, buy, sell, or transfer them. You might be wondering, then, what happens to your staking rewards. Where do they go?
The answer is that they are compounded automatically, which results in the value of $stCHZ increasing over time relative to $CHZ.
For example, suppose you deposit 100 $CHZ and receive 100 $stCHZ. A month later, you still hold exactly 100 $stCHZ. The number of tokens in your wallet has not changed but those tokens may now be redeemable for more than 100 $CHZ because staking rewards have accumulated and compounded.
How the $stCHZ exchange rate is calculated
The $stCHZ exchange rate is calculated by Kayen’s smart contracts using real on-chain balances. It is updated as part of protocol transactions and doesn’t depend on a price oracle or off-chain data feed.
At a high level, the rate reflects the relationship between:
- The total amount of $CHZ controlled by the liquid staking system
- The total supply of $stCHZ representing claims on that $CHZ
The exchange rate begins at 1.0 and is designed to rise over time as staking rewards are received and automatically restaked, subject to protocol fees, validator performance, and Chiliz Chain’s staking conditions.
This rate should not be confused with the secondary-market price of $stCHZ. The protocol exchange rate determines how much underlying $CHZ a user can redeem through Kayen, whereas the market price is whatever buyers and sellers are willing to pay for $stCHZ on an exchange at a particular moment. Those two values may be close, but they are not guaranteed to be identical.
$stCHZ: Your ticket to Chiliz Chain
With $stCHZ comes great freedom. Specifically, the freedom to use your tokens any way you like, whether that’s to hold, trade, transfer, or supply liquidity. With great freedom, however, comes great responsibility. At some stage, you’ll likely wish to unstake some or all of your $CHZ balance from Kayen and to do so you’ll need $stCHZ.
$stCHZ serves as your claim on the underlying staked $CHZ and when you later redeem it, the amount of $CHZ you receive will be determined by the current $stCHZ-to-$CHZ exchange rate. This means that the amount of $stCHZ you are obliged to return in order to redeem your staked $CHZ may be slightly less than the number you initially received.
If this occurs, you will be left with a residual number of $stCHZ in your wallet after redeeming your initial staked $CHZ. The remaining $stCHZ in your wallet can be held or swapped for $CHZ – or any other asset that is tradable on Chiliz Chain.
To summarize then, $stCHZ is a tradable token that represents your $CHZ stake. Your $CHZ earns while your $stCHZ stays free to trade, LP, and use across the ecosystem.
