PIP-41 l Offboard stMATIC as paUSD Collateral on Polygon PoS

Summary: This proposal aims to remove the stMATIC token as paUSD collateral on Polygon PoS..

Context: Lido, the issuer of stMATIC, is officially sunsetting the token, urging users to unstake to vanilla MATIC before June 16th 2025. More information available here.

Implications for stMATIC holders:

• Discontinued Rewards: stMATIC holders will stop receiving network rewards throughout the sunsetting process.
• Pre-Sunset Pause: The protocol will temporarily pause and then resume operations. No withdrawals can be processed until after the protocol resumes.
• Withdrawal Process: Users can unstake their MATIC through the Lido on Polygon frontend until June 16, 2025.
• Post-Sunset Access: After June 16, 2025, withdrawals will remain possible through explorer tools.

Therefore, with the end of rewards distribution and the sunset of the token we propose to offboard stMATIC from allowed collaterals for paUSD on Polygon PoS.

Rationale: The plan to offboard stMATIC would take place in 3 steps:

1. Reduction of Debt Ceiling to 0: We propose to reduce the debt ceiling of stMATIC for paUSD to 0, effectively halting any further borrowing against these assets.

2. Incremental Increase in Borrowing Rates: To expedite the repayment of existing debt, we propose to increase borrowing rates by 10 percentage points per week until the outstanding debt is cleared.

Note: This adjustment will be made independently of any partial automatic borrow rate adjustments (MIP-23 & MIP-25).

3. Removal of Collateral: The stMATIC will be removed from allowed collaterals for paUSD.

Note: Any individuals still holding stMATIC as collateral on Parallel should consider transitioning to MaticX (built by Stader Labs) any time soon if the proposal is approved.

Means:

• Human Resources: Multisig signers will need to sign transactions to execute the proposal
• Treasury Resources: There will be no treasury resources needed to execute the proposal.

Technical implementation: On Polygon PoS, Parallel DAO multisig will call following smart contracts:

• paUSD ConfigProvider: 0x44adedae87cda45f9e9b6d49e49db5d583646163
  • Modify the Debt Limit by calling by calling the SetCollateralDebtLimit function and set it to 0
  • Change the borrow Rate by calling the SetCollateralBorrowRate function at +10.00% every week.
  • Remove stMATIC collateral by calling the RemoveCollateral function with the stMATIC contract: 0x3A58a54C066FdC0f2D55FC9C89F0415C92eBf3C4

Voting Options:

• Accept the Offboarding
• Against/Rework the proposal
• Abstain

Authors: Jean Brasse from Mimo Labs