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ShMonad and Liquid Staking

ShMonad is a liquid staking token for the Monad blockchain. When you stake MON (Monad's gas token), you receive shMON—a token representing your stake plus all future rewards it earns. The protocol is developed by FastLane Labs and derives yield from multiple revenue streams, including Monad's native staking rewards, MEV protocols for validators and applications, RPC services, and other sources.

Why Liquid Staking Matters​

Traditional staking locks your tokens until you complete the full unstaking process. You earn rewards, but you can't use those tokens elsewhere. Liquid staking solves this problem.

The Core Benefits​

  • Earn while staying liquid: Your shMON tokens can be traded, used as collateral, or deployed in DeFi applications while continuously earning staking rewards in the background.
  • Full transparency: Every shMON is backed by real staked MON. The system maintains a complete accounting of all staked assets, available liquidity, and outstanding obligations.
  • Protection for long-term holders: The exchange rate mechanism prevents large depositors from extracting value through precisely-timed deposits and withdrawals. Recent rewards are included when calculating deposit rates but excluded when calculating withdrawal rates, ensuring fairness for existing holders.

Key Characteristics​

ShMonad operates entirely on-chain, enabled by Monad's technical capabilities. All operations, including the Withdrawal Queue and Stake Allocation Mechanism, are calculated and executed on-chain without external dependencies.

The protocol (shMON stands for Staked Holistic Monad) incorporates revenue from multiple sources:

Additional features include Atomic Unstaking for instant liquidity, Zero-Yield Deposits that allow staking of capital without minting tokens, and a Policy System for programmatic access control.

How Liquid Staking Works​

  1. Deposit: You deposit MON and receive shMON tokens in return. The exchange rate reflects the total principle and accumulated interest of deposited, staked MON divided by the number of shMON shares in circulation.

  2. Hold and use: Your shMON tokens remain fully liquid. You can trade them, use them in other protocols, or hold them to accumulate rewards. Over time, each shMON becomes worth more MON as staking rewards accumulate.

  3. Withdraw: When you're ready to exit, you have two options:

    • Instant withdrawal through the atomic pool (pays a small fee based on pool utilization)
    • Traditional unstaking through the standard process (takes several epochs but pays no fee)