Staker FAQ
Answers to the most frequently asked questions from shMON stakers, based on analysis of community conversations.
How does staking work?
Deposit MON into the shMonad contract and receive shMON tokens in return. shMON is a liquid staking token - it represents a share of the total staked MON pool plus all accumulated rewards. Over time, each shMON becomes worth more MON as staking rewards and MEV revenue accrue.
shMON tokens remain fully liquid: trade them, use them as collateral in DeFi, or simply hold them to accumulate rewards. See Introduction to ShMonad for the full overview.
What yield or APR can I expect?
Yield comes from multiple sources:
- Staking rewards - Monad's native validator rewards
- MEV revenue - payments from searchers through the Auction Handler
- Atomic unstaking fees - fees paid by users who withdraw instantly from the atomic pool
The APR is variable and depends on network activity, MEV volume, and total staked MON. See Yield Calculations for the formulas and what affects returns.
How do I unstake?
Two options:
| Method | Speed | Fee | Best For |
|---|---|---|---|
| Traditional | ~22-27 hours in normal capacity conditions, longer if redemption capacity is insufficient | None | Large amounts, patient users |
| Atomic (Instant) | Immediate | 0.005% - 1.005% based on utilization | Quick exits, smaller amounts |
Traditional unstaking is a two-step process: request the unstake (shMON is burned, exchange rate is locked), then complete matured requests after the waiting period. v1.2 supports multiple active traditional unstake request buckets; requests with the same completion epoch merge, while different completion epochs can stay separate.
What is the shMON exchange rate?
The exchange rate determines how much MON each shMON is worth. It starts near 1:1 but increases over time as staking rewards and MEV revenue accumulate. A rising exchange rate is expected behavior - it means the protocol is generating yield.
shMON is not pegged 1:1 to MON. If the exchange rate is 1.05, that means each shMON is worth 1.05 MON - reflecting 5% cumulative rewards since launch.
The protocol uses slightly different rates for deposits and withdrawals to prevent value extraction through precisely-timed entries and exits. See Exchange Rate for the full mechanics.
Do I need to claim rewards?
No. Rewards are auto-compounded into the exchange rate. The number of shMON tokens in a staker's wallet stays the same - but each shMON becomes worth more MON over time. There is nothing to claim, no buttons to click, and no gas to spend on harvesting.
To check accumulated yield, compare the current exchange rate to what it was when the deposit was made.
Is it safe? What are the risks?
shMonad operates entirely on-chain with no external dependencies. Key safety features:
- On-chain stake allocation - no off-chain governance or multisig decisions for validator selection
- Pooled share-rate circuit breaker - guards selected operations that should not reduce the virtual pooled shMON exchange rate
- 3-day code-upgrade timelocks - ShMonad, hMON, and coinbase beacon code upgrades are delayed
- Source-available code - contracts and sidecar code are publicly reviewable
- No rebasing - shMON token balance is stable; only the exchange rate changes
Risks to be aware of:
- Smart contract risk (as with any DeFi protocol)
- Validator or protocol accounting risk; if unexpected accounting conditions are detected, the protocol can freeze or close affected flows for investigation
- Exchange rate temporarily deviating from secondary market prices
How does MEV revenue benefit stakers?
When validators produce blocks, searchers pay for transaction ordering through the Auction Handler. Of each MEV payment:
- 90% goes to the validator's coinbase contract
- 10% is retained by the protocol (5% boosts shMON yield, 5% to FastLane on mainnet)
From the validator's share, commissions are taken and the remainder flows to shMON holders via equity growth. This means MEV activity directly increases the shMON exchange rate - stakers benefit without taking any action.
Are there minimum or maximum deposit limits?
There is no protocol-enforced minimum or maximum for standard staking deposits. Any amount of MON can be deposited to receive shMON.
For practical purposes, very small deposits may not be economical after accounting for gas costs.
What are zero-yield deposits?
An alternative deposit path where MON is staked and the depositor receives hMON instead of shMON. The depositor earns zero yield - instead, all rewards from that deposit flow to existing shMON holders, boosting their APR.
Think of it as leverage for the pool without borrowing: more staked capital earning rewards, same number of shMON tokens sharing them. hMON holders can convert to shMON at any time at the current exchange rate. See hMON for details.
What is isolated stake?
Isolated stake is validator-specific stake inside shMonad. Instead of receiving pooled shMON, you deposit MON for a specific validator and receive validator-specific vShares. Rewards and exits are tracked separately from pooled shMON.
Most users should use shMON unless they specifically want validator-level exposure. See Isolated Stake for details.
What fees does the protocol charge?
| Fee | Rate | Applied To |
|---|---|---|
| Staking rewards commission | 5% | Gross staking rewards |
| MEV auction handler fee | 10% | Successful MEV bids |
| Boost yield commission | 50% on mainnet | Non-staking revenue (MEV/ACE fees) |
| Atomic unstaking | 0.005% - 1.005% | Instant withdrawals |
| Traditional unstaking | 0% | Standard withdrawals |
Protocol fees are applied at the aggregate level. Stakers receive net yield after fees - individual staking rewards are not reduced. See Parameters and Fees for current values.
Common Misconceptions
"shMON should always be 1:1 with MON"
Reality: shMON appreciates relative to MON over time as staking rewards accrue. An exchange rate above 1.0 means the protocol has generated yield - this is expected and correct behavior. The rate will continue increasing as long as the protocol earns revenue.
"I need to claim my staking rewards"
Reality: Rewards are auto-compounded into the shMON exchange rate. There is no claiming mechanism, no harvest button, and no pending rewards to collect. Simply hold shMON and its MON value increases automatically each epoch (~5.5 hours).
"Unstaking is always instant"
Reality: Atomic unstaking is instant but charges a utilization-based fee (0.005% - 1.005%). Traditional unstaking is free but requires a multi-epoch waiting period, usually ~22-27 hours under normal capacity conditions. Choose based on urgency vs. cost.
"shMON is just another wrapped token like wMON"
Reality: wMON is a 1:1 wrapper with no yield. shMON is a yield-bearing liquid staking token backed by actively staked MON. Its value grows over time as staking rewards and MEV revenue accumulate - making it fundamentally different from a simple wrapper.
"Protocol fees come out of my staking rewards"
Reality: Protocol fees are applied at the aggregate protocol level on gross yield before distribution. Stakers receive net yield after all fees have been applied. The fees do not reduce an individual staker's existing balance or previously earned rewards - they only affect the rate at which new yield accrues.