How does the sMPC:MPC exchange rate work?

The relationship between sMPC and its exchange rate is essential to understand the Sceptre experience so, in this blog post, we are going to cover:

• how the sMPC: MPC Exchange Rate works

• how sMPC interacts with other Partisia Network Protocols

• how you can track the value of your MPC in relation to sMPC

  
  

What is the sMPC vs MPC exchange rate and how does it work?

The sMPC vs. MPC exchange rate essentially tells us how much one sMPC token is worth in relation to one MPC token. But unlike typical exchange rates that go up and down, the value of sMPC always increases in relation to MPC. While that might sound unusual, the explanation is actually quite simple.

When you stake your MPC on Sceptre, you receive sMPC in return. sMPC is a Liquid Staking Token (LST), which means you can use it in other protocols within the Partisia network to potentially earn more yield. The amount of sMPC you get is directly proportional to the MPC you stake because it’s minted at the time you stake. This proportionality is key: because of it, staking on Sceptre doesn't affect the MPC:sMPC exchange rate. The same holds true when you unstake: the sMPC you return is burned in the same proportion as the MPC you receive, leaving the exchange rate unchanged.

Similarly, if you swap another token for sMPC on a DEX, no new sMPC is minted. That sMPC comes from the exchange's existing reserves, so again, the sMPC vs. MPC value remains constant. Proportionality is maintained as long as no new MPC tokens are added to the Sceptre pool without corresponding sMPC being minted.

When you stake on Sceptre, we automatically claim your staking rewards and add them directly to the staking pool. These are new MPC tokens entering the pool, but they aren't part of a staking transaction, so no new sMPC tokens are minted at this point. To account for this difference and ensure fairness, the price of sMPC must increase. This is why the sMPC:MPC exchange rate steadily climbs over time.

Because the exchange rate rises as rewards are added, we call sMPC a reward-bearing token. This means that you'll receive more MPC than you initially deposited when you unstake from Sceptre to reflect all the rewards you’ve accumulated.

What happens when you provide sMPC to other protocols?

After staking your MPC with Sceptre, you can provide the sMPC tokens you received to other protocols on the Partisia Network. Even while your sMPC is being used elsewhere, your original MPC staked with Sceptre continues to accrue staking rewards.

As we've explained, these accumulating staking rewards cause the sMPC:MPC exchange rate to steadily increase. This means that the value of your sMPC, in relation to MPC, continues to grow even when you're using it within another protocol.

It's important to understand that the MPC you initially deposited on Sceptre isn't directly tied to your wallet. Instead, the sMPC you receive acts as a representation of your entitlement to a proportional amount of MPC. Therefore, you have the flexibility to use your sMPC across various protocols. Whenever you're ready to unstake, simply return your sMPC to Sceptre, and you'll be able to exchange it for the MPC you’ve accrued.

How can you track the value of your sMPC vs MPC?

You can easily view the sMPC:MPC exchange rate directly within the Sceptre app. You'll find it on both the Stake and Unstake tabs, conveniently located just below the value input field. To quickly calculate the current MPC value of your sMPC holdings, simply navigate to the Unstake tab and enter the amount of sMPC you have, whether it's in your wallet or deposited elsewhere.

For a historical perspective on the exchange rate, click the MPC/sMPC tab in the graph. Here, you'll see the complete evolution of the sMPC:MPC exchange rate since Sceptre for Partisia launched.

We hope this article helped clear any doubts you had about sMPC and its exchange rate vs MPC. If you still have questions, feel free to get in touch with our team on X, Telegram or Discord.