What is sICX and how does it work?

Balanced introduces a number of new assets to the ICON ecosystem. One of them, sICX, has raised many questions. So what is sICX, and how does it work? Let’s explore the details.

When you deposit ICX as collateral on Balanced, it’s first staked so you continue to earn staking rewards. This is crucial to the success of Balanced, as it would be much harder to encourage participation if investors had to sacrifice these rewards.

The staked form of ICX is known as sICX, and its value is based on the number of ICX in the staking pool. The amount increases each day based on ICON’s reward rate.

Let’s say you’re the first person to convert ICX to sICX. You deposit 1,000 ICX, which is converted to 1,000 sICX in the background. After 1 year, you’ll still only have 1,000 sICX. However, assuming an 11% reward rate, your 1,000 sICX will now be redeemable for ~1,110 ICX.

The number of sICX you hold remains constant, but the amount of ICX tied to it will increase over time as more staking rewards are earned and automatically re-staked.

sICX has many benefits:

• Instead of claiming and re-staking rewards manually, sICX allows for auto-compounding: staking rewards are automatically claimed and staked every time someone interacts with the collateral pool, so you get the maximum return.
• You can skip the 5–20 day unstaking period by swapping sICX for ICX on the Balanced exchange. You’ll receive 1% less ICX than if you waited.
• You can use staked ICX in a liquid form, which means you can hold it in your wallet or supply liquidity to a pool (i.e. sICX/bnUSD) without missing out on rewards.
• It increases the speed of traditional unstaking: when users deposit more ICX into the sICX contract (i.e. deposit more ICX collateral into Balanced or trade for more sICX on the Balanced exchange), it’s used to fill any pending unstaking requests. Instead of waiting ~7 days, it could be 1.

If you want sICX, you don’t have to deposit and withdraw collateral to get it: you can always swap ICX for sICX for free on the Balanced exchange.

The Balanced exchange includes an ICX/sICX liquidity pool, which is how you can bypass the unstaking period. If you supply ICX to this pool, you’ll earn Balance Tokens while your order is open, and ICX staking rewards after your order is filled (because your ICX is converted to sICX).

Learn more about the Balanced liquidity pools.

If you have any questions about sICX, chat with us on Discord.