Liquid Staking: A New Paradigm for Managing Encryption Assets

Liquid staking is fundamentally changing the way asset management works in PoS networks. Traditional staking requires locking up cryptocurrency to support blockchain operations, but liquid staking allows users to flexibly use their assets during the staking period by issuing liquid staking tokens (LST) that represent the staked assets.

EigenLayer, as a decentralized re-staking protocol on Ethereum, further expands this concept. Users can deposit LST into the EigenLayer contract to obtain liquidity re-staking token (LRT). These tokens not only contain the value and rewards of the staked tokens but also allow users to enjoy additional benefits.

The liquid staking market is developing rapidly, with a total locked value of ( TVL ) skyrocketing from 30 million dollars to over 57 billion dollars in less than 4 years. However, there are still differences in the staking ratios across networks. For example, Solana's staking ratio exceeds 70%, far higher than Ethereum's 27%. But Solana's LST accounts for only 6% of the staking supply, while Ethereum's exceeds 40%.

This provides a huge opportunity for projects like Sanctum in the Solana ecosystem. By introducing innovative re-staking solutions and fostering a competitive environment, Sanctum is expected to bring more flexibility, liquidity, and profit opportunities to Solana stakers, while avoiding a situation dominated by a single protocol.

Sanctum: Innovator in staking on Solana

Infinity Pool: A flexible and efficient LST trading pool

Sanctum Infinity is an innovative Liquidity pool designed to simplify the trading and stake of LST on Solana. It can be seen as a flexible large pool that supports seamless exchange of various LSTs.

Infinity uses Solana staking pool data for LST pricing to ensure accuracy. When users deposit LST, they receive INF tokens as a reward. These tokens not only earn staking rewards from all LST in the pool but also generate transaction fee income.

Infinity maintains balance by dynamically adjusting exchange fees, encouraging trades that help keep a good mix of LST in the pool. Its allocation strategy also supports the creation of new LST, injecting vitality into the ecosystem.

Validator LST: A Flexible and Efficient Staking Method

Validator LST represents the stake of users with specific validators, appreciating in value as rewards accumulate. Compared to traditional staking, validator LST simplifies the process, offers instant exchanges, and avoids the lengthy waiting period for unstaking.

This model allows validators to stand out by issuing their own tokens and providing unique rewards. It also makes it easier for stakers to participate in a broader DeFi ecosystem and gain more earning opportunities. At the same time, LST also helps to make the validator network more decentralized and competitive.

The Reserve: Deep Liquidity Support

The Sanctum reserve pool provides deep liquidity for all LSTs on Solana, addressing critical challenges in the staking ecosystem. Users can instantly exchange LST for SOL through the reserve pool without waiting for the traditional unstaking cooldown period.

The reserve pool also supports various DeFi protocols to accept any LST as collateral, enhancing the utility of LST. More importantly, it helps smaller validators compete more easily with larger validators by providing a shared source of liquidity, promoting the decentralization of the network.

The Router: Seamless LST Exchange

The Sanctum Router makes the exchange between different LSTs on Solana simple and efficient. By moving staking accounts between pools, the Router enables seamless exchanges between any LSTs, unifying the liquidity of all LSTs.

This innovative solution greatly enhances the liquidity and usability of LST in the DeFi ecosystem, unlocking the full potential of liquid staking on Solana.

Market Positioning of Sanctum

Unlike Lido, which dominates on Ethereum, Sanctum has adopted a more inclusive strategy on Solana. They recognize that LSTs are essentially interchangeable, and thus have turned to fostering a multi-LST environment rather than directly competing with other staking pools.

The concept of Sanctum is collaboration rather than competition, aiming to create infrastructure that supports various LSTs. By focusing on expanding the overall stake market rather than dominating the market, Sanctum hopes to establish a more decentralized and collaborative ecosystem on Solana.

Compared to major competitors like Jito, Sanctum focuses on providing robust infrastructure support to ensure the stability and security of the Solana ecosystem. Its innovative features such as the Infinity multi-LST Liquidity pool, reserve pool, and router work together to promote Liquidity and stability.

Outlook

Sanctum is showing strong development momentum, with its TVL growing to over $700 million, making it the fourth largest protocol on Solana. However, it also faces fierce competition from established players like Jito, as well as risks closely related to the development of the Solana ecosystem.

In the future, the success of Sanctum will depend on the user adoption of its innovative features and its ability to respond to potential regulatory changes. As the liquid staking market continues to evolve, Sanctum is expected to play a key role in shaping the staking landscape of Solana.