Author: Jiang Haibo, PANews

As the market rebounds, Solana (SOL) has risen to become the sixth largest cryptocurrency and, among all proof-of-stake (PoS) blockchains, its staking asset scale is second only to Ethereum, ranking second. However, compared to its market position, the concentration of funds in decentralized finance (DeFi) applications in the Solana ecosystem is relatively low, with a total locked value (TVL) of 1.137 billion USD, accounting for only 11.3% of its historical high.

In Solana's TVL, liquidity staking projects are particularly important, as they are key to driving TVL back to its historical high. In this field, Marinade and Jito have occupied significant positions with their highest TVL, highlighting the importance of liquidity staking. In this article, PANews will delve into the important participants in the liquidity staking field on Solana and compare their strategies and market performance.

Overall Situation of Staking and Liquidity Staking

According to Staking Rewards data, as of December 12th, the market value of SOL was 30.53 billion USD, the staking market value was 27.62 billion USD, the staking ratio was 69.18%, the staking quantity was 391 million SOL, the inflation rate was 6.75%, and the reward rate was 6.87%. Among them, SOL's staking market value ranks second only to ETH among all PoS public chains; the staking ratio is relatively high among PoS public chains with high market value.

Marinade data shows that there are a total of 1,986 validators in Solana, and the top validators provide an APY close to 8%, all without commission.

To reward SOL holders, increase network security, and resistance to censorship, the Solana Foundation has launched the "Staking Pool Plan," allowing users to deposit SOL into the staking pool and receive SPL tokens representing their share in the staking pool, which are the liquidity staking tokens (LST) that can circulate freely. Solana Compass data shows that a total of 16.82 million SOL is locked in the staking pool, providing an average APY of 6.68%. Therefore, SOL in the staking pool accounts for approximately 4.3% of the total staking amount. The top 4 staking pools are Marinade, Jito, BlazeStake, and Lido, the largest 4 liquidity staking projects in the Solana ecosystem.

Marinade Finance

Marinade Finance is the earliest liquidity staking protocol in the Solana ecosystem. It was established with the support of the Solana ecosystem during the Solana x Serum Hackathon in the spring of 2021 and was launched on the Solana mainnet in August 2021. Staking SOL on Marinade can yield mSOL, and staking rewards accumulate directly into mSOL.

Unlike other projects, Marinade also provides native staking services, allowing users to earn staking rewards without using any smart contracts (i.e., no LST).

Marinade has 7.058 million SOL staked, the highest staking amount among liquidity staking projects on Solana; it is also the project with the highest TVL on Solana, valued at 777 million USD; staking yield is 6.543%; staking amount has increased by 31.22% in the past 30 days.

Marinade's governance token is MNDE, with a circulating market value of 85.99 million USD and a total market value of 356 million USD, up 22.2% in the past 7 days.

Jito

Jito completed its Series A financing led by Multicoin Capital and Framework Ventures in August 2022 and launched its liquidity staking platform at the end of 2022. Staking SOL on Jito can yield JitoSOL, and staking rewards accumulate directly into JitoSOL.

Unlike other liquidity staking projects, Jito has developed the largest maximum extractable value (MEV) infrastructure for the Solana network, including: the Jito Solana client, Jito Bundles that allow searchers to send transaction bundles to validators, the Jito Block Engine blockchain builder, and the MEV allocation system. Due to its own MEV business, a portion of the MEV revenue is allocated to JisoSOL, resulting in relatively higher earnings for users staking through Jito.

Jito has 6.38 million SOL staked; staking amount has increased by 17.77% in the past 30 days; TVL is 455 million USD; staking yield is 6.892%.

Jito's governance token is JTO, with a circulating market value of 342 million USD and a total market value of 2.973 billion USD, up 46.6% in the past 7 days.

BlazeStake

BlazeStake was originally a niche staking pool launched in May 2022, but due to the collective outbreak of the Solana ecosystem, the governance token has increased several times from its low point, making BlazeStake surpass Lido to become the third largest liquidity staking project on Solana. Staking SOL on BlazeStake can yield bSOL, and staking rewards accumulate directly into bSOL.

BlazeStake mainly uses Solana Labs' official staking pool smart contract, which has the largest validator set, allowing users to stake liquidity to specific validators.

BlazeStake has 1.52 million SOL staked; staking amount has grown by 177% in the past 30 days; TVL is 108 million USD; staking yield is 6.232%.

Blaze's governance token is BLZE, with an undisclosed circulating market value and a total market value of 38.84 million USD, up 66.5% in the past 7 days.

Lido

Lido launched its liquidity staking service on Solana in September 2021 and dominates the liquidity staking on ETH. However, its development on other chains has not been ideal, and it failed to capitalize on the first-mover advantage and brand advantage. It announced in October that it would stop accepting new staking on Solana. Staking SOL on Lido can yield stSOL, and staking rewards also accumulate into stSOL.

Related reading: "Lido, facing enemies on all sides: shutting down services on multiple public chains, not well received in the Ethereum ecosystem either"

Lido has 887,000 SOL staked; staking amount has decreased by 41.43% in the past 30 days; TVL on Solana is 63.4 million USD; staking yield is 6.717%.

Lido's governance token is LDO, with a circulating market value of 2.095 billion USD and a total market value of 2.356 billion USD, down 6.7% in the past 7 days.

Applications of Various LST in DeFi

Marinade's mSOL, Jito's JitoSOL, Blaze's bSOL, and Lido's stSOL have all received good support in Solana's DeFi applications.

The two largest lending protocols on Solana, marginfi and Solend, both support mSOL, JitoSOL, bSOL, and stSOL as collateral for borrowing. However, after Lido's announcement, stSOL has been delisted from these two projects.

In the leading DEX on Solana, Orca, both mSOL/SOL and bSOL/SOL have liquidity of over tens of millions of USD, and there are trading pairs between mSOL and bSOL; however, there is relatively less liquidity between Jito/SOL and stSOL/SOL.

The growth in staking amount and liquidity in DEX may be related to the project's incentive measures. Blaze offers the highest incentives, with deposits in Solend earning a 15.37% APR subsidy in BLZE governance tokens, and mSOL deposits earning a 1.98% APR subsidy in MNDE governance tokens. Jito has not provided incentives for the adoption of JitoSOL in DeFi, and Lido's tokens have been mostly distributed and they are unable to provide further incentives, choosing to exit the market.

Conclusion

The Solana ecosystem contains a variety of representative liquidity staking solutions, all of which have received support from DeFi projects in the ecosystem. Marinade was the earliest to launch and has native staking services; Jito provides higher returns through MEV infrastructure; BlazeStake allows users to stake SOL with specific validators; and Lido is a representative provider of multi-chain liquidity staking services. However, the total amount of liquidity staking is relatively small, with SOL staked through staking pools accounting for only 4.3% of all staked SOL. The abundance of liquidity solutions has also led to liquidity dispersion, and there may be some competitive solutions emerging in the future, such as LST from marginfi.

Incentive measures still seem crucial for increasing staking amounts and liquidity of LST in DEX. Blaze, despite having the least fame, has provided the highest APR subsidies in DEX and lending protocols, leading to a 177% increase in staking amount in the past 30 days. Despite being the most prominent in the liquidity staking field, Lido, which has been online on Solana for a long time, has almost distributed all its tokens and is unable to participate in the subsidy war, choosing to shut down.

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