Solana Staking Market Analysis: The Troika of Liquid Staking

Author: Haibo Jiang, PANews

As the market recovers, Solana (SOL) has jumped to become the sixth-largest cryptocurrency and ranks second in terms of stake assets after ETH among all proof-of-stake (PoS)-based blockchains. However, compared to its market position, decentralized finance (DeFi) applications in the Solana ecosystem have a relatively low level of capital aggregation, with a total value locked (TVL) of $1.137 billion, which is only 11.3% of its all-time high.

Liquid staking projects are particularly important in Solana’s TVL, as they are key to driving TVL back to all-time highs. On this track, Marinade and Jito have a prominent position with their highest TVL, highlighting the importance of the liquid staking category. In this article, PANews will take a deep dive into the key players in the liquid staking space on Solana and provide a comparative analysis of their strategies and market performance.

The overall situation of staking and liquid staking

According to Staking Rewards, as of December 12, the market capitalization of SOL was $30.53 billion, the pledge market value was $27.62 billion, the pledge ratio was 69.18%, the number of pledges was 391 million SOL, the inflation rate was 6.75%, and the reward rate was 6.87%. Among them, the pledge market value of SOL ranks second among all PoS public chains, second only to ETH, and the pledge ratio is relatively high among the top PoS public chains in terms of market capitalization.

According to Marinade data, there are a total of 1,986 validators in Solana, and the top validators offer an APY of nearly 8%, all of which are commission-free.

In order to reward SOL holders and increase the security and censorship resistance of the network, the Solana Foundation has launched the “Staking Pool Program”, which allows users to deposit SOL into the staking pool and receive SPL tokens that represent their share of the staking pool, which are liquid staking tokens (LST) that can be freely circulated. According to Solana Compass data, a total of 16.82 million SOL were locked in the staking pool, and the average APY provided was 6.68%. Then, the SOL in the staking pool accounts for about 4.3% of the total stake. The top 4 staking pools are Marinade, Jito, BlazeStake, and Lido, which are the 4 largest liquid staking projects in the Solana ecosystem.

Marinade Finance

Marinade Finance is the earliest liquid staking protocol in the Solana ecosystem, which was successfully funded by the Solana ecosystem during the Solana x Serum Hackathon event in the spring of 2021 and launched on the Solana mainnet in August 2021. If you stake SOL on Marinade, you can get mSOL, and the staking income will be directly accumulated into mSOL.

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

There are 7.058 million SOL staked in Marinade, which is the largest amount of staking among liquid staking projects on Solana, and it is also the highest TVL project on Solana, worth $777 million, with a staking yield of 6.543% and an increase of 31.22% in the past 30 days.

Marinade’s governance token is MNDE, with a circulating market cap of $85.99 million and a total market cap of $356 million, up 22.2% over the past seven days.

Jito

Jito closed a Series A funding round led by Multicoin Capital and Framework Ventures in August 2022 and launched a liquid staking platform at the end of 2022. If you stake SOL in Jito, you can get JitoSOL, and the staking income will be directly accumulated into JitoSOL.

Unlike other liquid staking projects, Jito has developed the Maximum Extractable Value (MEV) infrastructure for the Solana network, which includes products such as: Jito Solana on the client side, Jito Bundles that allow searchers to send transaction packages to validators, Jito Block Engine, a blockchain builder, and a MEV allocation system. Due to its own MEV business, a part of the MEV income will be allocated to JisoSOL, so the income of users staking through Jito is also relatively higher.

There are 6.38 million SOL pledged in Jito, and the pledge volume has increased by 17.77% in the past 30 days. TVL is $455 million, with a pledge yield of 6.892%.

Jito’s governance token is JTO, with a circulating market capitalization of $342 million and a total market capitalization of $2.973 billion, up 46.6% over the past seven days.

BlazeStake

BlazeStake was originally a niche staking pool that was launched in May 2022, but recently due to the collective outbreak of the Solana ecosystem, the governance token has risen dozens of times from its low point, and BlazeStake has surpassed Lido to become the third largest liquid staking project on Solana. Staking SOL in BlazeStake can get bSOL, and the staking rewards are directly accumulated into bSOL.

BlazeStake primarily uses Solana Labs’ official staking pool smart contract, which has the largest set of validators, allowing users to stake liquidity to specific validators.

There are 1.52 million SOL staked in BlazeStake, and the staking volume has increased by 177% in the past 30 days. The TVL is $108 million, and the staking yield is 6.232%.

Blaze’s governance token is BLZE, with an undisclosed circulating market capitalization of $38.84 million, up 66.5% over the past seven days.

Lido

Lido launched its liquid staking service on Solana in September 2021, and it dominates the ETH of liquid staking. However, the development on other chains is not ideal, and it has not grasped the first-mover advantage and brand advantage, and has announced in October that it will stop accepting new staking on Solana. Staking SOL in Lido can get stSOL, and the staking rewards are also accumulated in stSOL.

Related reading: “Lido: Shut down multiple public chain services, and the ETH Fang ecosystem is not welcomed”

There are 887,000 SOL staked in Lido, the staking volume has decreased by 41.43% in the past 30 days, the TVL on Solana is $63.4 million, and the staking yield is 6.717%.

Lido’s governance token is LDO, with a circulating market capitalization of $2.095 billion and a total market capitalization of $2.356 billion, down 6.7% over the past seven days.

Several LST applications in DeFi

Marinade’s mSOL, Jito’s JitoSOL, Blaze’s bSOL, and Lido’s stSOL are all well supported 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 lending, but after the announcement of Lido’s launch, stSOL has been delisted by these two projects.

Among the most popular DEX Orca on Solana, both mSOL/SOL and bSOL/SOL have more than $10 million in liquidity, and there are also trading pairs between mSOL and bSOL that can be traded directly, while Jito/SOL and stSOL/SOL have relatively little liquidity.

The growth of staking and liquidity in the DEX may be related to the project’s incentives, with Blaze giving the highest incentives, with deposits in Solend receiving a 15.37% subsidy of APR in BLZE governance tokens and mSOL deposits receiving a 1.98% subsidy of APR in MNDE governance tokens. Jito has not yet incentivized the adoption of JitoSOL in DeFi, and Lido’s tokens have been almost fully distributed, and they can no longer be incentivized and have opted out of the market.

Summary

The Solana ecosystem includes a variety of representative liquid staking schemes, all of which are supported by DeFi projects in the ecosystem. Marinade was the first to launch and has a native staking service, Jito offers higher yields through MEV infrastructure, BlazeStake allows users to stake SOL to specific validators, and Lido represents a multi-chain liquidity bank staking service provider. However, the total amount of liquid staking is small, and the SOL pledged through staking pools only accounts for 4.3% of all staking SOL. The abundance of liquidity schemes has also led to the dispersion of liquidity, and some competitive schemes may emerge in the future, such as the LST of MarginFi.

Incentives still seem to be crucial for staking and LST liquidity in DEXs, with the Blaze project being the least well-known but giving the highest APR subsidy in DEXs and lending protocols, with a 177% increase in staking over the past 30 days. Even though Lido is the most famous in the field of liquid staking and launched on Solana earlier, almost all of its tokens have been distributed, and it is unable to participate in the subsidy war and chooses to shut down.