Analysis of the Depth of the Solana Liquid Staking Market: Four Giants Compete

With the recovery of the cryptocurrency market, Solana (SOL) has risen to become the sixth largest cryptocurrency in the world. Among all proof-of-stake (PoS) blockchains, its staked asset scale is second only to Ethereum. However, the degree of capital accumulation in decentralized finance (DeFi) applications within the Solana ecosystem is relatively low, with a total locked value (TVL) of $1.137 billion, which is only 11.3% of its historical peak.

In the composition of Solana's TVL, liquid staking projects play a crucial role, being seen as key factors in driving TVL back to historical highs. In this field, Marinade and Jito occupy significant positions with the highest TVL, highlighting the importance of the liquid staking category. This article will delve into the main players in the Solana liquid staking space and conduct a comparative analysis of their strategies and market performance.

Stake and Liquid Staking Overall Situation

As of December 12, data shows that the market value of SOL reached $30.53 billion, with a staked market value of $27.62 billion, a staking ratio as high as 69.18%, and a staking quantity of 391 million SOL. The inflation rate is 6.75%, and the reward rate is 6.87%. It is worth noting that the staked market value of SOL is second only to ETH among all PoS public chains, ranking second; its staking ratio is also at a relatively high level among the PoS public chains with higher market values.

There are a total of 1986 validators in the Solana network, with the top-ranked validators offering an annual percentage yield (APY) close to 8%, and no commission fees are required.

To incentivize SOL holders and enhance the network's security and censorship resistance, the Solana Foundation has launched the "staking pool program." This program allows users to deposit SOL into the staking pool and receive SPL tokens representing their share in the staking pool. These SPL tokens are liquid staking tokens (LST) and can circulate freely. Data shows that a total of 16.82 million SOL is locked in the staking pool, with an average APY of 6.68%. The SOL in the staking pool accounts for about 4.3% of the total staked amount. The top four staking pools are Marinade, Jito, BlazeStake, and Lido, which are also the four largest liquid staking projects in the Solana ecosystem.

Marinade Finance: Advantages of the Pioneer

Marinade Finance, as one of the earliest liquid staking protocols in the Solana ecosystem, originated from the Solana x Serum Hackathon event in the spring of 2021. The project successfully received funding from the Solana ecosystem and officially launched the liquid staking protocol on the Solana mainnet in August 2021. Users staking SOL on Marinade can earn mSOL, with staking rewards directly accumulating in mSOL.

Marinade's uniqueness lies in its provision of native staking services, allowing users to earn staking rewards without the use of smart contracts. Currently, there are 7.058 million SOL staked in Marinade, making it the largest liquid staking project on Solana; it is also the project with the highest TVL on Solana, valued at $777 million; the staking yield is 6.543%; and the staking volume has increased by 31.22% over the past 30 days.

The governance token MNDE of Marinade has a circulating market cap of $85.99 million and a total market cap of $356 million, having increased by 22.2% in the past 7 days.

Jito: MEV Innovator

Jito completed its Series A financing round led by well-known investment institutions in August 2022 and launched its liquid staking platform at the end of 2022. Users can stake SOL in Jito to receive JitoSOL, and the staking rewards are directly accumulated into JitoSOL.

Jito's uniqueness lies in developing maximum extractable value (MEV) infrastructure for the Solana network, including the Jito Solana client, Jito Bundles, Jito Block Engine, and MEV distribution system. Due to its own MEV operations, part of the MEV revenue will be allocated to JisoSOL, so users who stake through Jito can achieve relatively higher returns.

Currently, there are 6.38 million SOL staked in Jito; the staking volume has increased by 17.77% over the past 30 days; the TVL has reached $455 million; the staking yield is 6.892%.

Jito's governance token JTO has a circulating market cap of $342 million, a total market cap of $2.973 billion, and has risen 46.6% in the past 7 days.

BlazeStake: The Rising Star

BlazeStake was originally a niche staking pool, launched in May 2022. However, recently, with the overall explosion of the Solana ecosystem, its governance token price has risen dozens of times from its low point, making BlazeStake surpass Lido to become the 3rd largest liquid staking project on Solana. Users can stake SOL in BlazeStake to receive bSOL, with staking rewards directly accumulating in bSOL.

BlazeStake mainly uses the official stake pool smart contract from Solana Labs, featuring the largest set of validators, allowing users to liquid stake to specific validators.

Currently, there are 1.52 million SOL staked in BlazeStake; the staking amount has increased by 177% over the past 30 days; the TVL is $108 million; the staking yield is 6.232%.

The governance token of BlazeStake, BLZE, has a total market value of 38.84 million USD, and it has increased by 66.5% in the past 7 days.

Lido: The Predicament of a Multi-Chain Giant

Lido launched its liquid staking service on Solana in September 2021. Although Lido dominates liquid staking on Ethereum, its development on other public chains has not been ideal, failing to fully leverage its first-mover advantage and brand effect. Lido announced in October that it would stop accepting new stakes on Solana. Users staking SOL in Lido can receive stSOL, and the staking rewards are also accumulated in stSOL.

Currently, Lido has staked 887,000 SOL on Solana; the staking volume has decreased by 41.43% over the past 30 days; the TVL is $63.4 million; the staking yield is 6.717%.

Lido's governance token LDO has a circulating market cap of $2.095 billion, a total market cap of $2.356 billion, and has dropped 6.7% in the past 7 days.

The Application of 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 support mSOL, JitoSOL, and bSOL as collateral for loans, but stSOL has been delisted by both projects after Lido announced its exit.

On the largest decentralized exchange on Solana, both mSOL/SOL and bSOL/SOL have liquidity exceeding ten million US dollars, and there are also direct trading pairs between mSOL and bSOL; however, the liquidity for Jito/SOL and stSOL/SOL is relatively low.

The growth of staking volume and liquidity in DEX may be closely related to the project's incentive measures. Blaze offers the highest incentives, allowing users to earn up to 15.37% APR in BLZE governance token subsidies by depositing in the lending protocol. mSOL deposits can earn a 1.98% APR in MNDE governance token subsidies. Jito has not yet incentivized the adoption of JitoSOL in DeFi, while Lido, due to the near-complete distribution of its tokens, is unable to provide further incentives and ultimately chooses to exit the market.

Summary

There are various representative liquid staking solutions in the Solana ecosystem, all of which have received widespread support from DeFi projects within the ecosystem. As a pioneer, Marinade also provides native staking services; Jito offers higher returns through MEV infrastructure; BlazeStake allows users to stake SOL to specific validators; Lido represents a multi-chain liquid staking service provider.

However, the total amount of liquid staking remains relatively low, with only 4.3% of all staked SOL being staked through the staking pool. Diverse liquidity solutions have also led to the dispersion of liquidity, and more competitive solutions may emerge in the future.

Incentives are still crucial for increasing the staking volume and the liquidity of LST in DEX. Although the Blaze project has the lowest recognition, it has seen a surge of 177% in staking volume over the past 30 days by providing the highest APR subsidies in DEX and lending protocols. In contrast, Lido, despite its fame in the liquid staking field and its early entry into the Solana ecosystem, is unable to participate in the subsidy competition due to almost all tokens being issued, and ultimately chose to exit the market.

As the Solana ecosystem continues to develop, the competitive landscape of the liquid staking market may further evolve. Participants need to continuously innovate, optimize user experience, and provide attractive incentive mechanisms to maintain competitiveness in this rapidly developing field.