(Shortened for brevity. For the full post, which includes context on why liquid staking is important, see here.)
Hey JUP DAO!
We’re the Sanctum team, and we’ve been building liquid staking on Solana since February 2021. We helped Solana Labs to build the SPL stake pool program (today, all but one LST use a version of the SPL program), and launched the first SPL stake pool, Socean.
Over the years, we’ve continuously built to improve liquid staking. Our goal is to make all SOL liquid staked and unlock a key growth driver for Solana DeFi and Solana as a whole. 33% of SOL is unstaked, and of staked SOL, over 95% of staked SOL is not liquid staked, so there’s a long way to go!
Our plan to achieve this goal is to:
- Build a unified liquidity layer — The combination of Sanctum Reserve and Sanctum Router has allowed people to convert one LST to another even when there is normally no route between two LSTs. This unifies LST liquidity by allowing small LSTs to access the liquidity of much larger LSTs. Sanctum Router has serviced over 330M in volume on Jupiter alone, and Sanctum Reserve over 150M of instant unstakes.
This unified liquidity has single-handedly allowed the growth of LST DeFi. And Infinity, the most capital-efficient LST LP is coming – the optimal liquidity solution for an infinite-LST future.
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Launch a thousand LSTs — With a unified liquidity layer, we can launch a thousand LSTs, and we’re starting off with six: bonkSOL, compassSOL, dSOL, jucySOL, pwrSOL, and superSOL. These validator LSTs have zero deposit stake fee, zero withdrawal fee, and zero management fee. They therefore represent a strict upgrade over native staking. And many more are coming.
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Distribute ownership via LFG – We don’t have all the answers, and there are many things that I’d love the wisdom of the community on. We absolutely want to reward early adopters of Solana’s new staking meta, and we want to do it in a fair and equitable way. What is the best way to do it? How should our token be used to govern the Sanctum DAO and steward this public good far into the future? How should our token accrue value?
We have worked with Jupiter for a long time, and admire the ethos of Jup DAO. LFG represents the perfect opportunity to get the right folks across Solana to be involved in Sanctum’s mission. We aim to do this via a fair and decentralised launch, and would love to work with JUP DAO to pull this off.
Sanctum – more than any other protocol – belongs to Solana’s users. We work tirelessly to build the new staking meta, but we need buy-in from everyone. We need evangelists to spread the word. We need native stakers to convert to LSTs. We need protocols, existing and new, to integrate Infinity and the new wave of LSTs. We need projects to launch innovative new kinds of LSTs: personal LSTs, NFT LSTs, subscription-based LSTs. We need to build the LST economy together, and we need your help.
A New Meta For Liquid Staking
Before we end, we want to stress that the new meta of liquid staking on Solana is fundamentally different from what came before, or indeed on any other chain.
The liquid staking meta on other chains (and in the past on Solana) used to be winner-take-all. Before Jupiter built its aggregator, and before we built Sanctum Router, liquidity was incredibly fragmented. You had for example a stSOL-SOL pool on Saber, a mSOL-SOL pool on Raydium, and a scnSOL-SOL pool on Orca, and these pools were completely separate. So every stake pool fought for liquidity, and everyone wanted to use liquidity as a moat to extinguish the competition. I saw this game being played between Marinade and Lido when we were Socean. They were giving out millions in their token in order to incentivise deposits into these AMMs.
This is a super PvP mindset, imported from Ethereum. (Does anyone remember the “Curve Wars”?) But we didn’t want to play this PvP game. So we shifted our mindset from “how can we win this liquidity war” to “how can we help liquid staking flourish”.
Once we did that, we found the secret. The secret is that LSTs are (semi-) fungible. They’re not really different assets; they’re just wrappers over the same stake accounts. So we built to take advantage of this underlying fungibility, to build a 100x better liquid staking landscape than Ethereum.
So we have built that. We built Reserve, Router and Infinity. We have built a unified LST liquidity layer, and kickstarted a Cambrian explosion of new LSTs.
Critically, this is a PvE, not PvP moat. Everyone wants us to succeed, and we want everyone else to succeed. Stake pools want us to succeed and grow Reserve. DeFi protocols love that they can integrate LSTs without fear of depegging. Solflare loves that they can help users instant unstake from their wallet. Jupiter loves our Router because it connects liquidity and lowers prices. Validators love their validator LSTs which help their stakers get the best of both worlds.
We want stake pools to grow as much as possible. We want as many people to stake with validators as possible (via validator LSTs). We want everyone to get as much stake as possible, and for liquidity to be as deep as possible. Our goal should not be to destroy each other, but rather to unlock the ~95% of native staked SOL, and the ~33% of unstaked SOL.
This is the difference between staking on Solana vs Ethereum. This is why I think we can be bigger than Lido. Because we are building a moat that grows bigger by working with and helping others, not extinguishing others. Because that’s how Sanctum wins, and that’s how we all win.
To learn more and read about Sanctum, check out our links here:
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Blog: Blog
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Docs: Docs
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Website: https://sanctum.so
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Twitter: https://twitter.com/sanctumso
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Telegram: https://t.me.sanctumso
The Sanctum Team will be available on this forum, to answer any and all questions.
