Analysis of Solana Staking Market Depth: The Four Strongholds of Liquid Staking

As the cryptocurrency market warms up, Solana (SOL) has risen to the sixth largest cryptocurrency in the world. Among all Proof of Stake (PoS) based blockchains, Solana's staked asset size is second only to Ethereum. However, compared to its market position, the level of capital aggregation in decentralized finance (DeFi) applications within the Solana ecosystem is relatively low, with a total locked value (TVL) of $1.137 billion, only 11.3% of its historical high.

In the composition of Solana's TVL, liquid staking projects hold an important position and are a key factor in driving the recovery of TVL. Among them, Marinade and Jito stand out with the highest TVL, highlighting the significance of the liquid staking category. This article will delve into the main participants in the Solana liquid staking space and conduct a comparative analysis of their strategies and market performance.

Solana stake market overview

As of December 12, Solana's market capitalization reached $30.53 billion, with a staked market value of $27.62 billion and a staking ratio as high as 69.18%. The amount staked is 391 million SOL, with an inflation rate of 6.75% and a reward rate of 6.87%. It is worth noting that the staked market value of SOL ranks second among all PoS blockchains, only behind ETH. At the same time, its staking ratio is relatively high among the PoS blockchains with larger market capitalizations.

The Solana network currently has 1,986 validators, with the top validators offering an annual percentage yield (APY) close to 8% and no commission required. To incentivize SOL holders and enhance network security and censorship resistance, the Solana Foundation has launched the "staking pool program." This program allows users to deposit SOL into a staking pool and receive SPL tokens representing their share, known as liquid staking tokens (LST).

According to the data, a total of 16.82 million SOL is locked in the staking pool, with an average APY of 6.68%. This means that the SOL in the staking pool accounts for approximately 4.3% of the total staking volume. The top four staking pools are Marinade, Jito, BlazeStake, and Lido, which are also the four largest liquid staking projects in the Solana ecosystem.

Detailed Explanation of the Top Four Liquid Staking

Marinade Finance

Marinade Finance is one of the earliest liquid staking protocols in the Solana ecosystem, launched on the mainnet in August 2021. Users can stake SOL in Marinade to receive mSOL, with staking rewards directly accumulating in mSOL. Unlike other projects, Marinade also offers native staking services, allowing users to earn staking rewards without using smart contracts.

As of now, 7.058 million SOL is staked in Marinade, making it the largest liquid staking project on Solana and the project with the highest TVL, worth $777 million. Its staking yield is 6.543%, with a 31.22% increase in staking volume over the past 30 days. Marinade's governance token MNDE has a circulating market cap of $85.99 million and a total market cap of $356 million, with a 22.2% increase over the past 7 days.

Jito

Jito launched its liquid staking platform at the end of 2022. Users can stake SOL on Jito to receive JitoSOL, and the staking rewards are also accumulated into JitoSOL. What makes Jito unique is its development of 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 MEV operations, a portion of the MEV rewards will be distributed to JitoSOL, so users staking through Jito may receive relatively higher returns.

Currently, 6.38 million SOL is staked in Jito, with a growth of 17.77% over the past 30 days. Its TVL is $455 million, and the staking yield is 6.892%. Jito's governance token JTO has a circulating market cap of $342 million and a total market cap of $2.973 billion, with an increase of 46.6% over the past 7 days.

BlazeStake

BlazeStake was launched in May 2022 and has recently rapidly developed due to the overall prosperity of the Solana ecosystem, surpassing Lido to become the third largest liquid staking project on Solana. Users can stake SOL on BlazeStake to receive bSOL, with earnings directly accumulated into bSOL. BlazeStake primarily uses the official staking pool smart contract from Solana Labs, featuring the largest set of validators, allowing users to liquid stake to specific validators.

BlazeStake currently stakes 1.52 million SOL, with a growth of 177% over the past 30 days. Its TVL is $108 million, and the staking yield is 6.232%. The governance token BLZE of BlazeStake has a total market value of $38.84 million, increasing by 66.5% in the past 7 days.

Lido

Lido launched its liquid staking service on Solana in September 2021. Although Lido dominates liquid staking on Ethereum, its development on other chains has not been ideal. In October of this year, Lido announced that it would stop accepting new stakes on Solana. Users staking SOL on Lido can receive stSOL, and the earnings are also accumulated in stSOL.

Currently, Lido has staked 887,000 SOL on Solana, a decrease of 41.43% over the past 30 days. Its TVL on Solana is $63.4 million, with a staking yield of 6.717%. Lido's governance token LDO has a circulating market cap of $2.095 billion and a total market cap of $2.356 billion, down 6.7% over the past 7 days.

The Application of LST in DeFi

Marinade's mSOL, Jito's JitoSOL, Blaze's bSOL, and Lido's stSOL have received varying levels of support in Solana's DeFi applications. The two largest lending protocols on Solana, marginfi and Solend, both support these LSTs as collateral for lending, but after Lido announced its exit, stSOL has been delisted from both projects.

In Solana's largest decentralized exchange, Orca, the mSOL/SOL and bSOL/SOL trading pairs have over ten million dollars in liquidity, while the Jito/SOL and stSOL/SOL liquidity is relatively lower.

The growth of staking volume and liquidity in DEX may be related to the project's incentive measures. Blaze offers the highest incentives, with a 15.37% APR BLZE governance token subsidy for deposits in Solend. Marinade's mSOL deposits earn a 1.98% APR MNDE governance token subsidy. Jito has not yet incentivized the use of JitoSOL in DeFi, while Lido has chosen to exit the market due to the fact that its tokens have already been fully distributed and cannot provide further incentives.

Conclusion

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

However, the total amount of liquid staking is still relatively low, with SOL staked through staking pools only accounting for 4.3% of all staked SOL. The diversification of liquidity solutions has also led to the fragmentation of liquidity. More competitive solutions may emerge in the future, such as marginfi's LST.

Incentives are still crucial for the increase in staking volume and the liquidity of LST in DEX. Although the Blaze project is not well-known, it has seen a 177% increase in staking volume over the past 30 days by offering subsidies with the highest APR. In contrast, despite Lido's reputation in the field of liquid staking, it chose to exit the Solana market due to its inability to continue providing subsidies.