Rapid growth in liquid staking ecosystem driven by rising adoption rates
Solana, recognized as the fifth-largest cryptocurrency by market capitalization, has seen a significant surge in its liquid staking ratio, climbing by 1.76% from one quarter to the next. The quantity of Liquid Staking Tokens (LSTs) within Solana’s ecosystem has seen a twofold increase, leading to a more varied market. The dominance held by the top three liquid staking entities has diminished from 93% to 68.7%, reflecting a wider array of choices and participants.
DefiLlama reports that the current value of crypto assets staked on various liquid staking platforms exceeds $54 billion. Liquid staking differentiates itself from the conventional approach by allowing stakeholders to gain additional yields while retaining liquidity through derivative tokens for decentralized finance (DeFi) activities.
Dune Analytics provides data showing that over 23 million SOL, with a valuation surpassing $3.6 billion, are currently staked in liquid staking platforms.
When compared to Ethereum, Solana showcases a higher staking ratio, with approximately 60% of SOL staked. However, a mere 6% of this is engaged in liquid staking, indicating a substantial untapped potential and opportunities for growth within Solana’s liquid staking market.
Tom Wan, an analyst and researcher, has shed light on the factors propelling these trends. Wan pointed out that Jito Labs’ airdrop was a pivotal moment, boosting the liquid staking ratio by 2% from the fourth quarter of 2023 to the first quarter of 2024. He also emphasized the significance of the Sanctum Router and Sanctum Reserve launches as pivotal for continued expansion.
“Liquid Staking is experiencing a boom on Solana,” Wan expressed via a tweet, commenting on the sector’s robust growth.
In related news, BNB Chain is set to introduce its own native liquid staking.
The count of LSTs has escalated to 53, nearly doubling since the last quarter. This burgeoning growth, though still nascent, signifies a notable transformation in Solana’s infrastructure.
Platforms such as Sanctum have streamlined the creation and scaling of LSTs. Jito Labs, catering to approximately 91,000 Solana investors and offering an annual percentage rate (APR) exceeding 8%, stands as a testament to this segment’s development.
Wan also acknowledged the vital role of new technologies and incentives in this burgeoning expansion. The introduction of the Sanctum Router and Sanctum Reserve has eased market access, setting the stage for what he terms a ‘Cambrian explosion’ in the liquid staking domain of Solana.
Concurrently, emerging high-caliber projects from groups like Helius Labs, Solana Compass, and Drift Protocol are vying with established market leaders, fostering a more diverse marketplace.
Particularly, Jupiter Exchange’s jupSOL has achieved remarkable progress, recently overtaking bSOL in market capitalization and amassing a total value locked (TVL) of $329 million.
In the last 30 days, jupSOL has witnessed a 22% increment in TVL, partly attributed to its integration with Kamino Finance. Presently, jupSOL is the most substantial LST deposited on Kamino, holding $220 million, and boasts the highest annual percentage yield (APY) at 21%.
For further reading:
Ether.fi surpasses its rivals in the rapidly expanding liquid staking arena.
