Analysis of the Solana Ecosystem Liquid Staking Market: Four Major Market Makers Compete

As the cryptocurrency market warms up, Solana (SOL) has surged to become the sixth-largest cryptocurrency by market capitalization. In the proof-of-stake (PoS) based blockchain, its stake assets scale is second only to Ethereum. However, the degree 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, which is only 11.3% of its historical peak.

In the TVL of Solana, liquid staking projects play an important role and are key to driving the TVL back to historical highs. Among them, Marinade and Jito hold significant positions with the highest TVL, highlighting the importance of the liquid staking category. This article will delve into the important participants in the liquid staking field on Solana and conduct a comparative analysis of their strategies and market performance.

Stake and Liquid Staking Overview

As of December 12, the market capitalization of SOL is $30.53 billion, with a staked market value of $27.62 billion, a staking ratio of 69.18%, and a staking quantity of 391 million SOL. The inflation rate is 6.75%, and the reward rate is 6.87%. The staked market value of SOL ranks second among all PoS public chains, only behind ETH; the staking ratio is also relatively high among the PoS public chains with higher market capitalization.

There are a total of 1986 validators in Solana, with the top-ranked validators offering an APY close to 8%, all with no commission.

To reward SOL holders and increase the network's security and censorship resistance, the Solana official launched the "staking pool program," allowing users to deposit SOL into the staking pool and receive SPL tokens that represent their share in the staking pool. These SPL tokens are liquid staking tokens (LST) and can circulate freely. According to data, 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 the four largest liquid staking projects in the Solana ecosystem.

Marinade Finance

Marinade Finance is the earliest liquid staking protocol in the Solana ecosystem, launched on the Solana mainnet in August 2021. Staking SOL on Marinade allows you to receive mSOL, and staking rewards are directly accumulated into mSOL.

Marinade also offers native staking services, allowing users to earn staking rewards without using any smart contracts.

Marinade has 7.058 million SOL staked, making it the largest liquid staking project by stake on Solana; it is also the project with the highest TVL on Solana, valued at $777 million; the staking yield is 6.543%; the amount staked has increased by 31.22% over the past 30 days.

The governance token of Marinade is MNDE, with 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

Jito launched its liquid staking platform at the end of 2022. In Jito, staking SOL can yield JitoSOL, and the staking rewards are directly accumulated into JitoSOL.

Unlike other liquid staking projects, Jito has developed maximum extractable value (MEV) infrastructure for the Solana network. Due to its own MEV business, a portion of the MEV revenue is allocated to JisoSOL, so users staking through Jito also enjoy relatively higher returns.

There are 6.38 million SOL staked in Jito; the staking amount has increased by 17.77% in the past 30 days; the TVL is 455 million USD; the staking yield is 6.892%.

Jito's governance token is JTO, with a circulating market cap of $342 million and a total market cap of $2.973 billion, having increased by 46.6% in the past 7 days.

BlazeStake

BlazeStake was launched in May 2022 and has recently rapidly developed due to the collective explosion of the Solana ecosystem, surpassing Lido to become the 3rd largest liquid staking project on Solana. By staking SOL in BlazeStake, users can receive bSOL, and the staking rewards are directly accumulated into bSOL.

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

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

The governance token of Blaze is BLZE, with a total market value of $38.84 million, having increased by 66.5% over the past 7 days.

Lido

Lido launched its liquid staking service on Solana in September 2021, but its development on Solana has not been ideal, failing to leverage its first-mover and brand advantages, and announced in October that it would stop accepting new stakes on Solana. Staking SOL in Lido allows you to receive stSOL, and the staking rewards are also accumulated into stSOL.

Lido has staked 887,000 SOL; the staking amount has decreased by 41.43% in the past 30 days; the TVL on Solana is 63.4 million USD; the staking yield is 6.717%.

Lido's governance token is LDO, with a circulating market cap of $2.095 billion and a total market cap of $2.356 billion, down 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 both support mSOL, JitoSOL, and bSOL as collateral for borrowing, but stSOL has been delisted by both projects.

In the largest DEX on Solana, both mSOL/SOL and bSOL/SOL have a liquidity of over ten million dollars, and there are trading pairs between mSOL and bSOL that can be traded directly; while the liquidity of Jito/SOL and stSOL/SOL is relatively low.

The increase in staking volume and liquidity in DEX may be related to the project's incentive measures. Blaze offers the highest incentives, with a deposit on a certain lending platform yielding a subsidy of APR 15.37% in BLZE governance tokens, and mSOL deposits earning a subsidy of APR 1.98% in MNDE governance tokens. Jito has not yet provided incentives for the adoption of JitoSOL in DeFi, while Lido's tokens have already been mostly distributed, making it unable to provide further incentives and opting to exit the market.

Summary

The Solana ecosystem includes various representative liquid staking solutions, all of which have the support of DeFi projects within the ecosystem. Marinade was the first to launch, offering native staking services; Jito provides higher yields through MEV infrastructure; BlazeStake allows users to stake SOL to specific validators; Lido is a representative of multi-chain liquid staking service providers. However, the total amount of liquid staking is relatively small, with SOL staked through staking pools accounting for only 4.3% of all staked SOL. The abundance of liquidity solutions has also led to the dispersion of liquidity, and some competitive solutions may emerge in the future.

Incentives seem to be crucial for increasing staking volume and the liquidity of LST in DEXs. The Blaze project has the least recognition but has offered the highest APR subsidies in DEX and lending protocols, with a staking volume increase of 177% over the past 30 days. Lido, despite being the most recognized in the liquid staking field and having launched on Solana earlier, has almost fully distributed its tokens and is unable to participate in the subsidy battle, choosing to shut down instead.