Solana’s Liquid Staking Ecosystem Thrives on Growing Adoption

Solana, currently the fifth largest cryptocurrency by market capitalization, has seen a notable increase in its value. liquid staking ratio, up 1.76% compared to the previous quarter.

The number of liquid staking tokens (LST) on Solana has doubled and the market is becoming more diverse. At the same time, the dominance of the top three liquid staking providers has dropped from 93% to 68.7%, indicating a wider range of participants and options.

According to DefiLlama, over $54 billion worth of crypto assets are currently staked on various liquid staking platforms. Unlike traditional staking, liquid staking allows users to earn additional yield while maintaining liquidity through derivative tokens for defi activities.

Data Dune Analytics reveals that over 23 million SOL, valued at over $3.6 billion, is staked on liquid staking platforms.

Solana boasts a higher staking ratio than Ethereum, with around 60% of SOL staked, but only 6% of that amount is involved in liquid staking. This suggests significant untapped potential and growth opportunities in Solana’s liquid staking market.

Tom Wan, researcher and analyst, provided insight into the driving forces behind these trends. Wan noted that Jito Labs’ airdrop marked a turning point, increasing the liquid staking ratio by 2% from Q4 2023 to Q1 2024.

He also highlighted the launch of the Sanctum Router and Sanctum Reserve as fundamental for future growth.

“Liquid Staking is booming on Solana,” Wan tweeted, reflecting on the industry’s expansion.

The number of liquid staking tokens (LST) has increased to 53, nearly doubling from the previous quarter. This growth, while still in its early stages, indicates a significant shift in the Solana ecosystem.

Platforms like Sanctum have simplified the development and scaling of LSTs. Meanwhile, Jito Labs, which serves approximately 91,000 Solana investors and offers an annual percentage rate (APR) of over 8%, which illustrates the growth of this region.

Wan also noted that the introduction of new technologies and new incentives has been crucial to this expansion.

The launch of the Sanctum Router and Sanctum Reserve facilitated market entry, laying the foundation for what he described as a “Cambrian explosion” in Solana’s liquid staking sector.

In the meantime, new high-quality projects from entities such as Helius LaboratoriesSolana Compass and Drift Protocol emerge, challenging current market leaders and contributing to a more diverse market.

Jupiter Exchange’s jupSOL in particular has made significant progress. It recently surpassed bSOL in terms of market capitalization, reaching a total value locked (TVL) of $329 million.

Over the past 30 days, jupSOL has seen a 22% increase in its TVL, partly due to its integration with Kamino Finance.

JupSOL is now the most deposited LST on Kamino, at $220 million, and it offers the highest annual percentage yield (APY) at 21%.

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