Analysis of the Liquid Staking Market in the Solana Ecosystem: Competition Among Four Key Participants

Recently, the cryptocurrency market has shown signs of recovery, with Solana (SOL) rising to the sixth position in market capitalization. Among all Proof of Stake (PoS) blockchains, the scale of staking assets for Solana ranks second only to Ethereum. However, compared to its market position, the capital concentration of 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 composition of Solana's TVL, liquid staking projects play an important role and are a key factor in pushing the TVL back to historical highs. Among them, Marinade and Jito occupy a significant position in this field with the highest TVL, highlighting the importance of the liquid staking category. This article will delve into the main players 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, the data shows that the market value of SOL reached 30.53 billion USD, with a staking market value of 27.62 billion USD, a staking ratio of 69.18%, and a staking amount of 391 million SOL. The inflation rate is 6.75%, and the reward rate is 6.87%. The staking market value of SOL ranks second among all PoS public chains, second only to ETH; its staking ratio is also relatively high among the PoS public chains with higher market values.

The Solana network has a total of 1986 validators, with the top-ranked validators offering an annualized yield of (APY) close to 8%, and no commission is required. To incentivize SOL holders and enhance network security and censorship resistance, the Solana Foundation has launched the "staking pool program." Users can deposit SOL into the staking pool to receive SPL tokens representing their share, namely the liquid staking tokens (LST), which can circulate freely.

According to statistics, a total of 16.82 million SOL is locked in the staking pools, with an average APY of 6.68%, accounting for about 4.3% of the total staked amount. The top four staking pools are Marinade, Jito, BlazeStake, and Lido, which are also the four largest liquid staking projects in the Solana ecosystem.

Analysis of Major Liquid Staking Projects

Marinade Finance

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

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

Jito

Jito launched its liquid staking platform at the end of 2022. Users can stake SOL on Jito to receive JitoSOL, with staking rewards directly accumulated into JitoSOL. The uniqueness of Jito lies in the development of the maximum extractable value (MEV) infrastructure for the Solana network, where a portion of the MEV profits is allocated to JitoSOL, allowing users to obtain relatively higher returns through staking on Jito.

Jito has currently staked 6.38 million SOL, an increase of 17.77% over the past 30 days, with a TVL of $455 million and a staking yield of 6.892%.

BlazeStake

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

BlazeStake mainly uses the official staking pool smart contract from Solana Labs, featuring the largest set of validators, allowing users to liquid stake to specific validators. Currently, BlazeStake has staked 1.52 million SOL, with a growth of 177% over the past 30 days, a TVL of $108 million, and a staking yield of 6.232%.

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. Lido announced in October that it would stop accepting new stakes on Solana. Staking SOL with Lido rewards users with stSOL, and the staking rewards are also accumulated into stSOL.

Currently, Lido has staked 887,000 SOL on Solana, a decrease of 41.43% over the past 30 days, with a TVL of $63.4 million and a staking yield of 6.717%.

The Application of LST in DeFi

Marinade's mSOL, Jito's JitoSOL, Blaze's bSOL, and Lido's stSOL have received good support in Solana's DeFi applications. The two largest lending protocols on Solana, marginfi and Solend, support these LSTs as collateral for lending, but stSOL has been delisted.

In Solana's largest decentralized exchange, Orca, the mSOL/SOL and bSOL/SOL trading pairs have over ten million dollars in Liquidity, and there are also direct trading pairs between mSOL and bSOL. In contrast, the Liquidity of JitoSOL/SOL and stSOL/SOL is relatively low.

The growth of staking volume and liquidity in DEXs may be related to the project's incentive measures. Blaze offers the highest incentives, where users can earn a 15.37% APR subsidy in BLZE governance tokens by depositing in Solend. Marinade's mSOL deposits can earn a 1.98% APR subsidy in MNDE governance tokens. Jito has not yet provided incentives for the application of JitoSOL in DeFi, while Lido is unable to continue incentives due to the near-complete distribution of its tokens.

Summary

There are various representative liquid staking solutions within the Solana ecosystem, all supported by DeFi projects in the ecosystem. Marinade, as a pioneer, provides native staking services; Jito offers higher yields through MEV infrastructure; BlazeStake allows users to stake SOL to specific validators; Lido represents a multi-chain liquid staking service provider.

However, the total amount of liquid staking is still relatively small, with SOL staked through staking pools accounting for only 4.3% of all staked SOL. Diversified liquidity solutions have also led to a dispersion of liquidity, and more competitive solutions may emerge in the future.

Incentive measures remain crucial for increasing staking volume and the liquidity of LST in DEX. For example, although the Blaze project is relatively unknown, it achieved significant staking volume growth in a short period through substantial subsidies. In contrast, while Lido is well-known in the liquid staking field, it chose to exit the Solana market due to its inability to continue providing incentives.