A New Star in Liquid Staking within the Solana Ecosystem: An In-Depth Analysis of Sanctum

Liquid staking has brought revolutionary changes to asset management methods in PoS networks. By converting traditionally illiquid staked assets into tradable tokens, it offers users greater flexibility and yield potential. This innovation allows stakers to utilize their assets to participate in DeFi activities or trade without needing to unstake.

On the Ethereum network, EigenLayer further expands this concept by introducing a re-staking mechanism. Users can deposit liquid staking tokens (LST) into EigenLayer's smart contract to receive liquid re-staking tokens (LRT), thereby earning additional rewards on top of the original staking yield.

The liquid staking market has experienced explosive growth in just a few years, with the total locked value (TVL) skyrocketing from 30 million to over 57 billion dollars. However, there are significant differences in the staking ratios across different blockchain networks. For example, Solana's staking rate exceeds 70%, far higher than Ethereum's 27%. Interestingly, the penetration rate of liquid staking tokens in these two networks is also quite different: in Solana, LST accounts for only 6% of the staking supply, while in Ethereum, this ratio exceeds 40%.

This difference provides Sanctum with huge development space in the Solana ecosystem. By introducing innovative re-staking solutions and fostering a competitive environment, Sanctum has the potential to bring more choices, higher Liquidity, and more lucrative yield opportunities for Solana stakers. This not only aligns with the ever-evolving DeFi demands but also prevents Solana from following in Ethereum's footsteps and avoids the emergence of a dominant staking service provider like Lido.

Sanctum's core product Infinity is an innovative liquidity pool designed to simplify the trading and staking process of LST on Solana. It utilizes on-chain data for accurate pricing, overcoming the limitations of traditional AMMs in scenarios of insufficient liquidity or large trades. Users who deposit LST into the Infinity pool can receive INF tokens, which not only earn staking rewards from all LST in the pool but also provide additional earnings from transaction fees.

Sanctum has also launched innovative features such as validator LST, reserve pools, and routers. Validator LST allows validators to issue their own tokens, enhancing competitiveness; reserve pools provide deep liquidity for all LSTs, simplifying the redemption process; and routers enable efficient exchanges between different LSTs.

Unlike Lido's dominance on Ethereum, Sanctum adopts a more collaborative and decentralized approach within the Solana ecosystem. It is committed to creating a healthier and more inclusive staking environment by supporting multiple LSTs and promoting collaboration.

Despite facing competition from established players like Jito, Sanctum's unique reserves and routing mechanism, strong TVL growth, and potential to promote network decentralization are key bullish factors. However, Sanctum's success largely depends on the overall development of the Solana ecosystem, while also facing challenges such as user education and potential regulatory changes.

In the future, Sanctum plans to delve into various liquid staking tokens within its ecosystem, providing detailed comparative analyses and risk assessments. As the project continues to evolve, Sanctum is expected to play an increasingly important role in the liquid staking space on Solana, bringing more innovation and value to users.