Sanctum: Redefining liquid staking on Solana

Liquid staking is one of the core security and DeFi infrastructures of any proof-of-stake blockchain. This article compares the liquid staking landscape on Ethereum and Solana, explains the different approaches taken by the two, and provides an in-depth analysis of Sanctum - an innovative protocol that rethinks liquid staking on Solana.

Comparison of Liquid Staking between Ethereum and Solana

Ethereum

• To become a validator, at least 32 ETH must be staked, along with technical knowledge, and one must bear the risk of slashing.
• Does not support native stake delegation
• Lido dominates, controlling about 30% of the stake Ethereum.
• Lido's stETH has the highest liquidity and application integration in LST.

Solana

• Supports delegated proof of stake, allowing users to stake any amount of SOL directly with validators.
• The reduction has not been activated yet, and the choice of validators is not a key issue.
• The DeFi ecosystem is not as mature as Ethereum.
• LST only accounts for 6% of the staking supply, far lower than Ethereum's over 40%.

Innovation of Sanctum

The Sanctum team is a pioneer of the Solana liquid staking ecosystem, fundamentally rethinking liquid staking. Their core insight is that LSTs are actually interchangeable, as they are merely wrappers for stake accounts.

Sanctum Reserve

• A pool with over 200,000 SOL
• Users can exchange LST for reserves to obtain instant Liquidity of SOL
• Charge dynamic fees based on the remaining SOL percentage
• Provide a unified Liquidity pool for all LST

Sanctum Router

• Collaborate with Jupiter for development
• Allow efficient swaps between any two LSTs
• Complete multiple steps in a single transaction
• Ensure that any LST can be exchanged with other LSTs.

Sanctum Infinity

• A multi-LST liquidity pool supporting exchanges between all LSTs in the pool.
• Use on-chain staking pool information as a reliable oracle for pricing.
• Maintain target allocation by dynamically adjusting exchange fees
• The INF token accumulates all staking rewards and transaction fees from deposited LST.

The Impact of Sanctum

1. Lowered the threshold for establishing LST, triggering an innovation boom in the Solana liquid staking sector.

2. Allow individual validators to issue their own LST, increasing competitiveness.

3. Provides a new way to issue LST for infrastructure projects and applications.

4. Enabled the possibility of personal issuance of LST, similar to SocialFi

5. Promoted the diversification and decentralization of the Solana staking ecosystem.

Sanctum has democratized liquid staking, bringing groundbreaking changes to the Solana ecosystem. It not only enhances the capital efficiency of LST but also provides small validators with the opportunity to compete with large projects, further promoting the openness and inclusivity of Solana.