Intro

Among the numerous development initiatives in the blockchain space, Liquid Staking is considered one of the most groundbreaking since 2017. First introduced by Lido in 2020, Liquid Staking quickly reached the milestone of $1 billion in total value locked (TVL) and currently has a TVL of $24.5B. Since then, Liquid Staking has expanded rapidly to various Proof of Stake blockchains, leading in the DeFi sector with $42.82B in TVL, of which Solana accounts for $4.72B.

What is Liquid Staking?

Liquid Staking refers to protocols that allow users to stake a blockchain's Proof of Stake assets, such as ETH, MATIC, SOL, SUI... The protocol then issues a representative token for the staked assets at a 1:1 ratio. However, in the case of Solana, this ratio may not always be balanced.

Benefits of Liquid Staking

1/ Provides Liquidity for Staked Assets

To make it easier to understand, when users stake directly or delegate to validators, the staked assets become non-transferable and illiquid. For example, it's like depositing money in a bank to earn interest without receiving any equivalent assets, leaving you waiting only to receive interest from the bank.

This situation leaves users with two choices:

• Stake to the network for block rewards: This enhances network security but does not optimize capital efficiency.

• Stake on DeFi platforms: This increases capital usage but decreases the security of the network.

Both options have their pros and cons. Liquid Staking resolves this by issuing a representative asset, allowing users to use it to earn additional yields in DeFi or continue trading. This helps optimize capital utilization while maintaining network security.

2/ Flexibility

When users choose Native Staking by self-staking or delegating to validators, they need only run dedicated software or send SOL tokens to a stake account and delegate them to one or more validators (this is how staking works on Solana). However, an issue arises when users want to withdraw their assets: they have to "wait". If the market fluctuates significantly or there are large unstaking requests, the waiting period can be extended.

Liquid Staking solves this by providing liquidity, allowing users to redeem their original assets immediately. For example, if you deposit 10 SOL into Jito and receive 10 jitoSOL, you can swap it in the pool to get back SOL immediately without having to wait.

3/ Mitigates Validator Risks

In addition to benefiting both the network and users, Liquid Staking also helps users avoid the risks associated with malicious validators. On Ethereum, if a validator misbehaves, the staker bears the penalty. Similarly, on blockchains with delegation mechanisms, when a validator acts maliciously, the delegator also bears the penalty.

Liquid Staking mitigates this risk by delegating to multiple validators, reducing the potential for asset loss when issues arise. Moreover, Liquid Staking platforms often have a protection fund to compensate users when necessary.

Jito

Jito is a Liquid Staking service for Solana that distributes Maximum Extractable Value (MEV) rewards to holders. The Jito Stake Pool enables users to stake SOL and receive JitoSOL in return. This token provides liquidity while earning both staking and MEV rewards. JitoSOL has two unique aspects:

• It provides additional rewards from MEV transactions on Solana.

• It exclusively stakes with validators running software designed to improve network performance, reducing congestion.

Marinade

Marinade is an automated staking platform that monitors all Solana validators and delegates to over 100 of the best-performing ones. Users can optimize their SOL staking rewards through Marinade's automated strategy. Marinade offers two options: traditional staking or Liquid Staking to receive mSOL. Both options involve staking with the same set of high-performance validators.

SolBlaze

SolBlaze is a fully non-custodial stake pool protocol supported by the Solana Foundation. By staking SOL through SolBlaze, users receive bSOL—a token that can be used in DeFi applications. SolBlaze automatically delegates SOL to multiple validators to enhance Solana's decentralization. bSOL is designed to appreciate relative to SOL every epoch, corresponding to staking APY.

Jupiter

JupSOL represents staked SOL with Jupiter's validator, which is managed by Triton. Jupiter passes all validator rewards and 100% of MEV to stakers for maximum yield. JupSOL is issued through Sanctum.

The Role of iLoop

iLoop was established with the goal of enhancing the value of LST assets. Currently, the barrier for a Liquid Staking project to operate in the market lies in liquidity and adoption in DeFi projects. With Sanctum's solution, these barriers have been removed, transforming the entire Liquid Staking sector on Solana, making it easier for projects to launch their LSTs.

However, there is still one more issue to solve for LSTs to be more perfect—the ability to generate returns. If a project launches with an average APY of 6% - 8%, and then adds it to Sanctum's Infinity Pool or lends it on Kamino, it is not particularly attractive. iLoop has identified this issue and provides the ability to optimize the value of LSTs with leverage up to 15x, significantly increasing demand for staking through Liquid Staking platforms, which typically only offer ~6% yield.

About iLoop

iLoop is a next-generation lending and borrowing platform focused on the Liquid Staking market within the Solana ecosystem, providing solutions to optimize the holdings of LST stakers directly on a single platform.

Join us on this exciting journey with iLoop. iLoop is committed to continuously improving and developing our services to deliver the best experiences for the community in the Liquid Staking fields on Solana.