The current state of liquid staking isn't optimal

Liquid staking offers a significant improvement over native staking in terms of capital efficiency. However, during periods of abnormal sell pressure, the market price of liquid staking tokens (LSTs) may drop, depending on the available liquidity in the market. While this doesn’t affect the true value (or redemption price) of LSTs—since they can always be redeemed for the full amount of SOL at the end of the epoch—it can cause panic, leading to a negative momentum and further selling. This may result in a "depeg," where the price of the LST deviates from its true SOL value.

Sanctum was created to solve these challenges. Maintaining an AMM pool for LST-SOL liquidity is inefficient because, by design, more than 50% of the pool consists of SOL that isn’t earning yield. Additionally, converting from LST A to LST B shouldn't require the user to first sell LST A for SOL.

As a result, liquid staking is somewhat "semi-liquid." At Sanctum, we’re making liquid staking fully liquid by developing a complete suite of on-chain programs and infrastructure.