Increasing the APY for your holders

Introduction

With native staking, you directly delegate your SOL to a chosen validator, and staking rewards automatically compound into your stake account approximately every 50 hours.

Liquid staking introduces a stake pool that acts as an intermediary between you and the validator. When you liquid stake, you deposit SOL into the stake pool and receive Liquid Staking Tokens (LSTs) in exchange, similar to how you receive LP tokens in liquidity pools.

Every ~50 hours, the stake pool receives rewards. Unless epoch fees are set to 100%, these rewards increase the total SOL managed by the pool while the LST supply remains constant. This mechanism naturally increases the LST-to-SOL ratio.

When SOL is added to the reserve stake account, it increases the total SOL managed by the pool without minting new tokens, which also increases the LST-to-SOL ratio.

Since we calculate the APY by comparing the LST-to-SOL ratio between consecutive epochs, any SOL deposits to the reserve account will increase the APY and returns for your stakers.

Calculation methodology

$$\text{APY}_i = ((\frac{\frac{\text{TVL}_{i-1}}{\text{SUPPLY}_{i-1}}}{\frac{\text{TVL}_{i-2}}{\text{SUPPLY}_{i-2}}})^\text{182.5} -1)*100$$

Where:

• $\text{APY}_i$ is the APY calculated during epoch ${i}$.

• $\text{TVL}_{i-1}$ is the stake pool's total value locked in SOL at the end of epoch ${i-1}$.

• $\text{SUPPLY}_{i-1}$ is the total LST supply at the end of epoch ${i-1}$.

• $\text{TVL}_{i-2}$ and $\text{SUPPLY}_{i-2}$ refer to the values at the end of epoch ${i-2}$.

• $\text{182.5}$ is the approximated number of epochs in a year.

APY displayed to users

We look at the APY of the last 5 completed epochs, remove the smallest and largest outliers and calculate the average of the remaining 3 values. This is the APY displayed on Sanctum and provided through our API.

If the APY data from the past 5 epochs is incomplete, this falls back to your APY since inception.

Please note that your APY will be displayed on Sanctum once you have accumulated at least 5 epochs of staking history. This ensures we provide users with accurate and meaningful data.

How to do it?

If you're interested in giving back to your stakers, check out this section of the documentation to find your reserve stake account address.

Once you've sent the SOL to the reserve, you will need to run the splsp update -c force-all your_pool_address for our database to properly register the transfer and update the SOL value of your LST

How to confirm things worked?

Using splsp list --verbose <pool-pubkey> and assuming no deposits or withdrawals happened after the SOL transfer, you should see that the total-lamports went up while the pool-token-supply remained the same. As long as the ratio of total-lamports to pool-token-supply went up, then the redemption rate of the LST has increased.

You should also see that a quote for SOL -> xSOL for the same amount of SOL using only the Sanctum Router route on our site should result in less xSOL now (since xSOL is now more valuable in sol terms).