How did we come up with the solution?

To come up with the solution, it requires 1) a change in mindset from PvP to PvE and 2) deep understanding of how staking works on Solana. The new meta of staking on Solana the Sanctum team are pioneering is fundamentally different from what came before, or indeed on any other chain.

The liquid staking meta on other chains is winner-take-all. It remains so, with Lido as the biggest example on Ethereum. Before the Sanctum team worked with Jupiter to build the Sanctum Router, liquidity was incredibly fragmented. For example there was a stSOL-SOL pool on Saber, a mSOL-SOL pool on Raydium, and a scnSOL-SOL pool on Orca, and these pools were completely separate. So every stake pool needed to fight for liquidity, and everyone wanted to use liquidity as a moat to extinguish the competition.

This is a super PvP mindset, imported from Ethereum.

Of course, under these circumstances, there was no way there could be smaller LSTs. To start your own stake pool, an operator would need to come up with millions of dollars of liquidity to even start to play the game, otherwise their LST would easily depeg. So small LSTs were impossible.

The core mindset shift of Sanctum is to think not about "How can we win ourselves?" but instead "How can we help Solana, and crypto flourish?"