Liquid staking is incomplete
The value proposition of liquid staking isn't strong enough.
Last updated
The value proposition of liquid staking isn't strong enough.
Last updated
Despite the advantages of liquid staking, less than 5% of staked SOL is liquid staked even after more than 3 years. It's like if 95% of all money was still gold bars, kept in vaults under lock and key.
Why? If liquid staking is so great, how come nobody wants it?
We think it's because of the value proposition of liquid stake pools isn't strong enough.
The first (and for a long time, the only) option for liquid staking on Solana was stake pools. Stake pools take your SOL and issue you their liquid staking token (LST). They then take your SOL and stake it with a bunch of different validators. The staking returns that these validators accrue go into the pool, causing the LST to gain in value over time. This isn't bad, and is sufficient for many use cases, but the value proposition isn't strong enough, and isn't for everybody.
Here's one example. All stake pools split their stake amongst multiple different validators, and also charge a management fee. But many people want to stake to a specific validator, and they don't want to pay extra fees in order to access liquid staking. So many people choose to stick with native staking instead.
There are extremely limited LST choices available to you, the unstaking UX of liquid stake pools is still garbage and the risk of an LST depegging during times of insufficient LST liquidity is unacceptable. Most times, you're still better off staking your SOL natively instead of holding any LST.
The player versus player (PvP) mindset of existing liquid stake pools has caused liquid staking to still be incomplete. In fact, we think everyone has looked at liquid staking the wrong way – until now. It requires a change in mindset from PvP to PvE (player versus environment).
The new liquid staking on Solana the Sanctum team are pioneering is fundamentally different from what came before, or indeed on any other proof of stake (PoS) blockchain.
Liquid staking, when done correctly, can be so much more than just earning staking yields while participating in DeFi.
