The Rise of Liquid Staking Crypto Platforms on Solana
Solana crypto: liquid staking platform activity on the rise
The trend of liquid staking crypto platforms has expanded beyond Ethereum to include Solana. This has led to a significant increase in the total value locked (TVL) for this type of protocol. Liquid staking applications allow users to earn returns from staking platforms while also benefiting from alternative liquidity through LST tokens.
In 2023, Solana users have deposited approximately $89 million, marking a 91% increase in TVL. A total of 1.66 million SOL (equivalent to $31 million) and various other tokens, such as USDT, USDC, wLDO, stSOL, and WETH, have been locked.
Interestingly, 69% of the 270 million TVL across all protocols on the Solana network is allocated to liquid staking protocols. The Shapella update in April, which enabled the unstaking of previously deposited ETH on the Beacon Chain, has been cited as a catalyst for the growth of this industry.
The best liquid staking dApps on Solana and Ethereum
The most popular liquid staking crypto platform on Solana is Marinade Finance, which accounts for 62% of the TVL in the community with $125 million. Lido is the second most used protocol with $55 million and manages 27% of the capital in this niche. Other protocols, including Jito, JPool, and Socean, make up the remaining $24.9 million.
Marinade Finance has experienced a significant decrease in capital since November 2021 when its TVL was $1.8 billion. The bear market and the collapse of FTX led to a downsizing of the protocol and the entire DeFi ecosystem on Solana.
On Ethereum, liquid staking platforms have seen substantial growth in recent months. Lido on Ethereum is the largest decentralized application in DeFi with a TVL of $14.7 billion. Other prominent LSD platforms on Ethereum include Coinbase wrapped staking with $2.2 billion, Rocket Pool with $1.9 billion, Frax with $453 million, Stakewise with $177 million, and Ankr with $93 million. However, none of these applications surpass Lido’s overall numbers.
Integration of Liquid Staking Tokens into DeFi
The integration of LST tokens with the main DeFi platforms has contributed to the increasing popularity of liquid staking platforms. Previously, users could only use the liquidity provided by these protocols for trading on decentralized markets or transferring to exchanges. However, the creation of liquidity pools in DeFi and the integration of LST tokens with lending platforms have made these financial products more appealing.
Investors can now leverage the liquidity provided by LS tokens while earning returns from staking. For example, the Aave stETH/wstETH pool has seen significant growth, with current total liquidity of $2.53 billion. The ability to borrow coins by using the liquid token received from Lido as collateral has attracted investors.
The same trend can be observed on Compound, where the wstETH pool has grown by 817% since May, now holding approximately $42.2 million. LS token derivatives are becoming more attractive in the DeFi space compared to cryptocurrencies like ETH and WBTC, as well as stablecoins, historically the most widely used assets in DeFi.
Overall, the rise of liquid staking crypto platforms on Solana, along with the integration of LST tokens into DeFi, has contributed to the growth and success of this niche market. Investors can now take advantage of the liquidity and returns offered by staking platforms while participating in the vibrant DeFi ecosystem.