By Sage D. Young, Unchained

Compiled by: Felix, PANews

Solana’s liquidity staking ecosystem is growing, with new big players joining the ranks.

On August 29, three centralized exchanges Binance, Bybit and Bitget launched new liquid staking tokens (LST), which will allow holders to earn income while ensuring the security of the Solana blockchain, and still Can participate in DeFi activities such as lending and borrowing.

According to DefiLlama data, the liquidity staking ecosystem on Solana has more than doubled this year, from $1.9 billion in TVL on January 1 to $4.1 billion, of which three protocols, Jito, Marinade and Sanctum, account for nearly 77% market share.

On the It helps bbSOL become bigger and stronger."

Solana’s booming liquidity staking space

The growing number of participants entering the Solana liquidity staking ecosystem highlights the maturity of the LST market on Solana. Marinade is the second largest liquidity staking provider on Solana, with a TVL of US$745 million, and launched LST in 2021; while Jito is the largest liquidity staking provider, with a TVL of nearly US$2.9 billion, and launched the main currency at the end of 2022. net.

The overall liquidity staking (first appeared on Ethereum when Lido Finance launched LST in 2020) TVL is $42.5 billion. Among them, Ethereum occupies 83% of the market share, which is several times that of Solana’s 9.6%.

Jito Foundation contributor Andrew Thurman added, "About 40% of the pledged ETH is liquidity pledge, while only 6% of the pledged SOL is liquidity pledge", "It is expected that the two figures will gradually approach, that is to say, Solana The liquidity staking market still has a lot of room for growth and can accommodate many products."

Lucas Kozinski, a founding contributor to the Ethereum restaking protocol Renzo, said the launch of Solana LST by three exchanges could be a "big deal." "This shows that some of the infrastructure and products we have on Ethereum are just starting to be rolled out on Solana." These products will help enable users to join Solana’s native DeFi.

“Solana’s staking ecosystem has expanded rapidly over the past few years, with companies such as Jito and, more recently, Sanctum joining the ranks,” said Jacob Joseph, a research analyst at crypto analytics firm CCData. This "suggests that Solana is receiving increased attention".

Launching LST to increase revenue

As for why these exchanges have become active in Solana’s LST ecosystem, Lucas Kozinski, a founding contributor to the Ethereum restaking protocol Renzo, said that one possible reason is that the launch of a new LST “can provide additional products to users to Receive additional rewards and receive fees from them”.

Binance, the third largest LST by market capitalization, charges a 10% fee on ETH staking rewards. According to its official website, 10% of the fee is used to cover operating costs such as hardware and network maintenance for its validator nodes.

Suki Yang, co-founder of LMAO, a Memecoin platform based on Solana, had a similar view: “Imagine if a user uses Solana liquidity to stake tokens on an exchange, then all Binance has to do is generate returns from the liquidity staked tokens Taking a commission... doing this (launching LST) is completely in their own interests."

Leave SOL on the exchange

Another possible reason why these centralized exchanges want to launch LST is to keep SOL on their platforms as much as possible.

LMAO co-founder Suki Yang said exchanges, like investment banks, optimize for two metrics: trading volume and assets under management (AUM). By providing their own LST, users can stake their SOL on the exchange without having to withdraw it.

Without LST, exchanges would not be able to earn value when tokens are raised on exchanges. Additionally, the more assets on the platform, the greater the AUM, which increases a company’s trust, desirability and financial valuation.

As of August 1, Binance’s SOL net balance (composed of customer deposits and third-party escrow) was 32,732,433.696 coins, worth approximately $4.7 billion, accounting for approximately 7% of the token’s circulating supply. On the other hand, Bybit’s balance as of August 8 contained 2,643,721 SOL, which is approximately $375 million.

(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link )

Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.

〈Why do Binance, Bybit and Bitget all want a piece of the Solana staking market? 〉This article was first published in "Block Guest".