Liquid Staking on Solana Soars To All-Time High

Liquid staking accounts for 7% of Solana’s total market cap.

By: Pedro Solimano Loading...

Liquid Staking on Solana Soars To All-Time High

Defying the narrative that Solana is only about memecoins, data indicates that users are increasingly using the network for other activities such as liquid staking.

Total value locked (TVL) for liquid staking on Solana has been skyrocketing since October, surging to $3.73 billion from $244 million in that time, according to a Dune Analytics dashboard. The figure is 7% of SOL's market capitalization.

Solana LST Ratio - Dune Analytics

The data indicates that Solana, the fifth-largest blockchain by market cap, is able to attract users and investors with use cases besides memecoins, though these useless tokens continue to drive the majority of activity on the chain.

Liquid staking protocol JITO has the biggest share of the ecosystem with $1.57 billion of TVL, or 44% of the sector’s total supply, followed by mSOL with $600 million, or 17%, and in third place is jupSOL with $317 million, or 9%.

This could spell a tricky situation for Ethereum, where the overwhelming majority of liquid staking is taking place. If Solana is able to drain some of its liquid staking activity–considering the pie isn’t growing but capital simply moves from one protocol to the other–then Ethereum’s Lido, Eigenlayer and other popular liquid staking and re-staking protocols are in for stiff competition.

Still, Ethereum’s liquid staking ecosystem is magnitudes larger, with $47 billion of TVL, a considerable tenfold lead on Solana’s entire liquid staking sector, according to DefiLlama.

Liquid staking is an option for users who have their tokens already staked in a protocol to make use of that token in other DeFi applications. Users receive a tokenized version of their staked crypto, which they can then deploy across ecosystems for other uses, opening up a world of opportunities without requiring them to unstake and stop receiving yield.

Institutions Favor Solana

Crypto-native users aren’t the only ones to lean into Solana.

According to CoinShares’s latest Digital Asset Fund Flows Weekly report, institutions deployed $16 million to Solana, lifting the yearly inflows to $57 million. This brings the total of SOL under management to over $1 billion for large entities from across the globe.

“The hype surrounding Solana we believe has captured the imagination of investors, and is the reason why we are seeing greater inflows,” James Butterfill, head of research for CoinShares told The Defiant.

Butterfill added that the entities they track have been consistently favoring Solana over Ethereum over the past 18 months, and last week’s flows “were just another example of this.”