Solana’s Liquid Staking Tokens Reach New Milestone With Over $5B Market Cap

The market capitalization of liquid staking tokens (LST) on Solana has surged to an all-time high of $5.44 billion.

On-chain data indicates that the surge represents a significant increase of over 17% from the previous peak of $4.57 billion recorded in July, highlighting the rising adoption of LSTs within the Solana ecosystem.

What is Liquid Staking?

Liquid staking is a method in decentralized finance (DeFi) that lets users earn rewards by staking their cryptocurrencies while still being able to use their assets. When users stake their assets, they receive liquid tokens in return. 

These tokens represent the value of the staked assets and can be used in various ways, like trading or lending. As a result, users can earn staking rewards while enjoying the flexibility to move and utilize their assets.

On the Solana network, LSTs represent staked Solana (SOL) and are issued to users who lock up their tokens. Like other cryptocurrencies, these tokens can be traded, transferred, and used within decentralized applications (dApps).

Solana validators, who verify transactions, can issue their LSTs to build community and loyalty around specific tokens. For example, Blaze uses its bSOL token in a rewards program that encourages users to hold it. These programs have boosted LST ownership, as many users hope for potential airdrops.

Growth in Solana’s LST Adoption

The popularity of LSTs on Solana has grown significantly as users are drawn to the dual benefits of earning staking rewards on their SOL and receiving additional tokens. This appeal has boosted the market capitalization of LSTs on the network. 

Additionally, the simplified staking process contributes to the growth. With LSTs, users can skip managing staking accounts, waiting through epochs, or manually claiming rewards. Instead, they can easily switch validators with a simple trade, making LSTs an even more attractive option.

Solana offers a range of liquid staking options, granting users flexibility and rewards. Leading the market is JitoSOL, which comprises nearly 45% of LSTs with a market cap of $2.5 billion. Jito’s liquid stake tokens allow users to earn staking rewards and maximal extractable value (MEV) rewards over time, enhancing yield accumulation.