Sanctum Review: Notable Liquid Staking Project in the Solana ecosystem

May 14, 2024 - Around 6 mins mins to read

Sanctum, one of the most sought-after liquid staking projects in Solana. Sanctum aims to support DeFi liquidity through the Stability Protocol with Liquid Staking Derivatives and Flash Loans.

Sanctum Review: Notable Liquid Staking Project in the Solana ecosystem

Table Of Contents

What Is Sanctum?
What Is Liquid Staking?
Solution of Sanctum
Validator LST
Tokenomics
Team and Investors
Roadmap
How to Earn the Sanctum Airdrop With SANCTUM
Conclusion

What Is Sanctum?

Sanctum is a protocol on Solana designed to streamline Liquid Staking on the platform and usher in a new era for Liquid Staked Tokens (LST). With Sanctum, users can stake SOL or LSTs directly on the platform, thanks to the liquidity layer it provides to the market.

Sanctum is creating a protocol that enables users to easily convert any xSOL back to SOL quickly without having to trade on AMM platforms. This innovation will provide greater liquidity for xSOL, contributing to a more stable and robust Solana DeFi ecosystem. Unlike the liquidity pool model, transactions on Sanctum have minimal impact on the token’s price. Therefore, during market downturns, Sanctum can help prevent significant collapses within the ecosystem.

What Is Liquid Staking?

Liquid Staking refers to protocols that enable users to stake an asset. Once staked, the protocol issues them a representative token (Liquid Staking Token) for the staked asset at a 1:1 ratio.

Liquid Staking was primarily created to tackle the problem of liquidity shortages. Users can utilize representative tokens to earn additional yield through methods like lending or trading. This enhances capital efficiency for investors. In addition to the staking rewards, Liquid Staking allows users to earn extra yield by investing assets in other DeFi protocols.

Solution of Sanctum

Reserve Pool

The Reserve, aka Sanctum Reserve Pool, holds idle SOL, accepting staked SOL and dispensing SOL in return. With over 210,000 SOL, it provides liquidity for all liquid staking tokens on Solana. As the deepest reserve pool, it accepts and dispenses SOL, replenishing its reserves by unstaking at the epoch end. Unlike other pools, it’s open to all LSTs, offering liquidity regardless of size.

This enables DeFi protocols like Drift, Mango, Margin, and Solend to use any LST as collateral. The Reserve ensures deep, instant liquidity for staked SOL, serving as a shared source for all sizes and acting as an emergency unstake backstop. Based on SOL percentage, dynamic fees keep fees low and usage efficient.

The Router

Staking SOL involves creating a locked stake account delegated to a validator, with warmup and cooldown periods for delegation changes. Similarly, depositing SOL into an LST generates a stake account delegated to chosen validators. LSTs act as liquid versions of stake accounts, ensuring semi-fungibility.

Sanctum enables unified liquidity by swapping stake accounts among LSTs. For example, depositing into jitoSOL creates a liquid wrapper of the stake account. The Sanctum Router allows for quick extraction and depositing of stake accounts, facilitating the efficient conversion of LSTs to SOL. Sanctum applies a flat 0.01% fee on LST to SOL swaps.

Infinity

Infinity is a unique multi-LST liquidity pool (LP) with operations that set it apart from other LPs in the market. While most LPs typically support only two assets, and some, like the Curve stableswap pool, accommodate 3 to 4 asset types. Infinity stands out by supporting nearly all existing LSTs. These include various SOL products like bonkSOL, bSOL, cgntSOL, and more.

According to project information, Infinity is the sole LP capable of accommodating millions of LSTs. This capability stems from LSTs being convertible into stake accounts, enabling the calculation of a unified price for LSTs based on the amount of SOL held in each account. Moreover, Infinity offers support for the conversion of any LST pair without the need for third-party involvement.

Validator LST

Validator LST is a token type that indicates the amount of money a user staked in a validator. The quantity of Validator LST will increase according to the APY specified by the project in advance. When a user stakes SOL, a stake account is established and delegated to the validator. Upon unstaking, this account becomes inactive after a set period (epoch).

At first, SOL is transferred to the Validator LST pool, creating a stake account that is subsequently delegated to the validator. Subsequently, the user obtains a Validator LST token symbolizing their staked assets with the validator.

Tokenomics

Currently, the project has not officially announced any information regarding tokenomics.

Team and Investors

Investors

Sanctum has secured $6.1 million in seed funding, with participation from well-known investors like Dragonfly, Sequoia, Jump Capital, and, notably, Solana Ventures.

Team

Currently, the project has not officially announced any information about the team.

Roadmap

Q3/2023: Establish a DAO for the project and kick off the deployment of Sanctum V2.

Q4/2023: Roll out Sanctum V2 and introduce incentives to encourage individuals to contribute to building the Sanctum ecosystem.

How to Earn the Sanctum Airdrop With SANCTUM

The program focuses on two key elements: Pets and EXP (points). The concept is simple: Collect Pets, and they will help you earn EXP every second. There are a total of 18 Pets, each corresponding to one of the 18 LSTs currently supported by Sanctum (INF, bonkSOL, jupSOL, etc.). You need to hold at least 0.1 LSTs of that type to obtain a specific Pet. For example, owning 0.1 INF will award you the INF Pet, while holding 0.1 bonkSOL will give you the bonkSOL Pet.

Step 1: Go to app.sanctum.so/wonderland choose your favorite Pet, and buy.

Step 2: Owning a Pet lets users earn EXP automatically every minute. Users earn 10 EXP per minute for each 1 SOL held through LST. More value held means more EXP earned; holding 10 INF generates more EXP than 1 INF.

Pets can level up to a maximum of 999. Upon reaching certain levels, Pets can evolve up to 3 times. The team has not disclosed the benefits yet. Many people may wonder whether they should concentrate on holding only one type of LST or spread their holdings across all 18 types.

Team Sanctum addressed this by stating, “You don’t need to hold all 18 types of LSTs.” However, CoinCu is unsure if holding all 18 types of LSTs would be beneficial; it remains a mystery.

Moreover, it’s a trade-off: focusing on mining one type of LST allows your Pet to level up and evolve more easily while holding all 18 types simultaneously slows down this process.

Conclusion

In this Sanctum Review, we understand that Sanctum offers users the opportunity to stake not only one but a variety of LSTs from various DeFi platforms – a key distinction from other projects.

CoinCu rates this as a highly potential Liquid Staking project to look out for airdrops in the Solana ecosystem in the upcoming period—a must-not-miss opportunity.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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