Restaking, a new and popular concept, primarily available on Ethereum, is soon going to be available on Solana, thanks to Picasso’s Solana <> IBC connection.
TL;DR:
In brief, restaking involves staking an asset with a blockchain’s validators along the standard proof-of-stake (PoS) mechanism, receiving some sort of receipt token for this, and then again staking the receipt token. This approach not only amplifies the potential yield for users while using the same initial assets, but it also contributes to bolstering the overall security.
These benefits are now being delivered into the Solana ecosystem; Picasso will initially enable staking of SOL, mSOL, jitoSOL, and Orca LP tokens into Picasso’s Solana <> IBC validators on trustless.zone.
Restaking: How it Works
Restaking has been described as a new primitive in crypto economic security that enables the rehypothecation of a token on the consensus layer. Specifically, the process of staking involves a user staking an ecosystem’s native asset to that ecosystem’s validators. The user then receives a receipt token representing this stake. They then “restake” this receipt token with validators again. This mechanism enables users to multiply the crypto economic security (and the yield) of their initial tokens, as they are essentially able to stake the same assets twice, receiving yield and supporting PoS validation both times.
Restaking has been pioneered and popularized by EigenLayer, which is a protocol for restaking ETH on Ethereum. In particular, users staking ETH are able to opt into EigenLayer’s smart contracts for restaking their ETH and thus extending the crypto economic security to additional applications within the ecosystem. EigenLayer thus addresses rising concerns of fragmented security on Ethereum, helping to bootstrap the security of various protocols/applications. EigenLayer’s total value locked (TVL) at the time of writing is over $275 million, indicating that there is a clear demand for restaking.
Despite the benefits of restaking, this concept has largely not yet expanded beyond the Ethereum ecosystem. However, there is a huge potential for restaking on other chains. This is particularly true on Solana, where there is a massive amount of staking occurring, with many prominent staking protocols already offering liquid staking tokens (LSTs) and receipt tokens that can be used for various purposes while a user’s original assets remain staked. In fact, at the time of writing, over 392 million SOL are staked, representing a staking market capitalization of over $25 billion dollars. This is a staggering 92% of the total circulating supply of SOL. Therefore, there is an incredibly large market for restaking these assets that are already staked in Solana. Yet, there has been very little use for these receipt tokens — until now.
Restaking on Picasso’s Solana <>IBC
Picasso will accept staking of both Solana’s native SOL token as well as restaking of various receipt tokens for SOL staking platforms. These tokens can be staked with validators of our Solana <> IBC connection. Users will be able to stake from trustless.zone, depositing their assets from their connected digital wallets into our staking contracts. From these contracts, assets will be delegated to validators of our guest blockchain that supports our IBC <> Solana connection. Thus, restaking in this manner will support our guest blockchain along the premise of PoS, which enhances the security of this connection.
Users will accumulate staking rewards proportionate to their staking amount and time. Thus, they can receive not only the yield on their original stake, but also the yield from restaking.
Below are the assets that can soon be staked into Picasso’s Solana <> IBC validators:
SOL:
As mentioned, Solana (SOL) is the native token of the Solana ecosystem. Its total market cap at the time of writing is over $28 billion dollars, making SOL the 6th largest token in terms of total market cap (as per CoinMarketCap). Also as mentioned, 92% of SOL is presently staked, but the remaining 8% of the circulating amount is unstaked, and still represents a huge market (around $3 billion). Thus, we are accepting SOL staking in addition to our restaking options.
mSOL:
mSOL is the liquid staking token from Marinade Finance, a Solana stake automation protocol monitoring all Solana validators and delegating to those that are the highest performing (e.g. provide the largest yield to users). Blockworks Research has described this token as the “…base layer of Solana DeFi”. According to Marinade’s website, they have a TVL of $659 million (nearly 10 million SOL staked), and provide users with an impressive 8.87% APY.
jitoSOL:
jitoSOL is the liquid staking token from Jito, which describes itself as “Solana’s first staking product including MEV rewards”. Users deposit SOL into Jito’s liquid staking pool, and then SOL is delegated to validators on Solana that meet minimum criteria for performance and network resiliency. Jito’s total TVL is 6,352,926 SOL, and they provide stakers with a 6.97% APY (as per Jito’s website).
Orca LP Tokens:
Orca is a decentralized exchange (DEX) on Solana where every trade supports charities fighting climate change. Users providing liquidity into Orca’s concentrated liquidity pools receive liquidity provider (LP) tokens to represent their deposits. The TVL in these liquidity pools is over $85 million, providing LPers with approximately $200,000 in weekly rewards.
bSOL:
Solblaze is in part a non-custodial liquid stake pool protocol that was built partly by Solana Labs and has been audited by three separate organizations, ensuring funds are always in your control.
When you stake at the click of a button, you receive staked tokens (bSOL) that appreciate in value over time relative to staking rewards. Unstake instantly without the standard 2–3 day delay period by swapping bSOL back to SOL on the instant unstake page.
Your staked bSOL tokens also represent your voting power, which can be used either to vote on treasury proposals (for supporting Solana ecosystem projects) to or unlock exclusive airdrops (where holding more bSOL gives you more airdropped tokens).
Each of these tokens represents a significant market that can soon be restaked to Picasso’s Solana <> IBC validators. If you already hold any of these tokens, or if we’ve inspired you to acquire some, we hope you’ll consider restaking them with us to support Picasso’s IBC <> Solana connection and to enhance your own yield.
Additional Opportunities via Solana <> IBC
Be sure to look out for upcoming announcements of even more use cases and ways to be rewarded via Picasso’s Solana <> IBC connection.
