Introduction To Liquid Staking And LSTs On Solana - Part 1

Imagine you staked your assets on Solana and have zero liquidity. LSTs on Solana give you unique tokens you can use till you get your reward from your staked asset.

That’s the essence of LSTs on Solana. Read on to grasp this concept and see how it can be helpful to you. 

What are LSTs?

LSTs (Liquid Staking tokens) represent your staked assets. So, LSTs offer liquidity along with rewards. Your assets lock up when you stake SOL, increasing your rewards. But this makes the staked assets unavailable for immediate use. LSTs change that by giving you tokens, you can use anytime while your Solana is still staked.

LST is a product of Solana’s consensus mechanism, DPOS. DPOS inspired the creation of LSTs through stake pools and validators.  Here is a good thread about LSTs:

With this method, you can deposit SOL into the stake pool. The stake pool invests your SOL in different validators. In return, you get LSTs (unique tokens) representing your staked assets, such as JitoSOL. Each stake pool works by setting different strategies for rewarding participants. JitoSOL has its staking strategiesLet’s take a look at LSTs’ token mechanics:

1) LST Token Mechanics

LST tokens function like Ethereum (ERC-20) tokens, with a few differences. You either get rewards or adjust your token amount to see the rewards you earn over time. Rebasting LSTs is yet to be available on Solana.  

2) LST Usage on Solana

LST on Solana is getting started. People are yet to become familiar with the significance of Solana LSTs. In no time, users will see that Solana’s LSTs are valuable liquidity means, and more people will get into them. Here is another good summary about LSTs:

There is more to LSTs on Solana. The second part of this article dives deeper into what it entails. Also, you can read more about it in this blog post.



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