Detailed explanation of Solana ecological project sanctumso: Received leading VC investment, TVL exceeds 85 million US dollars (with participation guide)

Original author: Yaoyao, head of Asia Pacific region of Solana Foundation

Today I want to share with you a project incubated by Solana Labs, led by Dragonfly, Jump Capital @sanctumso, a very important and innovative project for DeFi and liquidity on Solana that Solana Venture participated in and invested in, is also one of our Hidden Gems.

The founder soleconomist is a very senior Builder of Solana, and the team began building liquid staking in the Solana ecosystem in 2021. Sanctum currently has over $1 billion in funds under custody, a TVL of over $85 million, and a total transaction volume of over $500 million.

Let’s learn why @sanctumso can receive investment from leading VCs, achieve rapid growth, and how users can participate.

1/What is @sanctumso doing?

To summarize briefly, Sanctum can liberate the pledged SOL in the Solana ecosystem through liquidity support, and provide a safe haven for SOL to conduct flash loans and close LST mortgage positions. , ensuring that DeFi lending protocols remain solvent.

2/@sanctumso What problem did it solve?

A problem Solana has faced for a long time is: after staking SOL, users can obtain benefits/protect the network, but these pledged SOL are difficult to trade. or transfer. In short, after staking, there is nothing you can do about your SOL.

The emergence of liquid pledged tokens (LST) has broken this situation. A simple example, the pledged SOL is the gold bars in the bank safe, while the LST is the banknotes that can be used at any time. You can exchange banknotes for gold bars at any time. Therefore, liquidity is crucial for LST, and without liquidity, banknotes become a blank slate.

When liquidity is insufficient, your interests will also suffer. The picture below is an example. In a bad liquidity pool, when exchanging LST (bSOL) for SOL, if you insist on exchanging, it will cause 82% property loss.

All LST users may suffer such losses, and healthy liquidity has a very high threshold, often requiring millions of dollars to start, which is the difficulty faced by LST.

The emergence of Sanctum can reduce the impact of liquidity on prices from 82% to less than 2%. The following is a sharp contrast.

3/@sanctumso What products are there?

Sanctum Router, Reserve, Infinity.

Overall, Sanctum is a unified liquidity aggregation layer. LST can be exchanged for any other LST at nearly zero cost. Provide deep and unified liquidity for all users.

Introduce them separately:

Reserve: SOL liquidity pool, providing instant unstaking services for all LST. Regardless of the size of the validator's LST, it can be converted to SOL instantly.

Router: As a key part of Solana LST infrastructure. It allows two LSTs that usually have no path to convert to each other. By allowing small LSTs to access the liquidity of larger LSTs, the unification of LST liquidity is achieved.

Infinity: An Infinity-LST liquidity pool that supports mutual conversion between all LSTs in it. Most liquidity pools only support swaps of two assets (for example, jitoSOL-bSOL), while we will support thousands. This makes it possible to exchange small LSTs for large LSTs and then convert them freely. (For example, BonkSOL - bSOL - USDC).

4/ Team vision and contribution to the Solana ecosystem:

The @sanctumso team hopes to build a future where LST has unlimited possibilities, a more innovative Solana. When anyone can create an LST, when there is no liquidity trench and the switching cost is negligible, the prospects of LST will be unlimited. A thousand different LSTs mean a thousand times more innovation. At that time, people with more money in their pockets will give way to value providers.

This will not only bring stronger competition, but also support creative models such as micropayments or subscriptions (such as coffeeSOL), impact LST, "non-fraudulent NFTs", etc. Here are some examples:

5/ How to start using @sanctumso?

This is what I like very much. This product is so simple and comfortable to use! I love both UI/UX~

1. Go to http://app.sanctum.so/infinity. Be prepared to deposit SOL or any LST into Infinity.

2. Complete the confirmation on the web page.

3. Then, the deposited SOL can obtain staking income and transaction fees (the current APY is about 12%).

4. In addition, go to http://app.sanctum.so/swap to trade with all Sanctum partners.

I like what Sanctum is doing. Users can create their own LST without millions of dollars, and it can also provide a further level of income for the pledged SOL. Establish unified liquidity (so that all LST, regardless of size, can be easily traded as long as the value is sufficient) to combat centralization and achieve fair competition.

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