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Establishing liquid is a winner-takes-all game.
Users want yield and immediate liquidity; The first is an easy goods to offer, the second is a difficult distribution problem.
Any liquid bet token (LST) must win deep pools on Bootstrap and entries on money markets, Perps, routers and portfolios so that it can behave as “money”.
But liquidity conceives liquidity -that is why the LST market of Ethereum has long been dominated by Lido’s Steth, followed by a long tail of smaller non -successful LSTs.
However, the same dynamic does not take place in Solana, which literally has thousands of LSTs. That is largely due to Sanctum, the team responsible for reversing the economy of LSTs on Solana.
How is Sanctum doing?
Sanctum (formerly Socean) offers an issue of the white label for everyone to launch his LST, and a shared liquidity reserve that can connect any LST emittent.
This shared reserve enables everyone with SOL to launch their own LSTs without worrying about raising a gigantic sol buffer to meet repayments.
The co-founder of Sanctum FP Lee told me: “Betting of liquid on Solana works differently than the use of liquid on Ethereum for a technical reason with state accounts.”
“I saw a future in which, as long as you build a uniform liquidity layer, that the marginal costs of creating your LST will be zero, and therefore there will eventually be a thousand LSTs.”
To facilitate swapping between thousands of LSTs is where Sanctum’s own AMM -“Router” enters.
Swaps on Sanctum’s router do not trust liquidity depth, as is typical of AMMs. It simply moves underlying stake positions on intrinsic values, similar to how the clearing network of a bank works, so that Sanctum can get a small fee. That makes it possible to exchange LST’s effectively without binding curves or perishable loss.
If necessary, Swaps can use on the reserve or the shared Pool “Infinity” with thousands of LSTs. Here Sanctum takes a small fee and routes it to Inf, Sanctum’s yielding product that consists of a basket with white payments.
This extra income stream is the reason why the yield of info has been historically, even better than the yield of Solana’s dominant LST, Jitosol.
Inf is usually called an “lst-of-lsts”, but it is really more related to a strategy for the wearing of yields that means the trust of Sanctum.
In short, Sanctum socializes the hard parts of the LST activities (depth, repayments, routing) so that everyone can launch an LST and drive the same liquidity engine. Then it builds a superior yield -wearing product on top. Voila.
You would not guess the price action of his cloud native token (don’t look), but Sanctum is one of the rare few income -generating teams in the industry. The vertical integrated liquid storage product from Sanctum has generated substantial income, canceled around $ 5.9 million this month.
Now the team is expanding further than the use of liquids. The V2 refurbishment of Sanctum officially unveiled a wider push in Solana’s transaction connection yesterday.
