The market is gradually warming up, and while the Sanctum airdrop has landed, its reception has been less than expected. As a large amount of capital becomes "unlocked," what is the next project in the Solana ecosystem worth watching that could attract significant fund inflows?
Solayer, as a rising star in Solana restaking, announced the completion of its builder round financing on July 2, boasting a strong lineup of investors. As of July 15, the Total Value Locked (TVL) on its platform has exceeded $120 million. With the anticipation of an airdrop, can Solayer attract more capital inflows? How can users participate in the project? This article provides a quick overview of this promising Solana restaking project.
What Is Solayer?
Solayer is a restaking protocol within the Solana ecosystem. Leveraging its advantages as a decentralized cloud infrastructure, it allows SOL holders to stake their assets into other protocols or DApp services within the Solana ecosystem that require security and trust. In addition to Proof-of-Stake (PoS) staking rewards, users can also earn rewards from MEV (Maximal Extractable Value) and AVS (Actively Validated Services). Currently, Solayer supports deposits of native SOL, mSOL, JitoSOL, and other assets.
By utilizing Solana's stakers as validators, Solayer offers a high degree of decentralization and security, avoiding the trust risks associated with centralized service providers or proprietary tokens. It provides a simple way for decentralized applications (DApps) to create their own AVS LSTs (Liquid Staking Tokens). These tokens are backed by Solana's native staking rewards as a base, along with additional MEV rewards. DApps can also receive a portion of the staking commissions and, in the future, configure the underlying operators for staking delegation.
To put it simply, think of Solana as a highway with different lanes having varying tolls and congestion levels. Different DApps, like cars, have different speed requirements and toll tolerances. Solayer acts as a coordinator among cars, highways, toll collectors, and other parties by accepting user fund delegations.
Funding Status
As of now, Solayer has no institutional investments. However, judging from the builder round financing announced on July 2, its investors are quite impressive. They include Anatoly Yakovenko, co-founder of Solana Labs; Rooter, founder of Solend; Richard Wu, co-founder of Tensor; and Sandeep Nailwal, co-founder of Polygon.
Solana's EigenLayer: Exogenous AVS vs. Endogenous AVS
As Solana's equivalent to EigenLayer, Solayer differs functionally primarily in the focus of its restaking system.
EigenLayer's restaking is mainly used for Ethereum scaling solutions. However, Solana, as an integrated blockchain, does not rely on Layer 2 solutions like modular Ethereum does. Therefore, its restaking system needs to focus more on applications. Solayer is not only used for exogenous AVS (Actively Validated Services) but also emphasizes endogenous AVS on the Solana blockchain. The goal is to provide decentralized applications (DApps) on Solana with greater block space and the possibility of prioritized transactions.
Solayer redesigns EigenLayer's concept as exogenous AVS. These systems exist off-chain or outside the Ethereum main chain and can leverage Ethereum's proof-of-stake security.
Defined as exogenous AVS: Systems outside the main network can share proof-of-stake security.
Examples include cross-chain bridges, shared sequencers, and oracle networks.
Solayer redefines restaking for Solana while addressing the security and performance needs of developers, especially as congestion on the underlying L1 network intensifies. It introduces endogenous AVS: Solana-native programs that use SOL PoS to configure application security and throughput.
Defined as endogenous AVS: Dedicated to supporting decentralized applications (DApps) on the main chain. The goal is to provide DApps on the chain with greater ensured block space and prioritize transaction inclusion.
Additionally, the unbinding process for Solayer AVS is managed individually by delegation managers. To offer greater flexibility, Solayer allows them to design their own unbinding processes, with a maximum unbinding time not exceeding two days. Solayer will also provide an emergency exit mechanism to release bound assets from users if an AVS ceases operations.
How to Restake on Solayer?
Solayer Labs is developing its own multi-phase points program, which also prioritizes rewarding early participants. The earliest depositors (included in the early supporter whitelist) will have 24 hours to deposit any amount, with higher multiplier effects for points.
Phase 1 began on May 27, with a Total Value Locked (TVL) cap of $50 million for cycle 1. By June 15, the locked amount reached the cap. During this period, depositing more than 10 SOL unlocked a permanent invitation code. Entering the task interface and completing three or more tasks could yield higher points. Tasks are similar to those of other projects, such as inviting friends, depositing LSTs, and having deposit times spanning multiple phases.
Currently, in Phase 3, there is no TVL cap, and staking is available at any time. Compared to other cryptocurrencies, native SOL deposits yield more points.
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Restaking Security and Future Prospects
Restaking projects derived from liquid staking allow idle staked assets to earn additional rewards. For Ethereum, this extends the security of the base layer. However, for Solana, whether restaking is necessary remains a topic of debate. Ryan Connor of Blockworks Research believes Ethereum is a "modular" blockchain that relies on Layer 2 solutions to operate. Its vast staked asset base makes restaking highly practical. In contrast, Solana, as an "integrated" blockchain, has much smaller demands compared to Ethereum and other modular systems. Additionally, the protocol and nested risks associated with restaking worry many users. Lack of trust in protocols, fear of hacker attacks, and other concerns are like ticking time bombs. Nevertheless, Solayer, as the highest TVL restaking protocol on Solana, is still worth watching.
Frequently Asked Questions
What is Solayer?
Solayer is a restaking protocol on Solana that allows users to stake assets like SOL, mSOL, and JitoSOL to earn additional rewards beyond basic staking yields. It supports both exogenous and endogenous AVS to enhance security and performance for DApps.
How does Solayer differ from EigenLayer?
While EigenLayer focuses on Ethereum scaling solutions and exogenous AVS, Solayer is tailored for Solana's integrated blockchain, emphasizing endogenous AVS to provide DApps with greater block space and transaction prioritization.
Is restaking on Solayer safe?
Solayer leverages Solana's decentralized validators to minimize trust risks. However, restaking inherently involves protocol and nested risks. Users should assess their risk tolerance and stay informed about security updates.
What rewards can I earn on Solayer?
Users can earn PoS staking rewards, MEV rewards, and AVS rewards. Native SOL deposits typically yield higher points and potential airdrop benefits.
How do I start restaking on Solayer?
Visit Solayer's platform, connect your wallet, and deposit supported assets like SOL, mSOL, or JitoSOL. Follow on-screen instructions to complete the staking process.
What is the unbinding period for Solayer AVS?
The unbinding process is managed by delegation managers, with a maximum time of two days. An emergency exit mechanism is also available if an AVS stops functioning.