With the launch of the Jito re-staking protocol, Solana investors can leverage their already staked SOL to earn higher returns and participate in airdrop opportunities. This article will explore its operation and selection strategies. The article originates from a piece written by crypto researcher flow, organized and compiled by BlockBeats.
(Preface:
Arthur Hayes: I am more bullish on Solana than ETH, election results don’t matter, “Fed rate cuts” are key
)
(Background supplement:
Re-staking protocol Solayer launches new “stablecoin sUSD”: Enjoy RWA US bonds stable returns, with a minimum threshold of 5 USDC
)
Table of Contents
What is Jito Re-staking
Core components of the Jito Re-staking framework
3 VRT providers
How to choose the right VRT for SOL re-staking?
Further analysis on the differences between Kyros and Fragmetric:
This article introduces the re-staking protocol Jito (Re)staking launched by Jito Labs on Solana, which allows the use of already staked SOL assets to gain higher returns and possibly participate in airdrops. Users can re-stake SOL through three providers (Renzo, Fragmetric, and Kyros), each offering different risks, liquidity, and potential returns. The article details their characteristics and recommends Kyros, which supports a fair launch and has potential airdrop returns.
The following is the original content (reorganized for easier reading and understanding):
After successfully creating the largest liquidity staking protocol on Solana, Jito Labs brings another significant development: the new re-staking protocol — Jito Re-staking.
This re-staking project launched today and will soon open for deposits, with an initial re-staking cap of about $25 million (147,000 SOL). For those looking to gain higher SOL annual returns and seize early airdrop opportunities, this is a very attractive opportunity on the market currently.
Before introducing how to maximize this opportunity, let’s briefly review the basic principles of Jito Re-staking.
Simply put, re-staking refers to using assets that have already been staked to provide security for a specific decentralized service again. Although it may seem unimportant, in fact, this is one of the most promising innovations of this cycle. The concept was pioneered by EigenLayer and first launched on the Ethereum mainnet in June 2023.
An example of how re-staking actually works
Today, Jito finally brings this new technology to Solana through its re-staking scheme.
A diagram showing the components of Jito Re-staking
The Jito Re-staking framework includes two main components: the re-staking program and the vault program. They can be seen as two independent entities working together, providing a flexible, scalable foundation for building and managing staked assets, Vault Receipt Tokens (VRT), and Node Consensus Operators (NCN).
VRT is Jito’s term for liquid re-staking tokens, while NCN is similar to EigenLayer’s active verification service, representing entities that will utilize the Jito Re-staking solution.
The re-staking program’s main function is to manage the establishment of Node Consensus Operators (NCN), user selection mechanisms, and the distribution of rewards and penalties. This part is invisible to users and can be regarded as the core support of the Jito Re-staking solution.
The vault program, on the other hand, is responsible for managing liquid re-staking tokens (VRT) and customizing different re-staking strategies through DAOs or automated protocols. This is the main interface for users to participate in re-staking. It can be likened to, EigenLayer’s re-staking role in Solana is performed by the re-staking program, while the vault program is similar to EtherFi, acting as a liquidity layer between users and the core re-staking protocol.
How the Vault program works
In the initial phase, Jito only collaborates with three VRT providers: RenzoProtocol($ezSOL), fragmetric($fragSOL), and KyrosFi($kySOL), which will jointly distribute the initial cap of 147,000 SOL. Therefore, any user wishing to re-stake SOL through Jito needs to make a choice among these three VRT providers.
Landing page image of Jito (Re)staking
The following are the main characteristics of each VRT provider:
The key to choosing a VRT is to find an optimal risk-reward ratio.
The following is an analysis of each provider:
1. Risk: In terms of risk, the main concerns are protocol penalties (i.e., penalty risk) and liquidity risk. Since the current number of NCNs is small and in an early stage, all providers can be considered to have roughly the same risk. Renzo and Kyros accept the most liquid JitoSOL, while Fragmetric accepts a wider variety of Liquid Staking Tokens (LST), potentially increasing its liquidity risk. Additionally, Renzo and Kyros’ VRTs will have liquidity from the beginning, whereas Fragmetric’s tokens will not be transferable initially. Therefore, in terms of risk, Renzo and Kyros have the lowest risk, and Fragmetric has slightly higher risk.
2. APY Returns: The APY of each project is expected to be similar, but Renzo and Kyros, using only JitoSOL, are expected to have a slightly higher APY than Fragmetric, though the gap will not be significant.
3. Airdrop Potential: Considering all VRTs have similar risk and expected returns, the key factor in choosing a specific VRT is the potential for airdrop rewards. Renzo already has a token, although re-staking may earn some future airdrop points, the potential is relatively low. Both Kyros and Fragmetric currently have no tokens, so the potential for airdrops is higher.
Fragmetric’s characteristics: Expected to receive venture capital support, possibly following a high FDV, low circulation model; geared towards technical and decentralized user groups; collaboration with risk management company Gauntlet; initial tokens are non-transferable; accepts a variety of LSTs.
Kyros’s characteristics: Supported by SwissBorg, helping distribute $kySOL and potentially collaborating with major participants in Solana; may raise funds through a fair community-driven token model; has not yet started a large-scale promotion; NCN distribution method may be based on DAO voting; supports JitoSOL.
Overall, KyrosFi is more attractive in several aspects. First, the support from SwissBorg makes it easier to distribute $kySOL and opens the door for collaboration with major partners in Solana. Secondly, Kyros may adopt a fair launch approach. Lastly, Kyros is currently low-profile, making its potential for airdrop rewards more attractive.
Of course, this is a personal opinion for reference only, hoping this analysis can help you make a wiser decision when choosing to re-stake SOL.
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