Introducing Validator-Optimized LST (vSOL): Enhancing Solana's Liquidity, Network Efficiency, and Decentralization through Sanctum’s Infinity Pool

Executive Summary
The proposal introduces Validator-Optimized LST (vSOL), a liquid staking token designed to enhance Solana’s validator ecosystem by improving network efficiency and liquidity. Through dynamic validator optimization and support for smaller validators, vSOL provides users with the benefits of liquid staking while contributing to the health of the Solana network. Its integration with Sanctum’s Infinity Pool will enable seamless liquidity and support for decentralized staking, positioning Sanctum at the forefront of Solana’s liquid staking ecosystem.


Problem Statement
The current LST ecosystem on Solana faces challenges such as network congestion during epoch transitions and liquidity fragmentation across multiple staking pools. Large validator pools dominate the network, leading to computational delays and inefficient staking operations. These factors discourage the participation of smaller validators and reduce the efficiency of Solana’s staking architecture.


**Solution: Validator-Optimized LST (vSOL)
The proposed vSOL token will streamline staking by dynamically distributing staked SOL across a wide range of smaller validators. This will optimize network performance, reduce congestion, and improve staking rewards for users while decentralizing the validator network.

Key Features

  1. Validator Aggregation:
    vSOL will reduce Solana’s computational burden by consolidating validator accounts, minimizing network slowdown during epoch transitions, and increasing overall efficiency.

  2. Dynamic Validator Reallocation:
    Staked SOL will be reallocated dynamically across smaller, high-performing validators to optimize for both rewards and decentralization. This improves validator participation and network security.

  3. Instant Unstaking with Infinity Pool:
    By integrating with Sanctum’s Infinity Pool, vSOL will allow users to instantly unstake SOL without traditional lockup periods, offering flexibility and liquidity.

  4. DeFi Compatibility:
    vSOL will be interoperable with DeFi platforms, allowing users to earn staking rewards while leveraging their tokens in various decentralized finance applications.


Benefits to Sanctum and Solana Ecosystem

  1. Liquidity Enhancement:
    As part of the Infinity Pool, vSOL will enhance liquidity for liquid staking, allowing users to swap easily between LSTs and access staking rewards without delays.

  2. Network Efficiency:
    vSOL’s validator aggregation reduces the strain on Solana’s network, ensuring faster transaction times and smoother operation during high-staking periods.

  3. Decentralization and Validator Growth:
    By actively redistributing stake to smaller validators, vSOL will contribute to a more decentralized validator ecosystem, helping prevent centralization risks that threaten Solana’s network security.

  4. DeFi Incentives:
    Users can utilize vSOL within DeFi ecosystems, enabling liquidity mining, lending, and borrowing while maintaining liquid access to staked SOL.


Implementation Plan

  1. Launch Strategy:
    Launch vSOL as an LST in Sanctum’s Infinity Pool, enabling immediate swaps and staking options for users.

  2. Validator Partnerships:
    Build partnerships with smaller, underrepresented validators to ensure an efficient and decentralized staking process.

  3. Community Incentives:
    Use airdrops, rewards, and referral programs to encourage early adoption of vSOL and promote community involvement.


Conclusion

vSOL is a strategic fit for Sanctum’s liquid staking ecosystem, offering unique solutions to Solana’s congestion and decentralization challenges. Its integration with the Infinity Pool will ensure deep liquidity while promoting network health. This proposal aligns with Sanctum’s vision of making SOL fully liquid while optimizing for validator growth and network stability.


4 Likes

Hello,

Best if you can site something regarding the Problem Statement. This is because we have a lot of people (including the one writing this comment) unfamiliar with the challenges you are trying to solve due to never having run a validator.

This would help us to be more helpful in suggesting improvements to your proposal.

Thanks

2 Likes

Have you seen JitoSOL’s stakenet? This seems to be similar only with different parameters on distribution of stake and different goals.

Given that there is no mention of using a stakepool (difference in the case of stakenet) how do you propose to distribute staking of SOL to the smaller validators?

Regards

2 Likes

Congrats for the first post @Hammedfinance1 ! Welcome to sanctum research!
Love your focus on decentralization, we need to help other small validators.

But I’m afraid https://thevault.finance/ already take vSOL name and they work the same way as LST aggregator. Is it okay for you to see the link and check if I’m right about it being LST agregator to decentralize? Thankyou for your time and proposal!

5 Likes

Thanks for your reply , I feel the ticker can always be changed , very viable and I get your points

2 Likes

@fplee was wondering if u have gone through this

1 Like