[Proposal] Expand Wonderland Season 2 LST Tracking to All Eligible Liquidity Pools

Sanctum Products
1

Objective:

Enhance the inclusivity of Sanctum’s Wonderland Season 2 incentive tracking by expanding it to cover all liquidity pools that hold at least $100 worth of LSTs (Liquid Staking Tokens). This proposal aims to recognize and reward holders of LSTs who participate in various DeFi pools on the Solana network, thus fully embracing the liquid nature of LSTs and broadening engagement.

Background:

Sanctum’s Wonderland Season 1 offered rewards for users holding LSTs in either their wallet or specific liquidity pools on platforms like Meteora and Kamino. However, as there are over 50 LST options and numerous active liquidity pools on Meteora alone, Sanctum’s current tracking infrastructure only accounts for LSTs held directly in wallets or specific few pools, which is very limited. This limits the incentive program’s reach, discouraging users from placing their LSTs into various liquidity pools for yield opportunities, which is counterintuitive to the liquid utility of LSTs.

In comparison, SolanaHub has implemented a tracking system that recognizes hubSOL holdings in any liquidity pool across multiple DeFi products, including Orca LPs, Mango DEX, RainFi, and others. Following this example, expanding tracking on Sanctum would allow LST holders to engage freely in DeFi opportunities without missing out on Wonderland incentives.

Solution: Expand Sanctum’s LST Tracking to All Eligible Liquidity Pools

1. Dynamic Tracking of All Liquidity Pools with LST Holdings Above $100

Sanctum should upgrade its infrastructure to automatically detect and track any liquidity pool containing $100 or more worth of LSTs. Points allocated to Wonderland incentives would then include all eligible pools, thereby providing a more accurate representation of LST distribution and liquidity engagement across the Solana network.

This dynamic approach would cover popular DeFi platforms like:

  • Orca LPs
  • Meteora DLMM and Regular Pools

By including these pools, users will not be penalized for engaging in DeFi and can actively contribute to Solana’s liquidity ecosystem while maintaining eligibility for Sanctum incentives.

(Optional) 2. Transparency and User Interface Upgrades for Tracking

To boost user confidence and clarity, Sanctum should introduce a user interface feature displaying LST holdings in all eligible pools and the corresponding points accrued in Wonderland incentives. This dashboard would allow users to monitor their holdings, understand their points accumulation, and ensure their LSTs are recognized within the Sanctum ecosystem.

13 Likes
2

This is a very interesting proposal. This does require some time to put in place from the core team perspective.
I would like to add that i would highly welcome more precisions on :

  • how much of an importance you would give to provide liquidity, is it more important than holding ? if so, should points given be proportionally more important than to the ones holding ?
  • should the points be directly displayed on sanctum UI, should it be known that points for lp are tracked and potentially rewarded more than holding ?
  • how can we avoid game to be rigged ? keep it full linear ? why starting at 100$ ?

being a bit petty about questions but just for this proposal that is interesting to be enhanced

7 Likes
3

Thank you for the feedback. The reason for this proposal is that, in Season 1, I was forced to hold my LSTs in a wallet because I didn’t like the limited number of pools offered on Meteora, Kamino, and Orca. I think there were only 3-4 pools available, which felt very limiting.

  • how much of an importance you would give to provide liquidity, is it more important than holding ? if so, should points given be proportionally more important than to the ones holding ?

There shouldn’t be more importance placed on providing liquidity over simply holding. We shouldn’t limit or force people one way or the other. That’s why I’m proposing to track all liquidity pools that utilize LSTs, as, currently, this isn’t happening, and we’re either forced to hold in a wallet or use a specific pool, which is very limiting.

  • should the points be directly displayed on sanctum UI, should it be known that points for lp are tracked and potentially rewarded more than holding ?

No, the same points should be awarded for holding or providing liquidity.

  • how can we avoid game to be rigged ? keep it full linear ? why starting at 100$ ?
    It just gives full freedom on what to do with LSTs. People can either hold them in a wallet without utilizing them or deposit them in supported protocols like Meteora, Orca, and other top protocols. All that’s needed is to track it, like SolanaHub does.

The $100 threshold (or similar) is because if a pool is inactive, it usually has $0 in it. Starting at $100 usually means there’s a meaningful amount of money in the pool, showing a genuine intent to provide liquidity rather than just a minimal, inactive deposit.

3 Likes
4

my memory from S1 and why not so many were included or indeed added, is its incredibly difficult to track some of them, with liquidity pools it constantly changes after each epoch as it auto rebalances as the ratio changes, not so bad if its a one sided pool say INF, not as good if you do any of the LSTs paired with say SOL or USDC as a double sided entry

whether any of the tracking difficulties have changed i don’t know, if it has then great, they get the same points a simply holding, as the team have stated from day one, they hold LST holders to be 1st class citizens and not have to chase defi to get any enhanced rewards when it comes to any potential sanctum drops/rewards

2 Likes
5

It’s an interesting question as for any other token the answer is: It’s the most important thing a token needs.
Given the way Sanctum does swaps it’s not as important with these LSTs … however… having liquidity on chain is important and should be, at very least, equal weighting as holding the LST.

And maybe there’s an argument to maybe weight it higher becasue:

  • liquidity provision is a person taking on extra risk to provide a service that others can utilise
  • the more liquidity means the more extra protocols are engaged with Sanctum LSTs. If you have LSTs across 100 LPs on 5 DEXs that’s a lot more buy in and mindshare than 10 LPs on 3 DEXs and that is a massive positive over and above just raw yield.
1 Like
6

This has been suggested quite a few times already. In theory it makes sense, in practice it’s a massive pain to track the hundreds of LPs, borrow-lend positions etc. I don’t know what the solution is.

6 Likes
7

Great proposal, but it would require massive undertaking and it would most likely delay Season 2 even further.

1 Like
8

This is a solid proposal, but implementing it would be a significant undertaking and could likely push back the start of Season 2 even further. We’d need to carefully assess the resources required and potential impacts on the timeline to ensure a smooth launch without compromising quality.

3 Likes
9

that’s an incredible idea

1 Like
10

interesting proposal for someone like me who uses dlmm often

2 Likes
11

Great response. I faced similar annoying limitations in season 1 :face_with_raised_eyebrow:

1 Like
12

I read Meteora I like, I’m in ! Liq is Liq. Any liq should be eligible, yes ! :partly_sunny:

1 Like
13

Thanks for explaining. It was quite frustrating back then, hopefully, they can all be tracked now.

2 Likes
14

In my opinion, this shouldn’t take too much time to implement from scratch, and if collaborating with the SolanaHub devs, it could be quite straightforward. It would likely only require the collection of LST addresses and the use of SDKs from protocols like Meteora, Orca, and Raydium for now. A service could then track these periodically to calculate points at that moment, as these protocols are most commonly used for providing liquidity. That said, the hubSOL devs could provide more insightt to enable even faster implementation if needed.

Whoever is not participating in providing liquidity I encourage, you might be surprised by how much you can actually earn with specific pairs if you utilize proper strategy. But you have to learn strategies and go through trial/error what works best for you. It’s not for everyone. After all, LSTs are designed to be utilized in DeFi rather than being locked in native staking epochs. Personally, with my assets, I earn a significant amount of LST from fees on top of the APY per day by providing liquidity. For instance, with my strategies on Meteora, I earn anywhere from $50 to as much as $500 per day (the volume was outstanding, and my DLMM was really tight). The earnings outweigh the IL itself, if there is any by implementing proper strategy.

In general, with more liquidity in these pools, we can achieve the lowest possible slippages for swaps, which is also a key goal.

Keep in mind, this is a community proposal to maximise usage of Sanctum during Wonderland. This is not core thing. The dilemma this would solve is, if you want to participate in Wonderland or keep providing liquidity. Depends how long Wonderland S2 lasts, if thats 2-3 months, thats 2-3 months of not utilizing your LSTs in liquidity pools. But if not participating in Wonderland it also sucks. It sucks that we would have to choose. :sob: If the team needs to allocate resources to something more important, team knows the best.

3 Likes
15

Just went through the proposal - thank you for sharing.

TL,Dr: Although I like the proposal, it seems that it is not super easy to build this (heavy technical lifting vs. real upside). Furthermore, imo, this further fragments liquidity. Rather than having 1000 Pools with $ 100 in each of them, I would rather incentivise 25 pools with >500k liquidity in them. This is what the team should - in my opinion - optimise for.

Longer comments: Yes, I do like the idea that LSTs are being put more into DeFi (which gives further rise to Solana and Sanctum). I have however 2 key problems with this proposal:

1. Liquidity fragmentation: having 10k pools with $100 in LSTsol in them is not relevant, so having some liquidity hub is important → rather than rewarding every pool, it might make more sense to focus on the top 25/50/100/150 pools
2. Technical depth: Tracking hundreds of pools might be too difficult for the team and I do not think that there is massive upside.

  • Conclusion: I think it does make sense to track the Top 25-35 pools due to the technical work required from the team vs. the smaller benefits.
3 Likes