As a seasoned analyst with years of experience in the crypto space, I find the development of fragSOL, Solana’s first liquid restaking token, quite intriguing. Having witnessed the growth and challenges of Ethereum-based LRT protocols, it’s refreshing to see projects like Fragmetric leveraging Solana’s unique capabilities to address these issues head-on.
The innovative liquid staking platform, Jito, along with the restaking service provider, Fragmetric, have recently introduced a fresh liquid restaking token for the Solana network, which they’ve named fragSOL.
In a blog post published on August 29th, Fragmetric announced that the newly introduced token is the inaugural liquid staking token directly on Solana (SOL), modeled after the Jito (JTO) staking vault receipt token.
As per the platform’s statement, fragSOL is a specially designed liquid restaking token that aims to solve problems related to reward distribution and slashing in other liquid staking tokens. This innovative feature, exclusive to fragSOL, is facilitated by the unique characteristics of the Solana blockchain, as highlighted by the platform.
What are liquid restaking tokens?
In the world of decentralized finance, Liquid Reward Tokens (LRTs) represent a novel category. They give users who stake their assets an opportunity to generate earnings not only from their staked tokens but also through the rewards for Active Validation Services they provide.
As a researcher studying liquid restaking protocols, I’ve observed that participants often store Solana (SOL) within these systems to receive the liquid staked token (LST). This LST can then be reinvested by restaking it, thereby contributing to the active validation of services and potentially earning additional returns. However, a significant challenge many LRT protocols encounter pertains to the fair distribution of Active Validator Service (AVS) rewards.
According to Fragmetric, their LRT token will utilize Jito’s re-staking infrastructure and Solana’s token extension program to bring the advantages of fragSOL to the market. By integrating automated re-staking and yield optimization, fragSOL aims to increase the liquidity and adaptability of staked Solana tokens.
How it works
Instead of Ethereum (ETH) liquid restaking protocols grappling with challenges in evenly distributing AVS incentives, fragSOL attempts to tackle this issue using its transfer hook feature. This unique characteristic of Solana’s token extension empowers Fragmetric to handle reward distribution by assigning network rewards from the consensus node based on a user’s length of LRT possession.
“Whenever Alice sends $fragSOL to Bob, a mechanism called the $fragSOL transfer trigger gets activated. This mechanism updates both Alice’s and Bob’s $fragSOL balances in Fragmetric’s Rewards System. When Fragmetric’s vault receives NCN rewards, these rewards are logged by the Rewards System based on the time they were received. This method makes sure that the correct amount of NCN rewards is calculated and given to all users, according to their individual balances.”
Fragmetric.
A few days ago, Fragment unveiled fragSOL, following Renzo’s introduction of the liquid restartaking token ezSOL on Jito. Notably, this protocol also supports the liquid restartaking tokens ezETH on EigenLayer and pzETH on Symbiotic.
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2024-08-29 20:34