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Understanding Jito re-staking, how to maximize your SOL income?

Understanding Jito re-staking, how to maximize your SOL income?

BlockBeatsBlockBeats2024/11/01 10:17
By:BlockBeats

SOL can also play nesting dolls

Original title: Jito (Re)staking is here- Who will win the Solana restaking race?
Original author: flow, crypto researcher
Original translation: zhouzhou, BlockBeats


Editor's note: This article introduces Jito Labs' restaking protocol on Solana, Jito (Re)staking, a technology that allows the use of staked SOL assets to earn higher returns and potentially participate in airdrops. Users can restake SOL through three providers (Renzo, Fragmetric, and Kyros), each of which differs in risk, liquidity, and potential returns. The article compares their features in detail, and recommends preferring Kyros, which supports fair launches and has potential airdrop returns.


The following is the original content (the original content has been reorganized for easier reading and understanding):


After successfully building the largest liquid staking protocol on Solana, Jito Labs has once again brought another important development: the launch of a new re-staking protocol - Jito Re-Staking. This re-staking project is live today and will soon open for deposits, with an initial re-staking limit of approximately 25 million US dollars (147,000 SOL). For those who want to earn higher annualized SOL returns and want to participate in airdrop opportunities first, this is a very attractive opportunity in the market right now.


Before introducing how to maximize this opportunity, let’s briefly review the basic principles of Jito Re-Staking.


What is Jito Re-Staking


In short, re-staking refers to using assets that have already been staked to provide security for a specific decentralized service again. While it may seem minor, this is actually 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.


Understanding Jito re-staking, how to maximize your SOL income? image 0

An example of restaking in action


Today, Jito is finally bringing this new technology to Solana with its restaking solution.


Understanding Jito re-staking, how to maximize your SOL income? image 1

Diagram of the components of Jito re-staking


Core components of the Jito re-staking framework


The Jito re-staking framework consists of two main components: the re-staking program and the vault program. They can be thought of as two independent entities that work together to provide a flexible and scalable infrastructure for creating 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 the active verification service in EigenLayer, which is used to represent the entities that will utilize the Jito re-staking solution.


The main function of the re-staking program is to manage the creation of node consensus operators (NCNs), the selection mechanism for users, and the reward distribution and penalty mechanism. This part is invisible to users and can be seen as the core support of Jito's re-staking solution.


The Treasury is responsible for managing liquid re-staking tokens (VRT) and customizing different re-staking strategies through DAO or automated protocols. This is the main interface for users to participate in re-staking. By analogy, the re-staking role of EigenLayer is played by the re-staking program on Solana, while the Treasury is similar to EtherFi, acting as a liquidity layer between users and the core re-staking protocol.


Understanding Jito re-staking, how to maximize your SOL income? image 2

Image of how the Vault program works


3 VRT Providers


In the initial stage, Jito is only working with three VRT providers: RenzoProtocol ($ezSOL), fragmetric ($fragSOL) and KyrosFi ($kySOL), which will jointly allocate the initial cap of 147,000 SOL. Therefore, any user who wants to re-stake SOL through Jito will need to choose between these three VRT providers.


Understanding Jito re-staking, how to maximize your SOL income? image 3

Image of Jito (Re)staking landing page


Here is a brief table of the main features of each VRT provider:


Understanding Jito re-staking, how to maximize your SOL income? image 4


How to choose the right VRT for SOL re-staking?


When choosing which VRT, the key is to find an optimal risk-reward ratio.


Here is an analysis of each provider:


1. Risk:In terms of risk, the main focus is on protocol penalties (i.e., penalty risk) and liquidity risk. Due to the current small number of NCNs and the early stage, it can be assumed that the risks of all providers are basically the same. Renzo and Kyros accept JitoSOL, which has the best liquidity, while Fragmetric accepts a wider variety of liquid staking tokens (LST), which may increase its liquidity risk. In addition, Renzo and Kyros' VRT will be liquid from the beginning, while Fragmetric's tokens will not be transferable in the early stage. Therefore, in terms of risk, Renzo and Kyros have the lowest risk, and Fragmetric has slightly higher risk.


2.APY Return:The APY of each project is expected to be similar, but it can be assumed that Renzo and Kyros may have slightly higher expected APY than Fragmetric due to only using JitoSOL, but the difference will not be large.


3. Airdrop Potential:Given that all VRTs have similar risks and expected returns, the key factor in choosing a specific VRT is the potential for airdrop rewards. Renzo already has tokens, and although re-staking may receive some future airdrop points, the potential is relatively low. Kyros and Fragmetric currently have no tokens and have higher airdrop potential.


Further analysis of the differences between Kyros and Fragmetric:


Features of Fragmetric:Expected to receive venture capital support, may follow a high FDV, low circulation model; biased towards technology and decentralized user groups; cooperates with risk management company Gauntlet; tokens are not transferable in the early stage; accepts multiple LSTs.


Features of Kyros:Supported by SwissBorg, which helps distribute $kySOL and may cooperate with major players in Solana; may raise funds through a fair community-driven token model; has not yet started large-scale promotion; the NCN distribution method may be based on DAO voting; supports JitoSOL.


On the whole, KyrosFi is more attractive in multiple aspects. First, the support of SwissBorg makes it easier to distribute $kySOL and opens the door for its major partnership with Solana. Second, Kyros may take a fair launch approach. Finally, Kyros is relatively low-key at present, which makes its airdrop return potential more attractive.


Of course, this is a personal opinion and is for reference only. I hope this analysis can help you make a more informed decision when choosing to re-stake SOL.


Understanding Jito re-staking, how to maximize your SOL income? image 5


Original link


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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