SolBlaze: Accelerating DeFi with Liquid Staking
A Guide to Liquid Staking on SolBlaze and the bSOL Ecosystem
Solana uses a proof of stake consensus mechanism. This mechanism depends on a network of validators involved in continuous block building. Each block is built by the leader, a designated validator for four blocks and all of the other validators have a stake weighted vote on the next block. To ensure that validators do not act maliciously, their stake is at risk of slashing, where a validator can lose their stake by improper voting.
Staking is thus an integral part of the validator economy and keeping the network healthy. Solana is inflationary by design to incentivize users to stake with validators. By earning staking rewards, users mitigate the inflationary effect of the tokenomics.
A traditional staking process involves the user selecting a validator and depositing their SOL with the validator, locking up the tokens until at least the end of the current epoch, typically 1-2 days. Although native staking is a positive carry position, it takes locks up SOL from the ecosystem and slows the Solana economy.
Enter Liquid Staking
Liquid Staking is a way to contribute to the validator network by staking your SOL while having the liquidity to further interact with DeFi protocols in the Solana ecosystem. Stakers receive a token is received representing their staked SOL and increases in value according to the earned APY each epoch.
SolBlaze is a liquid staking protocol on Solana that features a high quality validator pool as well as ecosystem incentives and high liquidity. With SolBlaze’s liquid staking protocol, users stake their SOL in return for bSOL. bSOL reflects the staking rewards by appreciating in value every epoch. bSOL is always backed by an amount of staked SOL that is not under the custody of SolBlaze when staked through them.
At first glance, liquid staking may seem too good to be true. A simple way to understand liquid staking is that it is the meta-tokenization of staked SOL. bSOL is the tokenized representation of staked SOL through SolBlaze. If a validator in SolBlaze’s universe is slashed, SolBlaze’s total sum of staked SOL would decrease, and thus the value of bSOL would decrease proportionally. With native staking, if you deposit an entire amount of SOL to a single validator and they get slashed, you would lose your entire stake.
Stake Pools
The top 32 validators control nearly a third of all staked SOL, known as the security group. That doesn’t sound very decentralized. To combat this, SolBlaze offers stake pools, which allow for algorithmic distribution of staked SOL to vetted validators to promote decentralization and diversification.
SolBlaze has flexibility to automatically distribute your stake amongst their universe of over 200 validators with their delegation strategy or allow you to choose specific validators with Custom Liquid Staking (CLS). With CLS, your stake is a specific tokenization of proportional stake with validators of your choosing rather than the entire stake pool.
SolBlaze’s delegation strategy assigns a score to validators in their universe outside of the security group to promote decentralization in the network and diversify risk. With a mixture of features including APY, performance, and decentralization metrics, SolBlaze algorithmically selects a distribution that seamlessly delegates your stake amongst trusted validators.
BLZE Gauges: To support specific validators with protocol stake, users can vote in governance with the governance token $BLZE. By voting on different pools and validators, users can vote on the deployment of the stake pool.
Airdrop Strategies
At the time of writing this article, there are various avenues to leverage SolBlaze’s liquid staking to efficiently earn staking rewards and farm highly anticipated airdrops.
The trifecta utilizes Kamino’s bSOL-JUP vault and earns points for SolBlaze, Kamino, and Meteora. Simply use liquid staking on SolBlaze to receive bSOL and visit Kamino to deposit in the bSOL-JUP vault to start farming these points.
Economics and Growth
Liquid staking is a native protocol that allows validators to benefit from higher stake volumes as it brings in people who wanted the liquidity of unstaked SOL. In addition, liquid staking grows the DeFi economy by unlocking liquidity from ideally all staked tokens.
Conclusion
SolBlaze’s liquid staking solution is user-friendly and does not contain more risks than native staking. With liquid staking, you remain in custody of your funds, are able to contribute to fortifying the validator network using verified and audited Solana Foundation programs, and stay liquid with tokenized bSOL that allows you to continue participating in DeFi protocols.