🥛 PRO | The Rise of Liquid Staking on Solana

GM! Welcome to Milk Road PRO—your go-to weekly crypto report that's always buzzing with something exciting. This week is no exception!

Staking, liquid staking, restaking… Feeling overwhelmed by all the crypto jargon? Don’t worry, we get it. But trust the Milk Man, you don’t want to miss out on what we have in store.

Here’s the opportunity for Liquid Staking on Solana laid out for you in one image. 

Notice that Solana has 3x the amount of $SOL staked vs. Ethereum, yet only 6.9% of that is liquid staked.

Whereas on, Ethereum 65% of staked $ETH is liquid staked. 

What happens next for staked $SOL is very obvious here, and that friends, is the big opportunity at hand!

If the reason for this is unclear, no worries, we’re going to break it down in today’s report and finish off with 3 ways to capitalize on this opportunity.  

Here's what you can expect from this report:

P.S. - We’re hosting an AMA next week — scroll to the bottom for more info. 👀

Our focus today is to compare Solana to Ethereum as we believe that the liquid staking market on Solana has a massive opportunity to mimic Ethereum’s success.  

👉 Solana, with over $50 billion staked via native staking, leaves a vast amount of capital illiquid.

This means all those stakers aren't able to take advantage of the main benefits of liquid staking, which includes having tokens that are freely usable across various DeFi platforms with instant liquidity. 

Money always flows where it’s treated best, and in this case, that’s in liquid staking protocols. 

This contrast highlights significant growth potential for liquid staking on Solana, so this trend is already happening. 🔥 

The market share for liquid staked $SOL has recently hit 6%, up from 2% ~6 months ago! We see no reason why this growth won’t continue or likely accelerate. 

But before we get into the opportunity, let's step back and understand the incentives of staking, as this is what makes up the basis of this opportunity.

WHY DO PEOPLE STAKE? 🤔

Proof-of-Stake (PoS) blockchains offer an attractive incentive: staking yields. 

• These yields help users avoid the effects of inflation that are built into the system. 

• This inflation rewards those who stake their tokens by giving them a portion of the newly created tokens. 

• This system helps secure the network.

If you're not staking, you're essentially missing out on these gains which could offer anywhere from 3% - 12% APY. Therefore, many people prefer to stake.

Other Proof-of-Stake blockchains like Cardano, Avalanche or Sui have staking ratios in the high double digits, ranging from 50%-70%. 

There is a staggering $670 billion staked across the top PoS blockchains.

It only confirms that people love the idea of making extra money through staking yields (who wouldn't? 😆), but not everyone is ready to tackle the technical challenges it involves. 

HOW TO GET ACCESS TO THE STAKING YIELD? 👀

There are 2 main ways to stake on Ethereum, each catering to different levels of technical expertise: