What is Sanctum Validator LSTs

The Validator LST protocol by Sanctum allows users to stake their SOL with validators and receive a liquid staking token (LST) in return. This token, typically named following a convention like xSOL, represents the user’s stake and accrues value relative to staking rewards. For instance, holding 100 xSOL might equate to 107 SOL after a year, assuming a 7% staking APY. The liquid nature of the token enables users to trade it for SOL or other assets at any time on platforms like Jupiter, offering an alternative to traditional locked staking methods. Governance is handled by a decentralized 11-member multisig comprising trusted ecosystem actors like Jito, Jupiter, Laine, and others, ensuring decisions are made collaboratively and transparently.

How Sanctum Validator LSTs makes money

When users deposit SOL into a Validator LST pool, Sanctum sets up and manages the associated stake accounts. The deposited SOL is staked with validators, and users receive LSTs that reflect their share of the pool. Governance over key aspects of the protocol, including upgrades and fee changes, is managed by the multisig, requiring a majority vote to approve modifications. The management authority, currently held by Sanctum, is responsible for staking operations but cannot access user funds. Future plans include using Jito’s Stakenet for automated delegation to further decentralize management.

How you make money on Sanctum Validator LSTs

Users earn staking rewards through the value appreciation of their LSTs, which grow proportionally to the staking yield of the underlying validators. In addition to staking rewards, some validators may offer additional incentives, such as token or NFT airdrops, to LST holders. The liquid nature of LSTs allows users to trade or utilize them within the Solana DeFi ecosystem, providing additional opportunities for yield or liquidity management. The composability of these tokens enhances the potential for earnings beyond traditional staking methods.