3 Minute Read on Jito Network Flashbot + Lido, the Liquidity Staking Protocol Driving Solana’s Revival

Unlocking Solana's Potential Learn About Jito Network Flashbot and Lido, the Liquidity Staking Protocol Responsible for Revitalizing the Network - In Just 3 Minutes

Understanding Jito Network in 3 Minutes: Flashbot + Lido, the Liquidity Staking Protocol that Drives Solana's Revival

Produced by: DODOResearch

Author: dt

Editor: Lisa

This week, with the news of the Bitcoin spot ETF, the overall blockchain market sentiment is bullish. Among the top ten cryptocurrencies by market capitalization, apart from BTC, the main character of this story, the highest gainer is the Solana protocol token $SOL.

Understanding Jito Network in 3 Minutes: Flashbot + Lido, the Liquidity Staking Protocol that Drives Solana's Revival

Source: https://www.coingecko.com/

In the FTX collapse event last year, Solana suffered significant damage. Not only was the price of $SOL token affected, but also the liquidity of on-chain ecosystems and the mapping of cross-chain tokens such as soBTC, soETH, and the underlying DEX protocol Serum. These on-chain infrastructures were provided or sponsored by FTX, and the collapse resulted in liquidity withdrawal, mapping tokens becoming worthless, and the security risks of the underlying liquidity protocol Serum. The Solana ecosystem’s Total Value Locked (TVL) experienced a bloodbath drop, plummeting from a pre-event TVL of billions of dollars to a low point of 200 million dollars.

However, the Solana community stood strong, and with continuous efforts from the foundation, as we approach the one-year anniversary of the FTX collapse, not only has the price of $SOL token almost recovered to pre-event levels, but the on-chain TVL of Solana has also risen by nearly 90% from the low point earlier this year, increasing from 200 million dollars to 380 million dollars.

Understanding Jito Network in 3 Minutes: Flashbot + Lido, the Liquidity Staking Protocol that Drives Solana's Revival

Source: https://defillama.com/chain/Solana

In such a challenging environment this year, Jito undoubtedly performed the best among the protocols in the Solana ecosystem. Jito went live on the mainnet during the most difficult period after the FTX collapse in November 2022. TVL initially started at $4 million and has now surpassed $100 million in just one year, becoming the second-ranked protocol in terms of on-chain TVL, following the Solana liquidity staking protocol Marinade Finance.

Understanding Jito Network in 3 Minutes: Flashbot + Lido, the Liquidity Staking Protocol that Drives Solana's Revival

Source: https://defillama.com

This week, CryptoSnap Dr.DODO introduces the hottest riser in the current Solana Defi ecosystem, Jito. Let’s explore what magic makes Jito perform so well despite the unfavorable cryptocurrency market and the challenging Solana environment.

What is Jito?

Jito is a liquidity staking protocol launched by Jito Lab. In August 2022, Jito Lab secured a $10 million Series A funding led by Multicoin Capital and Framework Ventures, with participation from Solana Ventures and Anatoly Yakovenko, co-founder of Solana Labs.

Jito claims to be the first staking product on Solana that includes MEV rewards. Unlike other existing liquidity staking protocols, Jito offers additional MEV rewards to stakers, in addition to staking returns. Besides focusing on the liquidity staking track, Jito Lab also pays attention to the MEV track. It is the development team behind Jito-Solana, the first third-party validator client on Solana. Through the architecture of Jito-Solana, it is able to effectively capture MEV profits in the Solana network and reduce the probability of futile transaction dust attacks, thereby lowering the risk of the entire Solana blockchain crashing.

The Jito-Solana client introduces an auction mechanism similar to the Flashbot auction on the Ethereum mainnet. Traders submit bids for transaction sequences they believe to be profitable, and then a third-party block engine runs complex simulations to find the highest value transaction combination. These bids are then allocated to validators and token holders (JitoSOL), eliminating transaction dust attacks and increasing token holders’ rewards.

Understanding Jito Network in 3 minutes: Flashbot + Lido, the liquidity staking protocol driving Solana's revival

Source: https://www.jito.network/blog/jito-solana-is-now-open-source/

Flashbot + Lido = Jito

According to the “Validator Health Report – October 2023” recently released by the Solana Foundation, since its initial launch in August 2022, the Jito Labs client Jito-Solana has grown from 0% to 31% of the network’s proportion. It is the only third-party client currently available and has successfully introduced an auction mechanism that differentiates it from official validators, attracting many stakers to use Jito-Solana.

Understanding Jito Network in 3 minutes: Flashbot + Lido, the liquidity staking protocol driving Solana's revival

Source: https://solana.com/news/validator-health-report-october-2023

The emergence of Jito not only solves the MEV problem plaguing the Solana blockchain, but also reduces the occurrence of crashes caused by congestion on the Solana network. With Lido announcing its departure from the Solana staking field, Jito is expected to gain more Sol liquidity staking shares.

In addition, the fact that Jito does not yet have governance tokens attracts many airdrop hunters to participate. Currently, Jito is running a point system activity, where holding JitoSOL or depositing JitoSOL on lending platforms or providing liquidity can earn points. There is also a referral mechanism, where referring more people can earn higher points.

Author’s Opinion

I believe the Solana ecosystem is definitely an area worth paying attention to. After a year of downturn, projects that are not favored by the community or have shown no progress have already been eliminated. The surviving protocols represent strong community support and ongoing development updates. Among them, projects that have not yet launched their token are particularly worth participating in.

Therefore, the reason why I am introducing the Jito protocol this time is because of the aforementioned three points. I believe Jito can be considered a game-changer on Solana, with tremendous potential. In addition to Jito, Kamino and Marginfi are also on my observation list, as they also meet the aforementioned three criteria and are worth everyone’s attention and participation.

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!


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