With the news of Bitcoin spot ETF this week, the overall blockchain market is generally bullish. Among the top ten in market capitalization, in addition to BTC, the protagonist of this narrative, the one with the highest increase is the Solana protocol token $SOL.
Source: https://www.coingecko.com/
In the FTX crash last year, Solana was greatly hurt, not only by the plunge of $SOL tokens, but also because of the liquidity of the on-chain ecosystem and the mapping of cross-chain tokens such as soBTC, soETH and the underlying DEX protocol Serum, etc. These on-chain infrastructures are all provided or sponsored by FTX. As the collapse also led to the withdrawal of liquidity, the mapping of tokens to zero, and the security of the underlying liquidity protocol Serum, the Solana ecosystem TVL experienced a bloody decline, from the US$1 billion TVL before the incident to a low of US$200 million in an instant.
But thanks to the persistence of Solana community members and the continuous efforts of the foundation to update, now, nearly one year after the FTX collapse, not only has the price of Solana's token $SOL recovered to nearly the level before the incident, the TVL on the Solana chain has also increased by nearly 90% from the low point at the beginning of the year, from US$200 million to US$380 million today.
Source: https://defillama.com/chain/Solana
In such a difficult environment this year, Jito is definitely the best performing protocol in the Solana ecosystem. Jito went online on the mainnet in November 2022, which was the most difficult period after the collapse of FTX. The TVL has increased from the initial 4 million US dollars to more than 100 million US dollars a year later, second only to the Solana liquidity staking protocol Marinade Finance to become the second-ranked protocol on the chain in terms of TVL.
Source: https://defillama.com
This week, CryptoSnap Dr.DODO will introduce Jito, the fastest-growing cryptocurrency in the current Solana Defi ecosystem, to everyone to explore what magic allows Jito to perform so well despite the poor overall cryptocurrency environment and the fact that it is in Solana.
What is Jito?
Jito is a liquidity staking protocol launched by Jito Lab. In August 2022, the Jito Lab team received a US$10 million Series A financing led by Multicoin Capital and Framework Ventures, with participation from Solana Ventures and Solana Labs co-founder Anatoly Yakovenko.
Jito calls itself the first staking product on Solana that includes MEV rewards. Unlike other existing liquidity staking protocols, Jito provides stakers with additional MEV rewards in addition to staking income. In addition to the liquidity staking track, Jito Lab also pays attention to the MEV track. It is the first development team of Solana to launch the third-party validator client Jito-Solana. Through the Jito-Solana architecture, it will be able to effectively capture the MEV income in the Solana network, reduce invalid tx dust attacks, and reduce the probability of the entire Solana public chain crashing.
The Jito-Solana client introduces an auction mechanism similar to the Flashbot auction on the Ethereum mainnet, where traders submit bids for transaction sequences they believe to be profitable, and a third-party block engine then runs complex simulations to find the highest-value transaction combination. These bids are then distributed to validators and coin holders (JitoSOL), thereby eliminating tx dust attacks while increasing rewards for coin holders.
Source: https://www.jito.network/blog/jito-solana-is-now-open-source/
Flashbot + Lido = Jito
In the "October 2023 Blockchain Validator Health Report" recently released by the Solana Foundation, the Jito Labs client Jito-Solana has increased its network proportion from 0% to 31% since its first launch in August 2022. It is also the only third-party client at present. The auction mechanism brought by Jito-Solana has successfully opened up a difference from the official validator and has successfully attracted many pledgers to use it.
Source: https://solana.com/news/validator-health-report-october-2023
The emergence of Jito not only solves the troubling MEV problem on the Solana chain, but also reduces the crash problem caused by congestion on the Solana chain. As Lido announced that it will withdraw from the Solana staking field, Jito is expected to obtain more Sol liquidity staking shares.
In addition, the fact that Jito does not yet have a governance token also attracts many airdrop hunters to participate. Jito is currently running a points activity. Points can be obtained by holding JitoSOL and investing JitoSOL in lending platforms or providing liquidity. There is also a referral mechanism. You can get higher points by recommending more people.
Author's opinion
The author believes that the Solana ecosystem is definitely an area worthy of attention. After a year of lows, projects that are not favored by the community or inactive by the project parties have long been eliminated. The protocols that can still survive today all represent strong community support and continuous updates and deliveries by the development team. Among the many projects, those that have not yet issued coins are even more worthy of participation.
Therefore, the Jito protocol will be introduced this time because it has caught my attention due to the above three points. I believe that Jito can be said to be a game changer on Solana, and the protocol has great potential. In addition to Jito, kamino and marginfi are also on my watch list and meet the above three characteristics. They are all worthy of everyone's attention and participation.
