Introduction

Liquid Staking is a concept developed to provide liquidity for stakers, in contrast to traditional staking where users lock up their tokens and wait for the set yield date to withdraw. For Liquid Staking platforms, users stake their asset for example SOL to a smart contract or staking pool to generate a derivative token that matches the value of their staked tokens, this derivative token, generally referred to as Liquid Staking Tokens (LSTs), can also be used across other DeFi platforms.

However, the use cases for LSTs remain limited, liquidity for LSTs is fragmented, and interoperability needs to be improved. Sanctum Infinity is building a liquidity solution for all LSTs on the Solana network, providing efficient trading of LSTs, and making LSTs tradable and swappable among each other.

In this article, we will explore Sanctum Infinity, how it manages liquidity for LSTs, and the utility of its derivative token, INF, and governance token, CLOUD.

Staking on Solana - An Overview

Staking on Solana, like other Proof-of-Stake blockchains, involves delegating an amount of SOL tokens to validators who process transactions and secure the network. In return, you earn rewards pooled from transaction fees. To stake, you need a staking-supported crypto wallet, such as Phantom or Solflare. After transferring SOL to your wallet, you select a reliable validator and delegate your tokens. Rewards are distributed regularly and can be claimed through your wallet. To unstake your SOL, you initiate the process through your wallet. Your staked tokens pass through a cooldown period (around 2-3 days), and the assets are locked and cannot be transferred or used in any transactions.

The cooldown period helps maintain network stability and security. It prevents sudden, large-scale withdrawals of staked tokens, and rewards are still calculated up to the point of initiating unstaking, ensuring that validators and delegators are accurately compensated for their contributions up to that moment. After the cooldown period ends, your SOL tokens become available in your wallet for regular transactions or transfers.

What is Sanctum Infinity? The Infinite Liquidity Pool For LSTs

Sanctum Infinity is a liquidity pool for all whitelisted LSTs (e.g., mSOL, stSOL, jSOL) on the Solana network, where users can deposit their LSTs. Generally, liquidity pools are designed in pairs, where investors provide liquidity for token pairs and earn from trading fees generated by the pool.

On Sanctum Infinity, users can deposit any Liquid Staking Tokens and start earning INF tokens, which can also be used as LSTs across the Solana ecosystem. It is designed to accommodate as many LSTs as possible, hence the name Infinity.

Sanctum Infinity is backed by Dragonfly Capital, Solana Ventures, DeFiance Capital, and other investors.

Brief History

Sanctum Infinity is the flagship product of Sanctum Labs, formerly known as Socean, an algorithmic liquid staking pool built on the Solana blockchain. Socean evolved into Sanctum, expanding to accommodate more than just a stake pool to develop novel use cases for liquid staking tokens.

Team

Jesse Cho

Jesse Cho is Sanctum’s co-founder and Chief Technology Officer. He previously served as head of software at Bluebox Labs and has extensive experience in embedded systems, systems design and architecture, and Rust language development. He graduated from Hanyang University, South Korea (Bachelor of Engineering, Computer Engineering) and the University of Washington, United States of America (Bachelor of Science, Computer Science).

FP Lee

FP Lee is a Co-founder of Sanctum Labs and a popular personality on X with the handle @soloeconomist. He is a graduate of the University of Oxford.

Jaye Tan

Jaye is also the co-founder of Sanctum Labs. He has an LLB from the National University of Singapore.

Key Features of Sanctum Infinity

Infinity

Source: Sanctum

Infinity is Sanctum’s liquidity pool, where users can deposit whitelisted LSTs or SOL into the Infinity Pool and receive INF or return INF to withdraw whitelisted LSTs or SOL from the Infinity Pool.

Validator LST

Source: Sanctum

Validator LSTs combine all the benefits of native staking (zero fees, validator selection) and the benefits of liquid staking (instant liquidity).

When you stake SOL on Sanctum Infinity, an equivalent amount of Validator LST (usually denoted as “(x) SOL”) is minted and deposited into your wallet. The underlying SOL is delegated to a chosen validator on the Solana network, similar to traditional staking. The value of your Validator LST reflects the staked SOL it represents, plus any accumulated staking rewards. Unlike staked SOL, Validator LSTs are tradable on AMMs (Automated Market Makers) like Jupiter.

Trade

Source: Sanctum

Trade is a feature that facilitates the trading of LSTs, making use of the Router and Reserve function in the background. Instant Unstake is a feature handled by the reserve pool, where users can easily unstake their LSTs by tapping into the reserve pool. They can also swap between LSTs, which the Sanctum Router handles.

Instant Unstake

The Sanctum Reserve Pool is a private third-party pool designed for redeeming staked SOL. It consists of idle SOL that can be used in exchange for staked SOL. This Reserve is open for all LSTs to access and can be used to instantly unstake SOL that is staked with a validator. The Reserve accepts staked SOL and provides SOL in return. It equally unstakes the staked SOL at the end of the epoch (cooldown period) to replenish its SOL reserves.

The platform charges a variable fee for using the reserve pool, based on the percentage of SOL left in the reserve pool. This structure allows for low fees most of the time and ensures efficient usage of SOL during times of high liquidity demand.

The Sanctum Router

The Router acts as a bridge between different Liquidity Staking Tokens (LSTs). Its main function is to route your staked SOL to another validator to receive different LST. Sanctum charges a flat 0.01% fee on every LST to SOL swap processed through the Sanctum Router.

Sanctum Wonderland

The Sanctum Wonderland is a gamified experience where users can earn experience points (EXP) by acquiring pets and completing community quests. The Wonderland campaign also allows users to qualify for a potential airdrop.

Each liquid staking token (LST) has its corresponding pet which you can own by holding at least 0.1 of its corresponding LST. For example, holding 0.1 juicySOL will make you the owner of a Jucie Pet. You can own each Pet by holding 0.1 of all corresponding LSTs.

Pets will earn you 10 EXP per minute for every 1 SOL worth of your respective LST. For example, holding 5 SOL worth of clockSOL will earn you 50 EXP per minute.

Sanctum Stake Accounts

Source: Sanctum

When you stake your SOL directly on Solana with a validator, a stake account is created, Sanctum’s Stake Accounts feature focuses on managing these existing stake accounts. This functionality lets you transform your regular stake accounts into LSTs. If you don’t want LSTs, you can use the “Instant Unstake” option to convert your stake account back to SOL.

Sanctum Profiles

Source: Sanctum

Sanctum Profiles create a more social and user-centric experience. Users can create a profile associated with their Solana wallet, connect their social media accounts, and showcase their involvement in the community, achievements, and even interests.

How Does Sanctum Infinity Work?

Source: Sanctum

Sanctum Infinity functions as a traditional liquidity pool. Users can join by depositing approved LST. In exchange, they receive the INF token, which accumulates staking rewards and trading fees from the pool.

Price and Fee Management

Sanctum relies on a trustworthy on-chain Oracle to establish the current price of each LST. When you deposit SOL or LST, you won’t incur any fees. The pool only charges for LST swaps and withdrawals. Every asset in the pool has an input and output fee. The total cost for a swap is the combined input and output fees determined by the Infinity pool manager.

Liquidity Rebalancing

The pool adjusts swap rates dynamically to maintain the supply and demand of each token (LST). For instance, if the pool has insufficient mSOL but has an excess of jSOL, it encourages users to swap jSOL for mSOL by offering a better exchange rate for those willing to make the trade. Conversely, to boost the supply of mSOL and decrease the deficit, the pool offers higher rates to users who want to exchange mSOL for jSOL.

The pool manager can also manually rebalance the pool by unstaking an LST and moving the stake to another LST.

What is $CLOUD Token?

Source: Sanctum

$CLOUD is Sanctum’s governance token and will launch on Jupiter’s LFG Launchpad on a soon-to-be-announced date. The $CLOUD token will be used for deciding which LSTs qualify for the Sanctum Verified Partner program, with more use cases to be unveiled upon the launch of Wonderland Season 2.

$CLOUD has a total supply of 1,000,000,000 and an initial circulating supply of 18%, with 10% reserved for the initial airdrop, and 8% will be used to seed liquidity in Jupiter’s LFG launch pool. The rest is distributed as follows;

• The Community allocation, 30%, will contribute to future airdrops, grants, and staking rewards, with its use to be determined by the community.
• The team will use the Reserve, 13%, to grow the Sanctum ecosystem for partnerships, grants, and on-chain liquidity.
• 1% given to Jupiter LFG.
• 13% of the supply will be sold to investors who contributed to the seed funding round.
• 25% will be allocated to founders and core contributors.
• 13% and 25% are allocated to investors and the team respectively.

Note: Team and investor tokens will be fully vested 36 months after the token generation event.

$CLOUD Airdrop

The Cloud airdrop is designed to reward active community members and long-term holders. The main criteria will be Wonderland XP points and contribution to the community.

Source: Sanctum

According to one of its Co-founders @soloeconomist on X, “Half of the airdrop (5%) will be allocated in proportion to Wonderland XP. The other half (5%) will be allocated according to earnestness.” Earnestness will be measured based on Sanctum Profiles, a feature that allows users to connect their social media accounts to Sanctum. It will reward users who contributed to Sanctum by referrals, onboarding new users, and sharing constructive feedback.

Source: Sanctum

For a fair launch, $CLOUD will be available on Meteora’s Alpha Vault. Users can buy $CLOUD at a discount before launching on the LFG launchpad, but they will have to unlock their tokens at a later date. The Alpha Vault is designed to attract long-term bullish investors.

Governance

The responsibility of making upgrades, executing proposals, adjusting parameters, and adding or removing functionalities falls on selected members of the Solana community. Sanctum uses a multi-signature type of governance and operates on a minimum of 6 out of 10 signatures to execute upgrades.

The members of the following teams manage governance:

• Jupiter

• Jito Labs

• Laine

• Mango Markets

• MRGN

• Sanctum

• BlazeStake

What is the INF Token?

The INF token is a yield-bearing token rewarded in exchange for providing liquidity to the Infinity Pool. Its yield depends on the number of LSTs, their trading volume, and the TVL in the pool.

As of the time of writing (July 2024), depositing your LSTs yields an estimated annual percentage yield of 8.6%, in addition to extra earnings from trading fees within the pool.

Project Tokenomics

The INF token has a total supply of 1,695,126 INF, the same as the circulating supply.

Token Utility

INF can serve as an LST on various platforms within the Solana ecosystem. Protocols supporting INF include Armada, MarginFi, Kamino, Meteors, Solend, etc.

Is Sanctum Infinity (CLOUD) a Good Investment?

CLOUD is a token designed to be fair to all investors. The team is focused on giving everyone an equal chance to buy rather than favoring big investors or institutions. Retail investors won’t have to worry about pre-launch buyers dumping on them because pre-launch tokens will be vested. CLOUD’s success will depend on Sanctum’s popularity as a Liquid Staking platform in the Solana ecosystem.

Additionally, depositing Liquid Staking Tokens (LSTs) into the Sanctum Infinity pool can earn you yields on your LSTs. To guarantee the safety of user assets, its staking pool has been audited by multiple security firms, including Neodyme, Sec3, Ottersec, etc.

However, INF, as a derivative token, risks being devalued when there’s an overwhelming demand for liquidity. This can lead to losses, especially for investors using LSTs as collateral on lending protocols, as they face the liquidation risk.

Investors are encouraged to research and evaluate their risk tolerance before investing in the project because, like any investment, investing in Sanctum Infinity has risks. Investors should consider the cryptocurrency market’s volatility and potential regulatory changes.

Note: Investing in any crypto project does not guarantee profit and could result in capital loss.

News on Sanctum Infinity

Sanctum Infinity integrates into Jupiter Routing

On May 20, 2024, Sanctum, in collaboration with Jupiter, a leading Solana decentralized exchange, announced the integration of Sanctum Infinity with Jupiter Routing. This integration allows users to swap LSTs on Jupiter using Sanctum Infinity’s pool. It will offer a seamless transition between INF, JupSOL, or other LSTs on the Jupiter platform, providing users with improved swap rates and trading fees for INF.

Sanctum Closes Another Fundraising Round

Source: Sanctum

Sanctum recently closed a seed extension round, bringing the total funds raised to $6.1 million. Some of its latest investors include Boogle Syndicate, Drift Protocol, Squads, and MRGN.

Take Actions on CLOUD

Check out CLOUD price today and trade your favorite pair:

• CLOUD/USDT