Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
Since the resurgence of interest in Solana DeFi, liquid-staked tokens (LSTs) have experienced significant growth.
Similar to what we’ve seen with liquid staked ETH, the expansion of SOL LSTs can pave the way for increased total value locked (TVL) in DeFi protocols on Solana.
As SOL continues making headlines for its bullish price action the last month, DeFi investors are scrambling to gain exposure to the next class of Solana ecosystem tokens.
One of the most well known protocols, yet to tokenize, is Jito. With 6.4M SOL staked and nearly 43k liquid stakers, Jito is the only liquid staking protocol for Solana that distributes MEV (maximum extractable value) rewards to holders.
The Jito Stake Pool enables users to stake their Solana tokens in exchange for a liquid stake pool token (JitoSOL). JitoSOL provides liquidity while earning a combination of staking rewards and MEV rewards, currently netting 6.94% APY. Jito’s liquid staking derivative is unique in two ways:
- JitoSOL provides additional rewards to users from MEV transactions happening on Solana
- Jito exclusively stakes with validators that run software designed to improve network performance
Aside from being a passive strategy to earn more SOL while contributing to Solana’s blockchain consensus (Proof of Stake), liquid staking with JitoSOL also presents a potential airdrop opportunity if you consider the current Jito Points program that went live on September 14, 2023.
Jito Points are designed to quantify and reward contributions to the JitoSOL ecosystem for any of the following activities:
- Holding JitoSOL: Every JitoSOL in your wallet accumulates 1 point per day, based on a snapshot of JitoSOL holdings, starting from Jan 1, 2023.
- DeFi with JitoSOL: For those lending JitoSOL, you collect 1.5 points per JitoSOL per day with Orca, Raydium, Kamino, Marginfi, Meteora, Drift, and Solend. You can earn 1.5 points per JitoSOL for providing liquidity in any JitoSOL/xSOL pairs, 2.5 points for JitoSOL/SOL LP’s, and 3.5 points for JitoSOL/USDC and other volatile pairs such as JitoSOL/UXD and JitoSTOL/stETH.
- Referrals: For community builders, if you refer a friend to join the JitoSOL ecosystem, you gain 10% of the points they earn.
Today, I’ll show how I can get started staking SOL with JitoSOL and potentially earn more Jito Points by lending to Drift, a decentralized exchange for perps and spot trading, built on Solana.
How to Earn Up to 6.94% APY with SOL Liquid Staking and Farm Jito Points
Before we get started, please be aware of these risks.
- Smart contract risk in Jito (and Drift if lending JitoSOL)
- Front-end spoof attack on app app frontend
- An economic design exploit in the design of Jito or Drift
- Pegged tokens like JitoSOL can depeg
- Colluding signers on any multisig
Here’s how I get started!
- First, I go to the Jito staking app and connect my Solana wallet (ie Phantom).
- Then, I specify how much SOL to stake and follow the prompts to confirm transactions in my Solana wallet.
- Lastly, I go to the Drift app under Earn -> Lend/Borrow and click Deposit under the JitoSOL asset listing. Here I can specify how much JitoSOL to lend and follow the prompts to Confirm Deposit.
That’s it! Now…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
