Retail Investor Adoption Could Lead to Solana Liquid Staking Surge Potentially Quintupling to 18B

Solana’s liquid staking has the potential to grow more than five times due to the sustained increase in retail adoption. Liquid staking provides investors with greater capital efficiency by offering an equivalent of the initial staked token that can be used in other decentralized finance (DeFi) applications. Bybit Research predicts that the improved capital efficiency in DeFi could lead to a growth of over five times in liquid staking on Solana. At present, Solana-based liquid staking is valued at over $3.8 billion in total value locked (TVL), according to DeFiLlama, and could reach $18 billion, representing nearly a five-fold increase. Liquid staking is currently the largest protocol category on Ethereum, with a combined TVL of over $39.5 billion. However, concerns about centralization have arisen due to Lido’s dominance in the liquid staking market. Nevertheless, Bybit Research believes that these concerns are not necessarily applicable to Solana-based liquid staking. According to a report by Bybit, retail investors could be the driving force behind the nearly fivefold growth in Solana-based liquid staking through liquid staked tokens (LSTs). Retail investors are likely to be attracted to the increased flexibility and liquidity offered by liquid staking compared to regular staking. This is because with regular staking, the locked tokens cannot be redeployed in other DeFi applications.