Add stSOL as collateral for Jet Protocol

Hihi,

I am Jbeezy from Lido. This is a proposal to list Lido’s stSOL on Jet Protocol and build a partnership between the two.

Please reach out with any questions and I will do my best to address them.

Thank you for reading our proposal.

Collateral Asset Profile

  • Collateral Name (and symbol): Lido Staked Sol (stSol)

  • Collateral Short Description: stSOL is a liquid staking token that is redeemable for SOL that has been staked with Lido. Similar to Compound’s c-token, they are redeemable for the original SOL that was staked plus earned rewards. While holding stSOL, you can use it in an ever expanding list of DeFi applications while still earning rewards.

  • Total Value in Circulation: At time of writing there are ~1,000,000 stSOL representing ~$200M in value.

  • TVL on Solana: Potentially the full value of all SOL and accrued rewards (APY).

  • Adoption: stSOL is currently available on 4 top AMMs (Orca, Raydium, Mercurial and Saber) matched against an increasing number of pairs (SOL/USDC/USDT/stETH) as well as on FTX.

  • Price Oracle Feeds: We use a combination of switchboard on-chain feeds and an internal custom oracle. We are also speaking with Chainlink to expand their feeds to stSOL and Pyth as well.

Proposal

Detailed description of the asset and the reason(s) the Jet Community should consider onboarding it.

Lido stSOL is a non-custodial liquid staking protocol built on Solana. stSOL has currently onboarded 15 validators to date. The goal of Lido and liquid staking is to make Solana more decentralized and secure.

As stSOL is not rebasing (increasing balance) the value of stSOL will increase over time relative to SOL. This makes stSOL a best in class collateral asset to borrow against. This allows Jet users to take a long position against SOL while also giving users flexibility to leverage additional assets across DeFI.

Lido proposes initially seeding this pool with at least 25,000 LDO per month for at least the first 3 months if this proposal passes and after stSOL is listed.

Use Cases

People that are long SOL…

stSOL is available across in ever increasing set of DeFi applications and protocols. Outside of the standard liquidity programs, CEXs, DEXs and lending protocols, stSOL is uniquely positioned to eventually take advantage of Lido’s cross chain approach to liquid staking.

We see stSOL being leveraged in fix income products, options platforms, for leverage and more once those come online.

Looking at the Ethereum ecosystem, we have seen a large pent up demand for liquid staking assets in complex DeFi applications especially in the lending and money market space.

Relevant Metrics

  • Total Value In Circulation: Potentially as much as SOL tokens staked (~$80bn)
  • Total Value Locked: ~1,000,000 stSOL representing ~$200M in value as of 05/12/2021
  • Age of Asset: Mainnet launch on 8th September 2021

Open Questions

Is there an oracle requirement for listing on JET?

  • We are currently integrated with switchboard and exploring additional integrations.

Risk

  • Technical Risk: Lido stSOL has been audited by both Neodyme and Bramah. The reports and overview can be found below. Due to being a newer user I cannot post more than 2 links directly.

  • Counterparty Risk: Lido is permissionless and non-custodial. People cannot face direct counterparty risk through our protocol.

  • Liquidity Risk: Even though stSOL is backed by SOL, there are still elements of liquidity risk. With the withdrawal timing, liquidation events would require just in time liquidity that could be a risk vector. However, after, the SOL can always be redeemed from the contract by burning stSOL.

  • Price Feed Risk: stSOL price is directly linked to Sol price. In order to maintain the relative peg as the price of stSOL increases over time against SOL we use switchboard on-chain feeds.

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Here is the overview regarding the security model and audits: Security | Lido for Solana

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