In the competitive landscape of Solana liquid staking tokens (LSTs), a new protocol named Infinity (INF) has made a remarkable entrance. Within just one month of its launch, it accumulated an impressive 1.1 million SOL in staked assets. To put this into perspective, INF now ranks fourth in staking weight, trailing behind established players like JitoSOL (9.8 million SOL), mSOL (6 million SOL), and bSOL (2.5 million SOL). But what exactly is Infinity, and why is the Solana ecosystem showing such strong support for this new LST? This article explores the mechanics behind Infinity and the reasons it is poised to redefine liquid staking on Solana.
Understanding Infinity: A Multi-LST Liquidity Pool
At its core, Infinity is a liquidity pool (LP) that supports multiple liquid staking tokens. Unlike traditional liquidity pools that typically handle only two assets—such as a USDC-SOL pair—or stablecoin pools like Curve’s stableswap that accommodate three to four assets, Infinity is designed to support all whitelisted LSTs. This includes popular tokens like jupSOL, bSOL, bonkSOL, cgntSOL, compassSOL, and driftSOL, among others.
The protocol’s name reflects its unlimited capacity to incorporate LSTs. But how does it achieve this scalability? Each LST has a distinct price and staking yield, and with N assets in the pool, there are N*N possible trading pairs. Ensuring fair pricing across all these assets is a complex challenge—one that Infinity addresses through innovative mechanisms.
The Need for Infinity in Solana’s Ecosystem
Unlike Ethereum’s liquid staking landscape, which tends toward a winner-takes-all model, Solana is fostering a more diversified and competitive environment for LSTs. Infinity aims to level the playing field for all participants, including new entrants. By providing a unified liquidity layer, it enables smaller or emerging LSTs to compete effectively with larger ones, promoting healthier competition and innovation across the ecosystem.
How Infinity Supports Multiple LSTs with Fair Pricing
The foundation of Infinity’s operation lies in the delayed unstake instruction feature native to Solana LSTs. This function allows users to burn their LST tokens in exchange for SOL or a staked account, effectively treating LSTs as a “convenience layer” over staked assets.
To ensure fair pricing, Infinity relies on a secure, on-chain oracle that determines the floor price of each LST. This price is derived from the ratio of totalLamports to poolTokenSupply—values that can be read directly from each LST’s account. For example:
- totalLamports: 2586658749561150
- poolTokenSupply: 2333532553328205
Dividing totalLamports by poolTokenSupply yields a ratio of 1.1084 in this instance, which represents the LST’s floor price. It’s important to note that this ratio increases with each new epoch as staking rewards accumulate.
However, adjustments must be made for withdrawal fees. If an LST charges a fee—such as bSOL’s 0.10%—the adjusted ratio is calculated by multiplying the floor price by (1 - fee percentage). In this case, 1.1084 * (1 - 0.001) = 1.1073.
With adjusted ratios for all LSTs, fair exchange rates between any two tokens can be computed. For instance, if 1 bSOL = 1.1073 SOL and 1 scnSOL = 1.1758 SOL, then 1 bSOL would equal 0.9417 scnSOL. This method works because all LSTs are priced relative to SOL as a base currency, enabling Infinity to support countless assets while maintaining equitable pricing across all trading pairs.
Sources of Yield for INF Holders
The INF token represents a basket of multiple LSTs, with a strategic allocation of 20% to newer tokens (e.g., jupSOL, bonkSOL, cgntSOL) and 80% to established ones (e.g., jitoSOL, mSOL, bSOL). This diversification aims to maximize staking yields and trading volume, ultimately boosting overall annual returns. The allocation is weighted by total value locked (TVL), and the team actively monitors trading volumes—which tend to concentrate in larger pools—to rebalance holdings when necessary.
In essence, INF’s yield comprises two components:
- The weighted average of staking rewards from all underlying LSTs.
- Trading fees generated within the Infinity pool.
While returns vary based on factors like LST performance, trading volume, and TVL, users can expect a base staking return of approximately 7.5%, supplemented by variable earnings from transaction fees.
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The Future of LST Trading on Solana
Protocols like Sanctum and Infinity are set to dominate LST trading on Solana due to their superior capital efficiency and ability to integrate long-tail assets. As trading volumes grow, INF’s yields are expected to rise accordingly, making it an increasingly attractive option compared to holding individual LSTs. This shift could further consolidate liquidity and enhance the overall user experience in Solana’s staking ecosystem.
Frequently Asked Questions
What is a liquid staking token (LST)?
An LST represents staked assets (like SOL) that remain liquid and tradable. Holders earn staking rewards while retaining the flexibility to use their tokens in DeFi applications.
How does Infinity differ from other liquidity pools?
Unlike conventional pools that support only a few assets, Infinity can accommodate an unlimited number of whitelisted LSTs. It uses an on-chain oracle and ratio-based pricing to ensure fairness across all trading pairs.
Is Infinity safe to use?
The protocol relies on Solana’s native staking mechanisms and audited smart contracts. However, users should always conduct their own due diligence when engaging with DeFi platforms.
What determines INF’s yield?
Yield is derived from the combined staking rewards of underlying LSTs and trading fees generated in the pool. The exact return varies with market conditions and pool activity.
Can new LSTs be added to Infinity?
Yes, the protocol maintains a whitelist that can include new LSTs, provided they meet certain criteria and contribute to diversification.
How often does Infinity rebalance its LST holdings?
Rebalancing occurs based on TVL and trading volume data to optimize returns and maintain target allocations.