Lightspeed Newsletter: Phantom may boost JitoSOL usage

06.06.2024

Howdy!

I’ve been reading a few of these ‘Love Is Blind’ exposés recently, which are always a little fascinating and a little terrifying.

In my own humble opinion, these lawsuits won’t make a meaningful dent in the show’s viewership. What will kill ‘Love Is Blind’ is the fact that the “social experiment” side of the show was settled like five seasons ago, and its storylines are growing increasingly bland.

I digress. As for Solana:

Phantom may boost JitoSOL usage

Phantom and Jito — Solana’s most notable wallet app and its largest liquid staking provider — announced a partnership today.

Under the deal, users who are natively staking their solana on Phantom will have the option to convert their holdings to the JitoSOL liquid staking token (LST). On top of this, the companies say users will soon be “prompted” to convert unstaked SOL into JitoSOL within the Phantom wallet (I’m told this means in-app JitoSOL minting).

The significance of this is a matter of perspective.

On one hand, LSTs take immobile assets (staked SOL) and make them useful for DeFi applications — which leverages Solana’s base layer security to make the ecosystem more liquid. LSTs only make up 6% of all staked solana, so there’s a lot of potential for growth in this area.

But it’s worth noting that prior to the partnership, users could already purchase JitoSOL within Phantom if they wanted to. It takes two to three days to unstake solana, so the Jito-Phantom partnership is really just saving users a bit of hassle in doing something they could already do.

(Jito Foundation contributor Andrew Thurman pointed out that minting JitoSOL is more capital efficient than swapping SOL for JitoSOL, which is also worth noting.)

Looked at this way, Jito might be taking a bet that better education would lead to the adoption of JitoSOL. In other words, users who are staking their SOL might not understand that they can both earn yield and have a token via JitoSOL, and this partnership is akin to sending everyone a big push notification saying: “Hey, you’re leaving money on the table, just FYI!”

I ran this by Phantom’s head of growth, David Wu, who echoed the sentiment that the partnership is largely about education. He declined to comment on whether Jito had paid Phantom as part of the deal.

Jito appears to have convinced others in Solana DeFi that its bet will cash out. Kamino and MarginFi increased their JitoSOL loan-to-value (LTV) ratios — essentially making JitoSOL more valuable as collateral — while Drift raised its deposit cap for the asset.

Thurman said since SOL-JitoSOL is Solana DeFi’s most liquid LST pair, it should be seen as the most valuable LST for use as collateral.

As JitoSOL’s liquidity deepens, Thurman said he sees the LST becoming “the defacto collateral for Solana DeFi.”

— Jack Kubinec

Zero In

Here’s the market share of the four largest Solana LSTs over the past three months:

As you can see, JitoSOL and mSOL have seen their market dominance falter a bit in recent weeks, primarily driven by the relative growth of INF, a product offered by Sanctum. INF just recently passed bSOL, the LST offered by BlazeStake, to become the third-largest LST.

INF is a novel product whose “infinity pool” can be thought of as a basket of LSTs, offering holders exposure to the weighted average yield of tokens in the pool.

Its growth has also certainly been helped by Sanctum’s points-like program for its CLOUD token airdrop. The airdrop-farming window has ended on Sanctum for now, so it remains to be seen whether INF can continue to grab market share from incumbents.

— Jack Kubinec

The Pulse

It seems like it’s time to finally address the Iggy Azalea in the room: The decade-past-her-peak rapper’s memecoin is driving the online crypto conversation.

Ethereum co-founder Vitalik Buterin criticized the trend of celebrity backed memecoins, emphasizing the speculative nature and lack of utility in these projects. He expressed his concerns on social media, stating he was “feeling quite unhappy” about the rise of celebrity memecoins, comparing them unfavorably to earlier projects like the NFT based animated series “Stoner Cats,” which had a more tangible purpose.

In response, Azalea posted an image depicting herself as a breastfeeding mother with Buterin as the baby, captioned “he was just hangry.” This led to a flood of reactions from the crypto community, with many users mocking Buterin and supporting Azalea’s retort. User @0xSweep commented, “He gets all the girls,” while @kalvissh admitted, “This is not something I expected to see when I opened Twitter today.”

Buterin’s criticism and the subsequent social media reactions highlight the ongoing tension between calls for responsible blockchain development and the speculative fervor driving the memecoin craze. As regulatory bodies like the SEC monitor these developments, the long-term viability and ethical considerations of celebrity memecoins remain suspect.

Mother is up 96.9% over the last 24 hours. For my money though, I’d probably take the advice of the guy whose work makes the entire ecosystem possible in the first place. He just might know a bit more than some random pop singer trying to capitalize on the latest trend.

— Jeffrey Albus