Introduction
The rapid evolution of the Web3 space is largely driven by its open-source and decentralized nature. This has led to accelerated growth and scalability—often referred to as composability in the crypto context. Composability allows for the creation of modular technology stacks, where individual components can be integrated or removed seamlessly, fostering unprecedented innovation.
At the heart of this innovation lies the process of blockchain transactions, the core value of which depends on distributed networks coordinating and reaching consensus on system state. When a transaction is sent, a network of nodes must validate its content and vote on its order before it is included in the next block. When nodes reach agreement, they achieve a state known as consensus.
While Proof-of-Work (PoW) was the original consensus mechanism—used by Bitcoin and early blockchains—most networks today employ Proof-of-Stake (PoS). PoS relies on economic incentives rather than computational power to secure the network. Validators are chosen based on the amount of native tokens they have staked, with higher stakes increasing the chance of being selected to produce blocks.
PoS not only consumes significantly less energy than PoW, but also introduces mechanisms like slashing to penalize malicious behavior. As PoS blockchains gained adoption, staking paved the way for maximizing the utility of staked capital—giving rise to concepts like liquid staking and, more recently, restaking.
Understanding Staking Design
Native Staking
Staking involves token holders depositing assets into a smart contract to help secure the underlying protocol. In return, they receive rewards. This basic form is often called native staking since the staked capital remains idle, providing no additional utility beyond securing the network.
While anyone can become a validator, hardware and financial requirements often pose barriers. For instance, Ethereum validators need 32 ETH and robust computing equipment. Solana validators face similar demands. To lower these barriers, delegation mechanisms emerged, allowing token holders to participate with smaller amounts through staking pools—managed either by centralized entities or decentralized protocols like Jito on Solana.
Staking also exists at the application level. Token holders can lock assets to secure DeFi protocols, earning rewards, governance rights, or revenue shares. However, a key limitation of native staking is that locked capital is illiquid, reducing overall market liquidity.
Liquid Staking
Liquid staking protocols address this by issuing liquid staking tokens (LSTs) in exchange for staked assets. These LSTs represent the underlying deposit and can be used across DeFi applications, providing holders with additional yield opportunities. This innovation significantly improves capital efficiency and has become one of the fastest-growing sectors in DeFi.
By the time of writing, the total value locked (TVL) in liquid staking exceeds $42.3 billion. Ethereum dominates with around 85% of this TVL, while Solana’s share is smaller but growing—with Jito accounting for nearly half of Solana’s liquid staking market.
Restaking
Restaking extends the utility of staked assets by allowing them to secure additional networks or services. In essence, it is a variation of shared security in PoS environments, where a provider chain offers security to consumer chains via a restaking protocol.
This mechanism enables new blockchains—whether application-specific or general-purpose—to bootstrap economic security using established networks like Ethereum or Solana. Stakers, in turn, can improve capital efficiency and earn additional rewards by securing multiple chains. However, this also introduces additional slashing risks.
There are two primary ways to participate in restaking:
- Native Restaking: Running a validator node that commits to a restaking module.
- Liquid Restaking: Depositing assets into a protocol that handles restaking on the user’s behalf, issuing liquid restaking tokens (LRTs) in return.
Restaking can be asset-specific or generalized to support multiple asset types—a concept known as universal restaking.
Early Implementations of Restaking
Although often associated with Eigenlayer today, restaking concepts have been tested across various ecosystems:
- Polkadot: Validators stake DOT to secure the Relay Chain, which in turn provides security to approved parachains.
- Avalanche: Validators securing the C-Chain can also participate in subnets, which are dynamic validator sets protecting multiple chains.
- Cosmos: The Cosmos Hub uses “Replicated Security,” where the top 95% of validators also secure consumer chains. Recent upgrades allow more flexibility, including opt-in security and even Bitcoin staking via Babylon.
In June 2023, Eigenlayer introduced restaking to Ethereum, allowing staked ETH and LSTs to secure Actively Validated Services (AVSs). It operates as an open marketplace connecting security providers (validators and stakers) with consumers (AVSs). Eigenlayer recently announced permissionless token support, enabling any ERC-20 to be used as a restaking asset.
The Current State of Restaking
As of now, the total value locked in restaking is approximately **$28.14 billion**. Eigenlayer dominates with **60%** of this amount, and Ethereum accounts for about **80%** of all restaking TVL. Only four protocols—Eigenlayer, Babylon, Symbiotic, and Karak—have surpassed $1 billion in TVL.
Liquid restaking has grown in parallel, with a TVL of around $15.62 billion, representing about 57% of the total restaking market.
On Solana, restaking is still in its early stages. Picasso Network launched the first restaking vault in early 2024, attracting around 3,507 SOL. The total restaking TVL on Solana is now approximately $371 million, largely driven by the recent introduction of Solayer and Jito’s entry into the market.
Restaking on Solana
Solana is designed for high-speed execution and low-cost transactions, making it an ideal foundation for scalable applications. As the second-largest blockchain by TVL, it holds significant potential for restaking growth.
Introducing Jito
Jito Labs, founded in 2021, is a U.S.-based infrastructure company focused on Solana. It offers a suite of MEV products and services, with the Jito Foundation overseeing the JTO token and ecosystem strategy.
Key products from Jito include:
- Jito-Solana: A validator client designed to capture MEV and redistribute profits to stakers and validators.
- Jito Block Engine: Facilitates off-chain block space auctions, allowing searchers to submit transaction bundles.
- JitoSOL: A liquid staking token that lets holders earn staking rewards and MEV income.
In March 2024, Jito Labs paused the mempool functionality of its Block Engine due to concerns over sandwich attacks. The engine continues operating but without the mempool component.
Building on this experience, Jito has now introduced Jito (Re)staking—a hybrid multi-asset staking protocol designed to let applications and networks bootstrap economic security using any SPL token on Solana.
How Jito (Re)staking Works
Launched on July 25, 2024, Jito (Re)staking consists of two core components:
- Vault Program: Manages the creation and operation of vault receipt tokens (VRTs), which represent restaked positions.
- Restaking Program: Coordinates network participants, including node operators and node consensus networks (NCNs).
Key Terminology:
- Node: Software running according to network specifications.
- Node Consensus Network (NCN): A group of nodes achieving consensus for a specific protocol or network.
- Operator: Entity managing one or more nodes within an NCN.
- Vault Receipt Token (VRT): A derivative token representing a restaked position.
The protocol allows anyone to create VRTs using any SPL asset, simplifying the design of token economics and utility. It supports multi-asset staking, enabling NCNs to leverage existing tokens with deep liquidity alongside their native assets.
NCNs can customize parameters such as slashing conditions, deposit/withdrawal limits, and delegation strategies. This flexibility helps balance risk and reward while enhancing economic security.
Advantages of Jito (Re)staking
Jito’s solution addresses several critical challenges in the on-chain economy:
- Modular and Asset-Agnostic: Allows any SPL asset to be used for restaking, improving accessibility and reducing reliance on a single base layer.
- Customizable Risk Parameters: NCNs can implement complex security models, including multi-asset slashing and layered penalties.
- Delegation Flexibility: Vaults can choose operators and NCNs based on risk tolerance, and operators can select which vaults and assets to support.
- Secure Fund Management: All program funds are stored securely and can only be moved via user action or slashing events.
Roadmap and Ecosystem Adoption
Since its launch, several prominent projects have announced integrations with Jito (Re)staking:
- Switchboard: Will use Jito to enhance economic security for its decentralized oracle network.
- Squads: Integrating Jito into its Squads Policy Network for improved treasury management.
- Renzo: Launching ezSOL as a VRT, allowing users to stake JitoSOL and earn combined rewards.
- Sonic: Using Jito to secure its HyperGrid shared state network and bridge.
- Fragmetric: Introduced FragSOL, the first native LRT on Solana, leveraging token extensions for reward distribution.
- Ping Network: Will utilize Jito to enhance privacy infrastructure security.
- Kyros: Offering kySOL, which combines staking, MEV, and restaking rewards into a single token.
These partnerships highlight growing interest and validate Jito’s approach to restaking.
Risks and Considerations
Restaking introduces several interconnected risks that stakeholders should evaluate:
- Slashing Risk: Validators and stakers face additional slashing conditions from the NCNs they secure. Concentrated staking increases systemic risk.
- Volatility: Price fluctuations in underlying assets can impact the security of both base and consumer chains.
- Absence of Active Slashing: Many restaking protocols, including Eigenlayer, have not yet implemented slashing. This lack of enforcement increases risks for stakers and NCNs.
- Transparency and Trust: Subjective faults—those requiring off-chain resolution—raise concerns about transparency and potential chain forks.
- Market-Driven Incentives: Without long-term commitment mechanisms, operators may frequently reallocate stakes in pursuit of higher returns, undermining stability.
- Liquid Restaking Risks: These include asset-backed risks, liquidity access, smart contract vulnerabilities, oracle inaccuracies, governance challenges, bridge security, and recursive lending risks.
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The Case for Restaking on Solana
Since Eigenlayer’s launch, restaking development has accelerated significantly. Ethereum continues to lead in TVL, but Solana offers distinct advantages:
- Liquidity Gap: Ethereum’s liquidity is nearly 10x that of Solana, making it a stronger security base.
- Growth Potential: Solana has more room for expansion, and restaking incentives could help increase TVL.
- Capital Efficiency: Lower transaction costs on Solana make restaking management more economical.
- Ecosystem Demand: The rise of SVM L2s and app-chains creates new demand for economic security.
Jito’s Position in the Market
Jito is well-positioned to lead restaking on Solana:
- Approximately 93% of Solana validators use Jito-Solana.
- JitoSOL holds $3.14 billion in TVL, accounting for 45% of Solana’s liquid staking market.
- High borrowing demand for JitoSOL on Kamino Finance reflects its utility.
However, competition is emerging. Solayer has already accumulated $168 million in deposits, and other native protocols like Sanctum, Marinade Finance, and Helius may develop competing products. Cross-chain rivals like Symbiotic and Karak could also enter the Solana restaking space.
Use Cases for Jito (Re)staking
Restaking protocols benefit from the growth of middleware solutions requiring coordination mechanisms. Potential applications include:
- Decentralized Solver Networks: DEXs can launch solver networks with slashing incentives for optimal trade execution.
- SVM L2s: As demand for faster confirmation times grows, L2s will need economic security—which Jito can provide.
- Order Flow Auctions: Solana DEXs can implement MEV redistribution mechanisms similar to Ethereum’s CoWSwap.
Frequently Asked Questions
What is restaking?
Restaking allows staked assets to secure multiple networks or services simultaneously. It improves capital efficiency for stakers and helps new projects bootstrap security.
How does Jito (Re)staking work?
Jito enables users to stake SPL assets into vaults, receiving VRTs that represent their restaked position. These VRTs can be used across DeFi while securing node consensus networks.
What are the risks of restaking?
Key risks include slashing penalties, asset volatility, smart contract vulnerabilities, and liquidity constraints. It’s important to assess protocols thoroughly before participating.
Can I restake on Solana without technical expertise?
Yes. Liquid restaking protocols like Jito allow users to participate without running nodes. You simply stake assets and receive liquid tokens in return.
How does Jito compare to Eigenlayer?
While Eigenlayer focuses on Ethereum, Jito is built for Solana. Jito also supports multi-asset staking and offers lower transaction costs.
What is the future of restaking?
Restaking is expected to play a key role in the growth of modular blockchains and app-chains, similar to how cloud computing enabled rapid web application development.
Conclusion
Restaking represents a significant evolution in blockchain security and capital efficiency. By allowing staked assets to secure multiple services, it reduces barriers to entry for new networks and increases returns for participants.
Solana’s high throughput and low costs make it an ideal environment for restaking innovation. Jito (Re)staking, with its modular and asset-agnostic design, is well-positioned to support the next wave of decentralized applications.
As the ecosystem matures, restaking could become as transformative as cloud computing—enabling developers to focus on building rather than on security constraints. While risks remain, the potential rewards for early adopters and the broader ecosystem are substantial.