Solana’s liquid stock could rise 5x to $18B upon retail investor adoption.
With continued growth in retail adoption, Solana-based liquid inventory has the potential to more than fivefold.
Liquid Stake creates greater capital efficiency for investors by providing the equivalent of an initial paid token that can be deployed for other decentralized finance (DeFi) applications.
According to Baybit's research, improved capital efficiency at Diffie could increase liquidity more than fivefold at Solana.
Baybit Research told Cointelegraph:
“In our view, Solana has the potential to raise liquidity due to its active community. Based on Ethereum LST market statistics, the Solana LST market could grow to $18 billion.”
Solana liquid staking TVL, all time chart. Source: DeFillama.com
At the time of publication, Solana-based liquid reserves have a cumulative total value of more than $3.8 billion locked in (TVL), according to Defilama, which is a nearly five-fold increase from the $18 billion mark.
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Lido-like centrality isn't a concern for Solana's liquid pinching.
Liquid stocks are already the largest protocol category on Ethereum, with a combined TVL of over $39.5 billion, compared to the total of the lending market at $30.9 billion.
The largest protocol categories on Ethereum. Source: DeFillama.com
Considering that Lido's $22.9 billion TVL accounts for more than 57% of the Ethereum liquid inventory market, the growing market segment's centralization raises concerns.
However, these centralization concerns aren't necessarily a concern for Solana-based liquid stocks, Baybit Research says:
“In our view, the large amount of attention from one party from Ethereum will not be repeated in Solana because there are currently many players as described in the report. Lido's success is the first mover advantage.”
Savings ratios on Solana and Ethereum. Source: Bibit
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Will retail investors encourage the growth of Solana-based liquidators?
According to a report shared by Baybit with Cointelegraph, retail investors could hold the key to a nearly five-fold growth in Solana-based liquid staking market for liquid-held tokens (LSTs).
The report said.
“LSTs supported by major exchanges will break down barriers and become a shining bridge between ordinary users and the possibilities of DeFi in Solana. Baybit is a market leader with the recent launch of bbSOL, the world's first to launch LST on Solana.”
Retailers may be attracted by the flexibility and liquidity in liquid reserves compared to regular reserves, which means that locked tokens cannot be redeployed in other DeFi applications, he added.
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