Challenges, Solutions, and Positive Cycles

1. Staker Perspective

• Traditional staking involves prolonged asset locking, making it difficult to respond to urgent liquidity needs.
• Constant monitoring of validator performance can be burdensome.
• Delegating stakes to a single validator increases risk concentration.

• Liquid Staking: Holding elSOL earns SOL staking rewards while maintaining asset liquidity, allowing conversion back to SOL at any time.
• Automatic Diversification and Multiple Revenue Streams: Automatically monitors validator performance and diversifies delegation. Additionally, staking elSOL provides extra income opportunities through VLD token mining and bandwidth leasing.

• Stakers can pursue high yields while minimizing risks and management efforts, gaining additional incentives.
• Increased liquidity allows more active investment activities, thereby enhancing overall liquidity in the Solana ecosystem.

2. Validator Perspective

• Validators face high financial risk if they fail to secure tens of thousands of SOL in stakes, making it difficult for new and smaller validators to sustain operations.
• Operational burdens, such as 24/7 management and frequent technical updates, are significant.
• Stake concentration in large validators hinders network decentralization.

• Gauge Voting via VLD Mining: elSOL stakers use their mined VLD/veVLD tokens to democratically determine stake allocation to validators.
• Enables validators to provide staked bandwidth (QoS) to participate in elSOL allocations.

• Validators can more easily obtain sufficient stakes through gauge voting, reducing financial risks.
• Lower entry barriers encourage new and smaller validators, increasing network decentralization, security, and reliability.

3. Project/Trader Perspective

• Dedicated RPC nodes without stakes have low priority under Stake-weighted QoS, limiting high-speed trading and processing of large transaction volumes.
• Managing one's own validator and collecting large stakes involve significant technical and financial burdens.

• Bandwidth Staking (Stake Bandwidth Market): Obtain stakes by borrowing bandwidth from elSOL stakers, ensuring QoS priority.
• Projects and traders can stake elSOL themselves, applying the stake directly to their own dedicated RPC (ERPC).
• Pay bandwidth usage fees to stake providers, creating a mutually beneficial structure.

• Projects/traders easily secure only the bandwidth they require, quickly achieving a high-speed, high-success-rate transaction environment.
• Increased bandwidth leasing rewards incentivize stakers to stake more elSOL, thus increasing the bandwidth supplied to RPC nodes.
• This leads to more projects and traders participating, raising overall Solana transaction volumes and enhancing ecosystem liquidity.