Mechanism

elSOL is built on Solana’s official staking pool program and operates as an extension of the existing staking system. Its design focuses on safety, efficiency, and transparency. Users deposit SOL as usual and, in addition to receiving staking rewards, can use functions to handle network bandwidth.

elSOL is issued via Solana’s official staking pool program. When a user deposits SOL, they receive elSOL of equivalent value. This token is a receipt for the deposited SOL, and its redemption value increases gradually as staking rewards accrue.

Deposited SOL in the elSOL pool is delegated to MEV-enabled elSOL validators operating with 0% commission. Each elSOL validator returns 20% of its block reward profits to the pool every epoch, which raises the overall yield of elSOL. This achieves both maximized staking rewards and stable operation while continuously acquiring stake and bandwidth.

On Solana, SWQoS (Stake-weighted Quality of Service) determines traffic priority based on stake weight. elSOL leverages this, enabling users to actually handle bandwidth derived from the stake they provide.

When users stake elSOL, they can apply SWQoS bandwidth on ERPC in proportion to their stake. Users specify, in the management interface, which endpoint(s) to apply bandwidth to and how much. After configuration, the setting becomes effective from the next epoch, and the limit of the specified endpoint(s) is updated according to the applied stake. This does not re-delegate stake; rather, stake weight is referenced as bandwidth weight and reflected in SWQoS evaluation.

When using the shared SWQoS endpoint, the request rate (throughput) is determined by the amount of elSOL applied: 4.2 elSOL per 1 request/second (1 TPS). Fractions are rounded down.

The maximum applicable rate depends on the current ERPC plan. Users can split their elSOL across multiple endpoints. Example: With 10 elSOL, 2 TPS is available. It can be split as 1 TPS to shared endpoint A and 1 TPS to endpoint B. Settings can be changed later and usually update on an epoch basis.

Thus, elSOL converts staked SOL directly into SWQoS bandwidth and lets users flexibly decide where and how much communication performance to apply.

If users do not use SWQoS bandwidth themselves, they can sell SSP—issued based on their staked elSOL (1 elSOL staking = 1 SSP)—on the SWQoS market. Sellers set a desired VLD rate; when other users or providers purchase at that rate, the sale is executed.

If a sale is executed, the stake provider receives VLD per epoch according to the set rate and the amount sold. If a sale is not executed, VLD from usage of the shared SWQoS endpoint is still distributed as shared rewards. This shared reward is distributed to SSP providers in proportion to the share of SSP offered on the market that remains unused.

This allows stake providers to earn rewards even without directly consuming bandwidth, and buyers can obtain the bandwidth they need without private validator contracts. SSP makes stake-derived bandwidth liquid and matches supply and demand via market mechanics.

Through this mechanism, even if excess stake occurs, it can be redistributed as an active resource across the Solana network, enabling more efficient overall utilization.

VLD is used to trade bandwidth in the SWQoS market and is issued by Validators DAO. Buyers use VLD to purchase SSP, and bandwidth providers receive VLD as rewards. This creates an environment where communication resources can be exchanged at fair prices across the Solana network.

VLD is minted only as needed according to actual network demand, preventing overissuance. Supply dynamically adjusts with demand, avoiding extreme price volatility or dilution. This ensures stable token circulation based on real demand and supply.

VLD also has a maximum supply limit. When demand increases and utilization approaches the supply cap, new issuance stops, and the price may rise accordingly. This mechanism allows VLD to reflect bandwidth demand on the Solana network and adjust its price naturally.

The SWQoS market balances supply and demand through VLD trading, autonomously discovering fair prices for bandwidth. Accumulated transactions based on real usage form the most efficient pricing range for the entire Solana network.

For detailed token design, its relationship with Validators DAO, and distribution methods, please refer to the Validators DAO white paper. Here, we have outlined VLD’s overview as the mechanism supporting elSOL operations and the SWQoS market.