Why elSOL? | elSOL - Solana LST

Staking is essential for maintaining a secure blockchain network and has increasingly attracted the interest of investors due to its profitability. However, several challenges persist in the current system.

Challenges

Challenges for Individuals

Uncertainty of Rewards and Management Costs: Staking rewards are not guaranteed unless the validator you stake with produces blocks. Even if an APY (Annual Percentage Yield) is displayed, there is a possibility that no rewards will be earned. Therefore, investors must constantly monitor the validator’s status, which can be burdensome. To mitigate this risk, some investors consider spreading their stakes across multiple validators, but this further increases management costs.
Locked-In Staked Assets: Staked assets are locked for a certain period and cannot be withdrawn immediately. Additionally, even after initiating unstake, it can take up to two days for assets to return to your possession. This makes it challenging to respond to sudden liquidity needs.

Challenges for Validators

Demanding Operations and High Skill Requirements: Running a validator is a 24/7 operation requiring constant monitoring and immediate responses to unexpected errors and emergency updates. In addition to technical skills, validators must have a deep understanding of economics and blockchain, as well as marketing capabilities. Validators need to promote their work and contributions to the chain to attract staking, which requires a broad skill set and can be extremely demanding.
Economic Pressure: As of August 2024, the breakeven point for validators is around 30,000 SOL in staked assets. Validators below this threshold are likely operating at a loss, and in the worst case, may be unable to continue operations. While the Solana Foundation provides staking subsidies to address this issue, this support is not indefinite, leaving many small and medium-sized validators in a difficult position.

Challenges for the Network

Decentralization and Security: Decentralization of the network is directly linked to security. The presence of small and medium-sized validators and decentralized staking helps maintain the distribution of voting power in Proof of Stake (PoS) systems. This reduces the risk of concentrated power in a few validators, which could otherwise lead to malicious actions. However, in reality, staking tends to concentrate in large validators, making it difficult for new validators to attract stakes.
Barriers to Entry for New Validators: The complexity and costs associated with managing stakes make it practically difficult for investors to stake with new validators. If the number of new validators continues to decline, it could negatively impact the security, expansion, and mass adoption of the network. Promoting the growth and decentralization of new validators is crucial for the future of Solana.

How elSOL Solves These Challenges

elSOL (Enhanced Linkage SOL) is a Liquid Staking Token (LST) managed by the team behind the open-source Solana validator tool "solv." It addresses all the aforementioned challenges through the following features:

Refined Distributed Delegation Strategy and Monitoring Bot: elSOL continuously monitors the status of validators to which it delegates stakes, aiming to minimize downtime while maximizing returns. During this process, users simply need to hold elSOL, freeing them from the complexities of managing their staking. This significantly reduces the need to monitor validator activity, thereby lowering management costs.
Liquidity and Additional Earnings: elSOL can be used to provide liquidity in LP pools such as Orca, enabling users to earn even higher returns. Moreover, it offers immediate liquidity with no lock-up periods, allowing users to convert elSOL into SOL or USDC at any time, thus being responsive to sudden liquidity needs.
Utilization of solv's MEV Mode: solv's MEV mode automates validator updates and operational tasks, reducing operational costs. This mode automatically calculates rewards, distributes voting costs, and converts profits into elSOL, enabling users to earn staking rewards effortlessly. Reference (solv): https://solv.epics.dev/
Automated Validator Management Services by Validators Solutions: By utilizing solv’s automated validator management services, the rewards from these validators are automatically converted into elSOL. This allows users to manage validators with minimal effort, automating their asset management. Reference (Validators Solutions): https://validators.solutions/
Ownership Incentives and Ecosystem Decentralization: elSOL holders are eligible to receive airdrops of Validators DAO’s VLD tokens based on the amount they hold. These VLD tokens can be converted into veVLD, which grants voting rights. By voting for new validators, users can support the decentralization of the ecosystem, thereby contributing to the overall security of the network.
Easy Transition and Reduced Management Costs: Existing staked assets can be easily converted into elSOL through the web interface, enabling users to benefit from elSOL's delegation strategy and the enhanced security of the Solana network while reducing management costs and earning staking rewards.

Through these features, elSOL enhances the decentralization and security of the Solana network, creating an environment where more users can enjoy the benefits of staking. As a result, staking becomes more decentralized, improving the overall security of the network and supporting the healthy growth of the Solana ecosystem.