Why Solana for Restaking?

Does restaking even make sense on Solana? This post aims to be the definitive answer to that question.

Restaking is an exciting primitive for blockchain networks that allows staked assets to serve as economic security for multiple systems at once, ultimately enhancing both security and capital efficiency. 

While “Shared Security” has been a concept in blockchain architecture for a number of years, the term “Restaking” was pioneered by Ethereum-native protocol Eigenlayer, and as such, Ethereum has emerged as the default home for restaking in the minds of many. 

But why can’t Solana become the native home for restaking?

With a number of advantages – including unique technical architecture and a mature staking ecosystem – Solana is strongly positioned to become the default hub for a variety of products that leverage restaking, including DeFi, Bridges, DePIN, AI, and layer-2 scalability and interoperability. 

The story of ‘Why Solana Makes Sense For Restaking’ goes beyond the technical specifications: it's about how multiple elements of the network's design and the ecosystem converge to create an environment where restaking can thrive at scale to a degree that exceeds any other existing blockchain network. 

Built Different — The Architecture Advantage

At Solana’s core lies a fundamental architectural decision that sets it apart: transactions can be confirmed simultaneously through the Sealevel runtime—enabling parallel processing—complemented by the Proof of History mechanism and Tower BFT for sub-second finality (meaning transactions are confirmed almost instantly). While other chains are retrofitting scalability solutions, Solana was architected from day one to handle concurrent operations efficiently. This foundational advantage becomes particularly relevant for restaking operations.

Think about what happens in a restaking protocol when thousands of validators need to update their positions simultaneously. Each operation—from stake delegation to reward distribution—needs to be processed and recorded on-chain. In most networks, this creates a sequential bottleneck, meaning transactions must be ordered and confirmed one by one. On Solana, however, Sealevel enables simultaneous processing of these updates, theoretically allowing the network to handle over 65,000 transactions per second.

We've seen it tested in real-world conditions. During the intense network activity at the end of Q1 2024, even under significant congestion, Solana maintained a throughput of 1,000-2,000 transactions per second (TPS)—orders of magnitude faster than EVM chains. Currently, despite extremely high usage testing the network's priority fees and transaction scheduler, Solana processes around 4.5K-5K TPS while maintaining stability. This proven performance under pressure demonstrates why Solana's architecture is particularly well-suited for restaking operations, where rapid, concurrent updates are essential for efficient protocol operation. This parallelism makes Solana at least 10x more efficient for implementing complex restaking protocols.

The architecture's efficiency extends beyond just transaction processing. Solana's accounts model and rent economy enable cheaper on-chain storage, allowing protocols to maintain more comprehensive on-chain data for risk management and performance analytics. This becomes particularly valuable for complex restaking implementations that require extensive data for decision-making and reward calculations.

The Economics of Scale

Solana’s efficiency translates directly into lower operational costs. Transaction fees averaging just $0.00025 fundamentally change what's possible in protocol design.

To put this in perspective, since April 2024, Renzo Protocol, a liquid restaking protocol has spent over $2.2 million in gas fees just for submitting proofs on Ethereum. During peak network usage, a staking update could potentially cost upwards of 30 ETH (happened in May ‘24). On Solana, these same operations cost mere pennies, freeing up significant capital for protocol development and user rewards.

This dramatic reduction in operational costs enables Restaking protocols to implement frequent updates and rebalancing (thanks to lower block times), sophisticated risk management strategies, and more responsive reward distributions without worrying about prohibitive transaction costs. Features that would drain millions in gas fees on other chains become economically viable on Solana.

Consider Jito's integration of MEV rewards into their restaking implementation. This kind of complex reward mechanism, requiring frequent on-chain updates and distributions, becomes practical when network fees don't eat into the rewards. The efficiency of Solana's transaction processing means protocols can focus on optimizing user value rather than minimizing transaction frequency to save on gas costs.

This economic efficiency creates a virtuous cycle: lower operational costs enable more sophisticated protocol offerings, which in turn attract more users and developers to the ecosystem. The capital that would otherwise be spent on transaction fees can instead be reinvested in protocol development or passed on to users as enhanced yields.

A Mature Liquid Staking Ecosystem

Solana's economic advantages are amplified by its mature liquid staking foundation. Currently, more than 64% of Solana is staked. Protocols like Jito have already laid the groundwork by solving key challenges in stake delegation, validator management, and staking token utility. This existing ecosystem significantly reduces the development overhead for new restaking protocols, allowing them to build on battle-tested infrastructure rather than bootstrapping their own chain. 

Validator networks are well-established, delegation mechanisms are optimized, and the risks associated with staking have been thoroughly explored. For node consensus networks (NCN) this means a shorter path to market and greater reliability when scaling operations. It also ensures that restaked tokens can integrate seamlessly into Solana's broader DeFi ecosystem, unlocking immediate utility in lending, trading, and liquidity provisioning.

With a mature liquid staking foundation already in place, the next step is unlocking the full utility of restaked assets across Solana’s thriving DeFi ecosystem.

The DeFi Multiplier Effect

Solana’s composable DeFi ecosystem further enhances the potential of restaking. As of today, the total TVL in Jito (Re)staking vaults is capped at ~200K  jitoSOL, equivalent to around $51M and currently at maximum capacity. Restaked tokens, such as ezSOL, fragSOL, and kySOL, gain immediate utility in lending markets, AMMs, and yield aggregators. This composability creates a multiplier effect, where capital deployed for staking not only earns staking rewards but also generates yield in other protocols.

For example, a user holding restaked tokens can lend them on a Solana-based money market while simultaneously accruing staking rewards. The low transaction fees and rapid finality of Solana make these multi-layered interactions seamless and practical, enabling users to maximize the productivity of their assets without being bogged down by cost or latency.

This interconnectedness also drives liquidity for restaking tokens, ensuring they retain value and utility within the ecosystem. As a result, the adoption of restaking protocols accelerates, benefiting both users and the broader network.

Jito’s architecture

Jito's architecture is made of three essential layers that work in harmony:

1. The Vault Layer manages asset custody and VRT operations
2. The Operator Layer handles validator operations and network participation
3. The NCN Layer implements additional network functions secured by restaked assets

This multi-layered approach enables protocols to bootstrap their security using any SPL token, with a unique dual opt-in model where both operators and stakers must agree to participation. This prevents unwanted delegations and creates a more controlled, secure environment compared to other protocols where anyone can delegate to any operator.

The architecture introduces unprecedented flexibility in risk management. NCNs can opt for maximum economic security for higher rewards or set minimum thresholds to prevent economic attacks. This granular control extends to slashing conditions, which can be tailored to specific network requirements and participant behaviors.

In practice, an NCN might operate as follows:

• A protocol uses an SPL token like fragSOL to secure its network.
• Validators stake fragSOL into the NCN, and the protocol tailors slashing conditions to incentivize desired behavior.
• Participants in the NCN simultaneously secure the network and earn rewards, reducing capital requirements for individual protocols.

This design has unlocked several use cases:

At the network level, NCNs tackle MEV challenges, aligning validator incentives to minimize predatory practices while ensuring fair distribution of beneficial MEV activities. The infrastructure is also proving valuable for Layer 2 solutions, with projects like Sonic SVM utilizing specialized networks for gaming-focused sequencing and data availability. Beyond individual applications, Jito's design enables robust cross-chain communication by providing a fast finality layer for cross-rollup and bridge security. The platform also supports critical infrastructure through oracle networks that ensure data accuracy through economic penalties and automated maintenance systems (keeper networks) that handle essential operations like liquidations and price updates - all protected by built-in economic security guarantees.

Protocols can develop more specialized staking mechanisms using Solana’s efficiency and NCNs’ adaptability, catering to unique use cases without the economic or operational constraints seen on other networks.

Vault Receipt Tokens

Vault Receipt Tokens (VRTs) offer a flexible and innovative approach to restaking on Solana. Acting as IOUs for restaking positions, VRTs unlock new opportunities for staked assets, transforming traditionally locked tokens into versatile instruments.

Jito’s multi-asset vault system drives this model by supporting the restaking of any SPL token, unlike most protocols limited to native tokens or liquid staking derivatives. This flexibility boosts token utility and enables security bootstrapping across diverse use cases.

Independent providers manage VRTs, handling tasks such as minting liquid restaking tokens, delegating assets, and selecting Node Consensus Networks (NCNs). These providers serve as intermediaries, akin to Ethereum’s EtherFi, bridging users and the core restaking protocol. Consequently, much of the value generated by Jito’s ecosystem flows through these providers, underscoring their essential role in the network.

Let's consider this scenario: Sarah stakes 100 JitoSOL on Jito’s restaking platform and receives a VRT representing her staked position. Unlike traditional staking, her JitoSOL remains staked and earns rewards, while the VRT gives her immediate liquidity.

She deposits part of her VRT into Kamino as collateral, borrowing USDC for other investments. Another portion goes into an AMM, earning trading fees and yield. Even as her VRT circulates in DeFi, her staked SOL continues accruing rewards.

Later, Sarah needs quick liquidity. Instead of waiting for unstaking, she sells her VRT on a secondary market, accessing funds immediately. Through VRTs, Sarah transforms her locked assets into flexible, earning instruments across Solana’s DeFi ecosystem.

Looking Forward: Unlocking New Potential

As blockchain networks continue to evolve, the demand for efficient and scalable restaking solutions will only increase. Solana's combination of technical architecture, economic efficiency, and a thriving ecosystem positions it to be at the forefront of this innovation. But Solana’s edge goes beyond infrastructure—it’s also becoming the preferred platform for developers.

According to the recent Electric Capital Report, in July 2024, Solana became the first ecosystem to onboard more new developers than Ethereum, a milestone that speaks volumes about its developer-friendly infrastructure. Solana’s rich tooling ecosystem, including frameworks like Anchor and SDKs for popular programming languages like Python and Rust, simplifies development and accelerates innovation. This developer momentum is a critical factor in Solana’s restaking story. 

With this foundation in place, the real potential lies not just in replicating existing restaking models more efficiently but in enabling new forms of security and capital efficiency that aren't practical on other networks. As protocols like Jito continue to push the boundaries of what's possible, we will likely see entirely new models emerge that leverage Solana's unique advantages in ways we haven't yet imagined.

This is just the beginning of the restaking story on Solana. With its foundation of technical efficiency, mature ecosystem, and innovative protocols already in place, the network is well-positioned to become the premier platform for the next generation of restaking implementations.