Liquid staking protocol Jito and restaking platform Fragmetric have announced the launch of a new token on Solana called fragSOL.
What are Liquid Restaking Tokens?
Liquid Restaking Tokens (LRTs) are a new token type in the liquid staking market that allows participants in the decentralized finance space to earn from their staked tokens as well as Actively Validated Services (AVS) rewards. Users deposit, for instance, SOL in any liquid restaking protocol to receive the liquid staked token. The holder can then reuse this LST by restaking it to support actively validated services to earn extra yield. However, many LRT protocols face challenges around AVS rewards.
How It Works
While Ethereum-based liquid restaking protocols contend with issues related to the effective distribution of AVS rewards, fragSOL aims to navigate this via the transfer hook feature. This aspect of Solana’s token extension allows Fragmetric to manage reward distribution by ensuring the allocation of node consensus network (NCN) rewards based on how long a user holds their LRTs. >“When Alice transfers fragSOL to Bob, the fragSOL transfer hook is activated, which updates their fragSOL balances in Fragmetric’s Rewards Module. When NCN rewards are received in Fragmetric’s vault, the reward module records the time-based balance, allowing users to claim their respective rewards. This method ensures that fragSOL accurately calculates and distributes NCN rewards to all users,” - Fragmetric.
Conclusions and Future Plans
Fragmetric’s launch of fragSOL comes a few days after Renzo launched its liquid restaking token ezSOL on Jito. The protocol also provides for LRTs ezETH on EigenLayer and pzETH on Symbiotic.
The emergence of fragSOL points to growing attention to liquid restaking solutions on Solana, offering new ways to optimize yields and reward distribution within decentralized finance.
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