In the past year, Solana’s DeFi ecosystem underwent a major overhaul. New DeFi projects take over and become the dominant protocols in Solana. Jito, Jupiter, and Kamino are new projects that dominate their respective sectors. Sanctum is a liquid staking project that wants to compete in Solana’s liquid staking sector with its innovations. So, what is Sanctum? What is the potential of Sanctum’s CLOUD token? We will discuss it in detail.
Article Summary
- 🧊 Sanctum is a protocol on the Solana network focused on developing the liquid staking token (LST) ecosystem. Sanctum facilitates the launch of new LST through three main products: Sanctum Reserve, Sanctum Router, and Infinity.
- ⚙️ Sanctum Reserve provides deep liquidity for LST to SOL exchange, while Sanctum Router facilitates easy inter-LST movement.
- 💯 Infinity (INF) is Sanctum’s aggregator LST token that provides higher interest to its holders, and acts as an aggregator of all LST in Sanctum.
- ⚖️ CLOUD is Sanctum’s governance token with community-oriented tokenomics, and uses the Sanctum Wonderland concept to increase user interaction in token airdrops.
What is Sanctum (CLOUD)?
Sanctum is a protocol on the Solana network focused on creating and developing a liquid staking token (LST) ecosystem. Sanctum wants to create an infrastructure for LST so that all projects —and even individuals— can launch their LST.
In addition, Sanctum also envisions adding new utilities to LST. For example, a project could airdrop to users holding its LST or creators can distribute their art to LST holders.
Currently, there are already 55 LSTs registered on the Sanctum platform. Launching LST using Sanctum is more effective than doing regular staking by creating a stake account. Sanctum facilitates the launch of new LSTs by offering three products as infrastructure: Sanctum Reserve, Sanctum Router, and Infinity.
How does Sanctum work?
The LST system in Solana utilizes a type of account called a stake account. Each LST will be connected to a stake account. There are four components in the Sanctum LST ecosystem: validators LSTs, Sanctum Reserve, Sanctum Router, and Infinity.
All LSTs in Sanctum are validator LSTs connected to a validator in Solana. For example, the BONK project has launched an LST in Sanctum called bonkSOL. With Sanctum, projects can run multiple validators connected to a single LST, easing the staking process for users. In addition, validator LST allows users to stake and unstake instantly.
Sanctum Reserve is Sanctum’s proprietary liquidity pool that allows instant exchange of LST to SOL. The Sanctum Reserve ensures there is deep liquidity to exchange small or large amounts of LST—there are 410,000 SOL in the Sanctum Reserve. So, the Reserve ensures there are no depeg events in case of large swaps and keeps every LST stable for DeFi applications.
Meanwhile, the Sanctum Router is in charge of facilitating LST-LST swaps. Imagine an LST as a food wrapper. When you want to move from jitoSOL to bonkSOL, the Router is in charge of opening the wrapper and replacing it with a new wrapper. Sanctum Router is the key innovation that enables an ecosystem of LSTs in Sanctum.
INF (Infinity) Token
Infinity (INF) is Sanctum’s LST that acts as an aggregator of all Sanctum’s whitelisted LSTs. Infinity has a liquidity pool of many LSTs which also serves to facilitate the liquidity for LST-LST swaps. INF can be an aggregator of hundreds of LSTs in Sanctum—hence the name Infinity.
INF has an advantage over other LSTs because it provides higher staking yields for its owners. Holders will earn an aggregation of the staking interest of all the LSTs in its liquidity pool and the transaction fees from the LST-LST swaps.
CLOUD Tokenomics and Sanctum Wonderland
CLOUD is Sanctum’s governance token launched on July 18, 2024. Sanctum’s airdrop is unique as it provides bonus tokens for users who lock their CLOUD first. Sanctum also has the concept of earnestness to provide bonus tokens for users who are active in the Sanctum community. Currently, CLOUD’s main utility is to serve as Sanctum’s governance token.
CLOUD tokenomics is also very community-oriented. At launch, 18% of CLOUD is already in circulation. Around 40% of CLOUD is allocated for airdrop which will be divided into several phases. This model is very similar to Jupiter.
Sanctum also creates Sanctum Wonderland to introduce the various LSTs on its platform as cute little characters. Users who own an LST will get the corresponding character. Wonderland was used to create interaction with users in phase one of the CLOUD airdrop.
Potential of CLOUD and Sanctum
Sanctum is one of the innovative projects in Solana as it creates the infrastructure for easier LST launch. In addition, Sanctum also expands the utilities for LST, provides liquidity for LST, and makes swaps between LST easier.
However, this fundamental value has not been reflected in the CLOUD price. CLOUD’s price has been steadily declining since its launch on July 18, 2024. The airdrop model created by Sanctum has only delayed the selling pressure on CLOUD. Airdrop owners are just waiting until their CLOUD bonus is maximized.
The price of CLOUD as of August 2 is $0.20 with a market capitalization of $30 million.
CLOUD’s price movement is actually similar to projects doing airdrops like PRCL, JTO, JUP, and ETHFI. The price will usually reverse when airdrop owners have finished selling their tokens. In the case of JUP, the price movement started to turn positive 35 days after its launch.
Then, just like JUP, Sanctum has clear fundamentals and a capable team. Currently, there is only 6.5% SOL in the liquid staking ecosystem. If Sanctum can push that number to 10%, Sanctum will become one of the essential protocols in Solana.
Sanctum Roadmap
In the Sanctum roadmap (still in progress), there are several interesting things:
- Improving Sanctum Performance: Sanctum explains that the LST launch process can be made faster and easier than it is now. The Sanctum team intends to create more automation for LST launches.
- CEX LST: The Sanctum team explained that several CEXs are communicating with them to launch LSTs in Solana.
- Expanding LST Utilities at Sanctum: Sanctum explained that they are testing how far the LST utility can be developed. Sanctum is testing the potential of LST as a project fundraising medium and as a sign of support for creators (replacing NFTs).
Conclusion
Sanctum is an innovative project in the Solana ecosystem that creates a liquid staking token (LST) infrastructure with features that make it easier to launch and exchange LST. With strong liquidity, new utilities, and an attractive INF aggregator token, Sanctum has the potential to become one of the fundamental protocols in Solana. Therefore, CLOUD is an attractive token to speculate on Sanctum’s great potential.
References
- “Infinity | Docs“, Sanctum, accessed on 30 July 2024.
- Kinij Steimetz, “Head in the $CLOUD(s)“, Messari, accessed on 31 July 2024.
- @Steimetzkinji, “I recently published “Head in the $Cloud(s)” a @MessariCrypto Deep Dive on @sanctumso , exploring how the protocol works, the problems it solves, and its potential impact, X, accessed on 31 July 2024.
- “What is Sanctum (and $CLOUD)? Exploring Liquid Token Staking (LST) On Solana“, Backpack, accessed on 1 August 2024.
- “Roadmap Update July 2024 – General“, Sanctum Research, accessed on 2 August 2024.