What is Sanctum? Sanctum is a Stability Protocol platform with a vision of solving problems with liquidity on Solana. So how does Sanctum solve this problem and what’s special? Let’s find out together in the article below.
To understand more about Sanctum, people can refer to some of the articles below:
- What Are Liquid Staking Derivatives (LSD)? Top 5 LSD Projects with Great Growth Potential
- Liquid Staking Will Continue to Grow Strongly in the Future
- What is Solana (SOL)? Solana Cryptocurrency Overview
Sanctum Overview
What is Sanctum?
Sanctum calls itself a Stability Protocol with the goal of becoming a liquidity pool or liquidity support for the entire ecosystem on DeFi. Sanctum targets two potential markets: Liquid Staking Derivatives and Flash Loan.
Sanctum’s problem for the Liquid Staking Derivatives segment is:
- Problem 1: All Liquid Staking platforms have their own xSOL and must build an xSOL – SOL liquidity pool for users to exit positions at any time. Too much Liquid Staking will cause liquidity fragmentation because the number of SOLs is limited.
- Problem 2: When Solana allows anyone to deploy Validator on Solana, the source and SOL decrease even more. Leading to xSOL – SOL pools being reduced in depth.
Sanctum’s solution is to build a protocol that helps users convert from any xSOL back to SOL in a short period of time without needing to transact on AMM platforms. From this solution, xSOLs will have thicker liquidity, leading to Solana’s DeFi becoming more sustainable and stronger.
In the lending context, having to liquidate a series of LSTs such as mSOL or stSOL can lead to a further sharp drop in SOL prices, which in turn causes liquidation, creating a domino that collapses the entire ecosystem. With Sanctum, LSTs will immediately convert back to SOL and when liquidated as SOL with a thicker liquidity framework will have less impact on the entire ecosystem.
To do this, Sanctum must build a Sanctum SOL Reserve Pool to help convert from xSOL back to SOL immediately. Besides, Sanctum allows users to switch from xSOL to xxSOL, such as mSOL via JitoSOL. Or even convert any SOL to xSOL (this feature makes LSD part of Sanctum).
Sanctum charges from 0.01% to 3% based on the percentage of SOL taken out from the Sanctum SOL Reserve Pool. Sanctum also charges a 0.01% fee when trading LSTs with each other.
The Sanctum Difference
The biggest difference is in how Sanctum operates. With a model that is not a liquidity pool, transactions on Sanctum have almost no effect on the price of the token, so in a volatile market, Sanctum will help the ecosystem avoid mass collapse.
It can be said that Sanctum is the result of the work that resulted from the collapse of FTX and Alameda Research.
Development Roadmap
Quarter 3/2023: Establish DAO for the project and start deploying Sanctum V2.
Quarter 4/2023: Deploy Sanctum V2 and deploy incentives to attract people to build the Sanctum ecosystem.
Investor
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Core Team
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Tokenomics
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Exchanges
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Project Information Channel
- Website: https://www.sanctum.so/
- Twitter: https://twitter.com/sanctumso
- Document: https://docs.sanctum.so/
- Blog:
Summary
If the project is successful, Sanctum SOL Reserve Pool will be a thick liquidity pool that can solve outstanding problems and future risks of the Solana ecosystem. Hopefully through this article everyone can understand more about what Sanctum is?