Solana's liquid staking tokens (LSTs), such as mSOL and JitoSOL, have already become the core collateral and 'building blocks' of its DeFi ecosystem. Now, Solayer's restaking mechanism is giving rise to a more powerful and complex new asset class—Liquid Restaking Tokens (LRTs), which is expected to become the 'super building block' that ignites the next wave of composability explosion in Solana DeFi.
What is LRT? When you deposit your LST (e.g., mSOL) into an LRT protocol (built on Solayer) for restaking, the protocol will mint an LRT that represents your restaked position. The uniqueness of this LRT lies in its embedded multiple sources of yield:
Basic SOL staking rewards. Restaking rewards from multiple AVS. Governance token rewards from the LRT protocol itself.
This 'super asset' with embedded multi-layered yields will bring boundless imagination to Solana DeFi:
Higher-level lending markets: Lending protocols can accept LRT as collateral. Since LRT itself carries high income-generating capability, this will spawn more complex, even negative interest rate lending products. Innovative structured products: Developers can create various yield-enhancing strategies and fixed income products based on LRT, packaging complex restaking yields into financial products that are easy for ordinary users to understand. Deeper liquidity pools: Liquidity pools composed of LRT and other assets (such as USDC, SOL) will provide traders with unprecedented capital efficiency.
The emergence of LRT will greatly increase the capital efficiency and complexity of Solana DeFi, elevating the game of composability to a whole new dimension.
