Is Solayer’s Restaking a good business?

Protocol architecture: https://docs.solayer.org/getting-started/introduction

Protocol data: https://defillama.com/protocol/solayer#information

The current market perception of Restaking is dominated by Eigenlayer - Eigenlayer aggregates and expands the economic security (shared security) of Ethereum through $ETH Restaking. In short, public chain teams can use EigenDA as a DA layer. Celestia's DA service is its competitor. However, it is worth mentioning that although the DA service is a simple business, it needs enough customers and their application users to prosper in order to make this flywheel turn.

Although Solana Restaking shares the same name as Ethereum’s Restaking, the two businesses have completely different focuses and target customer groups. Eigenlayer focuses more on providing services to the outside world (exogenous AVS), while Solayer focuses more on providing services to Solana’s internal applications (endogenous AVS). Of course, Solayer can also be expanded externally, and this is only the first phase of Solayer.

I think the Solayer blog’s explanation of its business model in the first phase is very appropriate (https://solayer.org/blog/introducing-solana-restaking-standard-endogenous-avs):

Imagine Solana as a highway with multiple lanes, with different lanes with different tolls and congestion levels, representing different Staking Tiers. Different DApps also have different speeds and acceptable charges as passing cars. Solayer plays the role of coordinating cars (DApp), lanes of highways (Validators), toll booths (Restakers) and other parties by accepting user funds.

That is to say, DApps in the Solana ecosystem can adopt Solayer according to their own needs (block space and priority transactions) services to ensure that they are in the fast lane or slow lane, thereby bringing a better experience to users.

Participate in Solayer Restaking The benefits of users come from three aspects:

• Solana Staking Rewards;

• MEV income;

• Possible Solayer token airdrops;

With this explanation, perhaps we can understand why Binance Labs will invest in Solayer-because Solayer will occupy a very important ecological niche infrastructure of Solana in the future.

Next, let’s briefly talk about Solayer’s competitors Jito and Sanctum, which was quite popular some time ago.

In the article Announcing Jito Restaking (https://www.jito.network/zh/blog/announcing-jito-restaking/), although Jito did not mention the focus of its future business, it only talked about some of the advantages of its products. However, in the example of the oracle it cited, we can see that the business focus of Jito Restaking seems to be more like Eigenlayer, providing services (economic security) for cross-chain bridges, oracles or Rollups. This is also the difference between Jito Restaking and Solayer's current business model. These are just my guesses at the moment. I will continue to talk about it in detail after the subsequent content is announced.

And Sanctum's narrative is not as grand as Jito and Solayer. What it wants to do is the liquidity layer of LST. Simply put, some small LSTs are not liquid enough and cannot be quickly exited through Swap. At this time, Sanctum launched an integrated liquidity layer to provide liquidity support for various LSTs of Solana. In short, Sanctum's product is to solve the current liquidity problem of SOL LST.

Finally, let's answer the first question: Is Solana Restaking a good business?

From Solayer's perspective, I think it's a good business. Unlike exogenous AVS, in the first phase, Solayer's target customer group is the current Solana ecosystem DApps, and Solayer's service adoption threshold is low - if there is a demand, DApps can easily use the services provided by Solayer. This is why I think Solayer can quickly establish an ecological moat.