TLDR;

• Introduction: Solayer and the Concept of Restaking

• Understanding Actively Validated Services (AVSs)

• How Solayer’s Restaking Model Works

• What is Optimal Restaking

• The Impact of Stake-Weighted Quality of Service (swQoS) on Endogenous AVSs

  
  

Restaking is a new concept in crypto. Certainly so, in the Solana ecosystem. The reason for this is that Solana is a new blockchain ecosystem. Security is not the main limiting factor in building a protocol from the ground up. However, with the growth of native Solana decentralized applications (or dApps), that need is growing. This growth is resulting in a need for capital and capital for security among other things.

Solayer is the premier restaking platform on Solana that is creating a security marketplace for native Solana dApps. In this article, I will explain how this trustless marketplace is created.

Introduction: Solayer and the Concept of Restaking

Solayer is a restaking platform on Solana that enhances the network’s efficiency by allowing staked assets to be reused across multiple applications. Restaking helps maximize the utility of staked tokens, offering both improved performance for applications and better returns for stakers.

Within Solayer, there is a focus on – Optimal restaking i.e. restaking assets to ensure that resources like blockspace, transaction bandwidth, and network security are allocated efficiently, benefiting both stakers (supply of security) and dApps (demand for security).

Solayer specializes in **securing endogenous AVSs (**which we will cover later) such as decentralized apps (dApps) and DeFi protocols built on Solana. It does this through – efficient management of network security based on dApps and the assets staked with them, and the marketplace to regulate this exchange of staked assets.

Understanding Actively Validated Services (AVSs)

Validation is the process through which nodes in a blockchain confirm transactions and ensure the integrity of data. In some cases, specific services need dedicated validation to maintain their operations — these are known as Actively Validated Services (AVSs).

In other words, AVSs are systems that require dedicated transaction validation beyond what the core blockchain provides. An AVS is any protocol or application that relies on consistent, reliable validation to process transactions to the main blockchain from the users and to work correctly. AVS can range from financial applications like staking pools and DeFi protocols to infrastructure services. Every application that uses the blockchain, Solana or otherwise, as a foundational layer, is an AVS and requires validation. Hence, a certain amount of security is required to ensure these transactions are not altered maliciously.

For the context of Solana-based dApps, AVSs are categorized into two types:

Solayer is addressing this need by creating a trustless security marketplace for Solana dApps or AVSs on Solana. Specifically, the endogenous AVSs. Through its restaking model, Solayer allows stakers to enhance the security of these AVSs while earning returns.

How Solayer’s Restaking Model Works

At it’s core, restaking on Solayer allows users to reuse or restake their staked SOL or Liquid Staking Tokens (LSTs) to secure AVSs, or dApps on Solana.

A user logs on to – app.solayer.org

Under “Markets” each staked version of SOL is mentioned with US dollar value of tokens locked into the restaked vault.

For instance, here is the leaderboard of the liquid restaked tokens as of October 2024. The largest liquid restaked token is native staked SOL or sSOL worth $185 million or nearly 75% of the total pool on Solayer. The other tokens include staked versions from:

1. Centralized exchanges pooling SOL from their users

   • Eg: Binance, Bybit, and Bitget

2. Solana liquid stakers and infra providers offering liquid staking derivatives

   • Eg: Jito, Helius, Marinade, Infinity, etc.

When users deposit this form of SOL, either native or in a liquid staked form, this is what happens on Solayer:

1. User Stakes SOL in the Solayer Stake Pool

The user begins the process by sending SOL to the Solayer stake pool. This pool handles deposits and issues sSOL-raw, a temporary token representing the user’s staked SOL.

2. Receiving sSOL-raw from Solayer Stake Pool

Once the user deposits SOL, they receive sSOL-raw, an intermediary Liquid Staking Token (LST). This token keeps earning staking rewards while giving users the flexibility to proceed with restaking.

3. Restaking through the Restaking Pool Manager

The restaking pool manager plays a crucial role by managing and redirecting staked assets. Users can restake sSOL-raw and receive sSOL, which offers more usability in Solana’s DeFi ecosystem.

4. Delegation to MEV-Boosted Validators

Solayer delegates the staked assets to MEV-optimized validators. These validators maximize returns by strategically ordering transactions, providing both higher rewards for validators and increased yields for users.

5. Efficient Conversion Back to sSOL and Asset Flow Management

Through the interaction with the restaking pool manager, sSOL-raw is converted to sSOL, completing the restaking process. The entire process is non-custodial and handled in a single transaction, ensuring efficiency and user control over assets at all times.

This structured approach ensures users benefit from both liquidity and MEV-boosted staking rewards while maintaining flexibility within the Solana ecosystem.

In summary:

• Restaking on Solayer allows users to reuse or restake their staked SOL or Liquid Staking Tokens (LSTs) to secure multiple AVSs, or dApps on Solana.

• This model helps maximize the efficiency of staked assets, transforming them into tools for both security and profit generation. Solayer focuses on endogenous AVSs—the native applications built on Solana that require blockspace and reliable transaction inclusion.

• The Solayer model allows for efficient:

  • Stake Management: Users stake SOL or LSTs, which are then allocated to Solana-native dApps to secure their operations.

  • Validator Allocation: Validators receive these staked assets and allocate processing power and blockspace to prioritized dApps.

  • Trustless Marketplace: Solayer facilitates a marketplace where developers, validators, and stakers align their interests for efficient resource management.

• This model ensures that native Solana dApps get the security and bandwidth they need while providing stakers with additional yield opportunities.

What is Optimal Restaking

Staking has two main use cases:

1. To the protocols, staking provides network security.

2. To the stakers, staking provides additional yield.

Either way, staking is the efficient use of assets from a party that wants to use it effectively (the stakers) to the party that needs to use it for an essential function (the protocols for yield). The protocols that allow this movement of capital i.e. Solayer ensure this happens. But beyond that Solayer ensures that restaking is – optimal.

Solayer facilitates optimal restaking by – creating a trustless marketing place for endogenous AVSs (with support for exogenous AVSs coming soon). This marketplace allows for optimal restaking for the following reasons:

1. Stake Management:

   Solana native dApps secured by Solayer receive staked tokens. These tokens are managed by the dApps efficiently. This ensures precise resource allocation and avoids under- or over-utilization of staked assets.

   
   

2. Direct Validator Allocation:

   Processing power is allocated to the dApps (secured by staked assets) by the validators directly. This direct flow of power reduces intermediaris and ensures that transactions are fast and no power, processing or electricity, is wasted.

   
   

3. Native Solana Focus:

   Solayer directly supports – protocols within the Solan ecosystem i.e. endogenous AVSs. This prevents fragmentation of capital, processing power, and focus, and hence resulting in growth for the native applications.

   
   

What Makes This Model "Optimal"?

The optimality of Solayer’s model lies in how resources are allocated efficiently, ensuring staked assets are deployed exactly where needed. Validators prioritize dApps with higher stakes, allowing critical applications to thrive without resource constraints. This alignment creates mutual incentives where validators, stakers, and dApps all benefit—validators earn fees, stakers gain higher yields, and dApps secure necessary blockspace. Additionally, dynamic resource distribution ensures the system adapts seamlessly to network traffic, preventing congestion and ensuring smooth performance, even during peak times.

Who Benefits and How?

Protocols (dApps) gain secure blockspace and prioritized transaction processing, helping them operate efficiently, especially during high network demand. Validators benefit from increased rewards, leveraging MEV opportunities and staking fees by supporting high-stake applications. Stakers, in turn, maximize their yields by distributing assets across multiple dApps, reducing risk while retaining liquidity. This ecosystem ensures that all participants—dApps, validators, and stakers—are aligned toward maximizing returns and performance, fostering sustainable growth within Solana.

How This Works

Solayer acts as the orchestrator of the trustless marketplace, connecting stakers, dApps, and validators in a way that ensures optimal resource management and yield generation.

This process is simplified by Solayer through automating asset collection and allocation for dApps, ensuring efficient use of capital. Validators receive processing power based on staked tokens through the restaking pool manager. Rewards are distributed transparently, with MEV boosting returns for stakers. Operating in a trustless system, Solayer ensures users retain control over their assets, promoting seamless, secure operations.

Here’s how Solayer fits into the flow:

Stakers → Stake → dApps via Solayer:

• Stakers deposit their SOL (or Liquid Staking Tokens) into the Solayer platform, which manages these assets efficiently.

• Solayer channels these staked tokens to native Solana dApps (endogenous AVSs). By staking through Solayer, the users earn staking rewards while providing dApps with capital to secure blockspace.

1. dApps → Delegate → Validators via Solayer:

   • Once the SOL is staked in dApps, Solayer delegates these tokens to validators through its restaking pool manager. Validators receive these tokens and, in turn, allocate their processing power to the associated dApps.

   • This delegation is managed directly and transparently, ensuring validators align their performance with the interests of high-stake dApps.

2. Validators Process Transactions and Earn Rewards:

   • Validators perform essential blockchain tasks such as transaction verification and block production. In Solayer’s marketplace, MEV-boosted validators are prioritized, enhancing network efficiency and returns.

3. Validators → Rewards → Stakers via Solayer:

   • Solayer manages the flow of rewards back to stakers. These rewards include staking yields and additional MEV profits.

   • Since the process is non-custodial, stakers retain control of their assets throughout. Solayer ensures that rewards are distributed fairly and efficiently based on the original stake.

4. Circular Flow of Value:

   • The entire system forms a feedback loop: stakers earn rewards, dApps secure necessary resources, and validators perform efficiently to maintain the network’s performance. Solayer ensures that each component aligns perfectly through optimal restaking.

     
     

The Impact of Stake-Weighted Quality of Service (swQoS) on Endogenous AVSs

Solayer’s trustless marketplace allowing optimal staking is based on – stake-weighted quality of service (or swQoS). This is a resource allocation or a staked token distribution mechanism to distribute blockspace and processing power based on the amount of stake held by stakers. Validators with higher stakes gain proportionally greater access to transaction processing units (TPUs), allowing them to submit more transactions to block leaders efficiently.

In Solayer’s marketplace, swQoS ensures that validators prioritize dApps backed by significant stakes.

Higher amount staked = Higher prioritization by validators = Higher processing power.

This system aligns incentives between validators and native Solana dApps by promoting high-quality service to the most critical applications. Additionally, swQoS helps mitigate network congestion by ensuring that validators with a higher stake allocation maintain smoother transaction processing, reducing the risk of Sybil attacks and network slowdowns.

Solayer integrates swQoS into its architecture to enhance the efficiency of restaking. It ensures that validators allocate their resources to dApps proportionally, maintaining fair access to blockspace. This dynamic distribution mechanism allows developers to create scalable, responsive dApps without needing to over-provision infrastructure.

Impact on Endogenous AVSs

Endogenous AVSs—native Solana dApps—rely on efficient blockspace and transaction prioritization to operate smoothly. Through swQoS, these dApps benefit from processing capacity based on their staked assets, ensuring their users experience consistent performance, even during peak traffic periods. However, this performance will change based on the changes in staked capital flow i.e. if it flows to another dApp, so will processing power.

With Solayer’s model:

• Resource Reservation: dApps can reserve specific amounts of blockspace and ensure high-priority transaction processing.

• Enhanced Reliability: Applications backed by swQoS enjoy stable network access, reducing delays and failed transactions.

• Elimination of Fees for Priority Access: dApps no longer need to pay premiums to RPC operators for transaction prioritization; staked assets alone determine service quality.

The impact is twofold:

1. For dApps: Endogenous AVSs receive dedicated blockspace and smooth processing, enabling them to handle large transaction volumes and user activity reliably.

2. For Validators and Stakers: Validators supporting high-stake dApps benefit from increased MEV opportunities and transaction fees, while stakers earn higher yields.

Endogenous AVSs. On Solana.

Solayer’s restaking model empowers the Solana ecosystem by creating a trustless marketplace where staked assets are managed efficiently. Through swQoS, endogenous AVSs — native Solana dApps — benefit from dedicated blockspace and high-priority transactions, ensuring smoother operations even during peak times.

This alignment of interests between:

• Validators: By gaining MEV opportunities

• Stakers: By maximizing their yield

• DApsps: By receiving security

Through this optimal restaking model, Solayer proves that efficient resource management is essential for long-term success in decentralized ecosystems. With its forward-looking approach, Solayer stands poised to redefine how native applications secure blockspace, paving the way for even greater innovations on the Solana blockchain.