What is $fragSOL?
$fragSOL is the first liquid-restaking token (LRT) on Solana. When you restake your SOL or other Liquid Staking Tokens ($jitoSOL, $mSOL, $bSOL, or $INF) using the Fragmetric protocol, you will receive $fragSOL. $fragSOL represents your restaked $SOL or LST, offering Solana staking yield, MEV reward and restaking revenue from multiple protocols, including Jito, Solayer, and Picasso and so on.
Okay, more yields… but wtf is restaking and LRT?
Restaking
Restaking is the process of enhancing the security of a specific decentralized service by staking an asset that has already been staked once, such as a Liquid stake Token (LST, e.g., $jitoSOL). EigenLayer was the first to introduce the idea, and recently, many restaking protocols have started accepting various types of assets—not just LSTs—as restaking collateral. Restaking allows users to earn additional fees from the decentralized service on top of the rewards from staking.
Liquid Restaking Token (LRT)
LRT refers to your restaked $SOL or LST via a specific Liquid Restaking Protocol, such as Fragmetric. Like LSTs, LRTs can be used across various DeFi protocols. With Fragmetric’s first LRT, $fragSOL, users can earn additional revenues from restaking on top of existing Solana validation and MEV rewards.
Can you briefly describe Fragmetric’s process?
When a user deposits SOL or LST into Fragmetric, they receive an equivalent amount of $fragSOL. The Normalized Token Program, developed by Fragmetric, accurately manages this conversion ratio, as detailed in the Fragmetric Architecture section. The deposited $SOL and LST are combined into a single basket, and Fragmetric distributes the portion of this basket efficiently across various restaking protocols and NCN/AVS.
The assets are delegated to partner validators responsible for economic security of NCN/AVS validation, with the earnings generated distributed to $fragSOL holders. Fragmetric acts as both an intermediary and a liquidity layer between users and restaking protocols, while also fulfilling a role akin to that of a portfolio manager.
How are fragSOL holders rewarded?
$fragSOL's price includes solana staking yield and MEV rewards, just as a typical LST does. This means that when users unstake $fragSOL, they will receive more $SOL than they initially deposited, based on the LSTs' basket-wide average annual percentage rate (APR).
However, NCN/AVS rewards differ in that they can be distributed in a variety of ways, including $SOL, native tokens, and other assets. Using the transfer hook feature from the Solana Foundation's token extension, Fragmetric developed $fragSOL to efficiently manage the distribution of these specialized rewards. Every $fragSOL transfer triggers this transfer hook, which modifies the configuration to precisely track a user's $fragSOL escrow timeframe, allowing restakers to receive additional revenue from NCN/AVS. Users can claim their respective revenues at any time. $fragSOL is an OPOS (Only Possible on Solana) LRT that cannot be built on the Ethereum ecosystem.
How can fragSOL be used in DeFi?
Because $fragSOL is a Liquid Restaking Token, it provides an infinite number of re-leveraging opportunities on DeFi. Here are a few applications for $fragSOL:
- Collateral for Borrowing
$fragSOL can be used as collateral in lending protocols, allowing users to borrow other assets while still earning rewards from the underlying staked $SOL. This enables users to unlock liquidity without unstaking their tokens.
- Liquidity Provision
$fragSOL can be added to liquidity pools on DEXs, increasing the protocol's liquidity. Contributing to these pools allows liquidity providers to not only facilitate trading but also earn a share of the pool's transaction fees.
- Trade on DEXs
$fragSOL will be available on most decentralized exchanges and can be traded for other tokens. Users can buy $fragSOL directly on a decentralized exchange (DEX) rather than depositing assets to Fragmetric protocol. Furthermore, by selling $fragSOL on a DEX, users can obtain the required liquidity immediately.
fragSOL is the first product introduced by Fragmetric and serves as the core of the Fragmetric ecosystem. For more detailed information, please refer to the Fragmetric Architecture section.