Solayer: Liquid Staking and Restaking on Solana

Solayer is a layer-2 protocol built to make staked SOL more productive. By combining liquid staking and restaking techniques, it aims to boost transaction capacity and unlock liquidity while letting token holders continue to earn rewards. For anyone following Solana scaling or DeFi innovation, Solayer offers a practical way to put staked assets to work.

What Solayer Does and Why It Matters

At its core, Solayer converts staked SOL into usable tokens that can be leveraged across decentralised applications. Instead of having assets locked and inactive while they stake, users receive liquid representations that retain reward accrual. That extra flexibility can ease network congestion and increase capital efficiency across the ecosystem.

How Solayer Works: Key Components and Concepts

Layer-2 processing and restaking explained

Solayer operates as a layer-2 companion to Solana, offloading some tasks from the base chain to improve throughput. One of its main functions is restaking, where pooled stake is actively redeployed across validators and services to amplify utility without sacrificing security.

Restaking Pool Manager: the coordination layer

The Restaking Pool Manager is a smart contract that supervises pooled SOL. It collects deposits, issues the liquid staking token, and directs where stake is placed. Think of it as the operational hub that keeps the pooled capital moving to the best available staking opportunities.

• Accepts SOL deposits from users
• Mints and distributes sSOL to represent staked positions
• Collects and channels staking rewards to holders

Liquid staking tokens: what sSOL does

sSOL is Solayer's liquid staking token and represents a claim on staked SOL plus future rewards. Holders can use sSOL in DeFi without waiting for unstaking windows, preserving liquidity while still benefiting from staking yields.

Delegation Manager: choosing validators

The Delegation Manager decides how pooled funds are assigned to validators. It communicates with multiple validators and distributes stake to balance security and reward potential, helping to automate a process that would otherwise require manual coordination.

Reward Accounting Unit: tracking earnings fairly

Rather than handling staking directly, the Reward Accounting Unit focuses on accurate bookkeeping. It records rewards generated by the pool and calculates each sSOL holder's share so distributions reflect proportional ownership.

Oracle price feeds: keeping sSOL aligned with SOL

Oracles provide external price data that help maintain the exchange relationship between sSOL and SOL. The goal is for one sSOL to approximate one SOL plus accrued rewards, so reliable price feeds are important for market confidence.

A simple flow for a user

A user stakes SOL into the pool and receives sSOL in return. The Restaking Pool Manager deploys the SOL according to the Delegation Manager's plan. Rewards are tracked by the Reward Accounting Unit and allocated to sSOL holders, while oracles keep the sSOL/SOL peg visible to markets.

Token Model: LAYER, sSOL, AVS and sUSD Roles

Solayer uses several tokens that serve distinct purposes within its ecosystem:

• SOL: The native asset of the Solana network, used as the base staking and settlement currency.
• LAYER: The protocol utility token used for governance, incentives, and participation in the network economy.
• sSOL: The liquid staking token representing staked SOL, enabling liquidity and ongoing reward accrual.
• AVS tokens: App-specific tokens that let DApps package and distribute SOL yield and extract MEV-related opportunities in controlled ways.
• sUSD: A stablecoin option within the layer-2 ecosystem, intended for transactions and liquidity operations.

Exchange Airdrop and Initial Distribution

To accelerate distribution and awareness, an exchange airdrop allocated 30,000,000 LAYER tokens, equal to 3% of the total supply, to eligible users via a HODLer-style snapshot program. That event increased market visibility and helped bring LAYER into wider trading and DeFi use.

Practical Considerations and Risks

While Solayer adds flexibility, users should understand the trade-offs. Smart contract vulnerabilities, oracle failures, delegation mistakes, or market volatility can affect value and peg stability. Restaking concentrates operational complexity, so assessing counterparty and contract risk is essential before participating.

A Balanced View of Solayer's Potential

By blending liquid staking with an active restaking approach, Solayer offers a way to make staked SOL more productive and reduce bandwidth pressure on the base layer. Its multi-token design and modular components aim to unlock new DeFi use cases without forcing users to choose between liquidity and staking yields.

Disclaimer: This article is for educational purposes only and is not financial, legal, or investment advice. Crypto assets are volatile; seek professional guidance before making financial decisions.