Jito

Like Ethereum, the Solana blockchain uses a Proof-of-Stake consensus mechanism. This means the network relies on validators who stake SOL as collateral, ensuring that they process transactions honestly and efficiently. SOL holders can also delegate their tokens to validators to earn rewards without running their own nodes. This offers yield for stakers, but also means their assets are tied up for the duration of the staking and unstaking periods.

Liquid staking protocols solve this problem by giving users an alternative asset, meaning their funds are not locked up entirely. These systems issue liquid staking tokens — JitoSOL, in the case of Jito — when a user locks up their original asset in a staking pool, which act as coupons representing their proportionate claim on the assets in the pool. Holders can use their liquid staking tokens to trade or participate in DeFi, then later redeem them for the original asset through the platform's unstaking process.

JitoSOL holders therefore continue earning staking yield while still retaining access to their capital for other onchain activities. Such systems are not without their risks, however; liquid staking tokens can trade below the value of their underlying assets, while smart contract vulnerabilities can lead to losses.

Jito adds another dimension to this system by providing the infrastructure for users to benefit from MEV: the additional value that can be captured by influencing the ordering and inclusion of blockchain transactions. Participating validators can earn additional tips by facilitating preferential execution for traders, who compete in auctions to have their transactions processed first.

Jito also has a governance token, JTO, which allows holders to participate in decisions concerning the protocol's development and operations.