Opening Remarks
In our Sanctum Research Part 1, we explored how liquid staking is transforming asset management in PoS networks. We discussed how liquid staking techniques issue Liquid Staking Tokens (LSTs) in exchange for staked assets, representing both the staked amount and accrued rewards. We also highlighted the rapid growth in the total value locked in liquid staking, noting that Solana boasts a staking ratio of over 70%, significantly higher than Ethereum’s 27%. Despite this, LSTs make up only 6% of Solana’s staked supply, compared to over 40% on Ethereum, presenting a substantial market opportunity for Sanctum in the Solana ecosystem.
Source: Dune Analytics
For more details about Sanctum Protocol, its capabilities, technical structure, and comparison with other competitors, please refer to Part 1. It only takes a few minutes and will show why we at Greythorn are closely following this project.
In this second part, we will focus on the recent airdrop and its structure, the success of their Alpha Vault, tokenomics, key DeFi partner integrations and listings, the growth of LSTs, and their adoption into Web2.
Tokenomics
Since the tokenomics were not available during our initial research, let’s begin here. Sanctum employs a multi-token system to support and enhance its ecosystem. Because the project focuses on making it possible for people to launch and trade millions of LSTs in the Solana ecosystem, there must be a way to ensure these LSTs are truly liquid. Here is where Sanctum introduces the Infinity Pool, a multi-LST liquidity pool that allows swaps between all LSTs in the pool. Users can become liquidity providers by depositing any whitelisted LST into the Infinity Pool and, in return, receive the $INF token, which accrues both staking rewards and trading fees from the pool and can be directly used by DeFi protocols.
The Sanctum Governance Token, $CLOUD, on the other hand, controls capital and attention within the ecosystem. Partners need to stake $CLOUD to qualify for the Sanctum Verified Partner (SVP) program, and $CLOUD holders vote on which partners are accepted.
The total supply of $CLOUD tokens is 1,000,000,000 (1B), distributed as follows:
- Launch Liquidity (20%): 10% for an initial airdrop and 10% to seed liquidity.
- Community Reserve (30%): Managed by the community for growth initiatives.
- Strategic Reserve (11%): Used by the team for ecosystem growth and partnerships.
- Team (25%): Allocated to founders and core contributors.
- Investors (13%): Allocated to investors.
- Jupiter LFG (1%): Reserved for Jupiter LFG.
Source: Dune Analytics
TGE, Airdrop and Community Feedback
The Sanctum airdrop took place on July 18th at 11am EST. It involved distributing 10% of CLOUD tokens, with 5% (50 million CLOUD) allocated for Capital and another 5% (50 million CLOUD) for Earnestness. A total of 108,185 profiles were eligible to receive the airdrop.
Participants had two options for claiming their airdrop. They could choose the “Long-Term-Aligned” approach, where they waited to claim their tokens and received a larger bonus the longer they waited, up to a maximum of 100%. Alternatively, they could choose the “Sanctum-Curious” approach, which allowed them to claim their tokens immediately without any bonuses.
To receive the full 100% bonus for the Capital component, participants needed to wait 14 days. For the Earnestness component, the full 100% bonus was given if they waited 180 days. Participants could claim their tokens at any time, but they would forfeit the remaining bonus if they did so early.
The community’s response to the Sanctum airdrop wasn’t as expected, with some users feeling frustrated, particularly those who invested significant $SOL and believed they were treated unfairly compared to non-monetary contributors who received larger allocations.
As seen recently, many projects struggle to establish fair criteria that reward all deserving participants and balance the distribution equitably between small and large contributors; in other words, it’s extremely hard to keep everyone happy.
Sanctum’s team expressed appreciation for all supporters, clarifying that the earnestness allocation aimed to build a dedicated user base. They acknowledged missing many deserving users and promised to review future submissions carefully.
Source: X
To address concerns, the team held a spontaneous Twitter Spaces session, reaffirming their dedication to building top products on Solana and making Sanctum the best place for SOL holders. This response highlighted Sanctum’s team commitment and the resilience of its community, as well as the need for better communication and fairer distribution.
As of today, July 24th, 12.44 million CLOUD tokens have been claimed, accounting for 24.24% of the total allocation (including forfeited tokens). This includes 6.53 million tokens from the Earnest Allocation and 5.91 million tokens from the Capital Allocation, based on data from Flipside by Marqu.
Source: Flipside
On the same day, the Sanctum TGE minted 1 billion CLOUD tokens, split 60/40 between the Team Cold and Community Cold multi sigs. From the Team Cold multisig, 250 million tokens were allocated for liquidity, with 100 million used for the launch pool via Meteora DLMM. The remaining tokens will cover liquidity needs over the first year. From the Community Cold multisig, 150 million tokens were designated for the launch airdrop and community needs. This results in 300 million tokens available in the first year, with up to 125 million tokens circulating initially.
Source: Sanctum
Sanctum Alpha Vault’s Success
The Alpha Vault was a special feature of Sanctum, in collaboration with Meteora that allowed long-term supporters to buy $CLOUD tokens at potentially better prices. Participants could deposit USDC into the vault, and in return, they received $CLOUD tokens at a discount. However, these tokens were vested over six months to encourage long-term commitment.
Source: Sanctum
The vault had a cap of 50 million CLOUD tokens and a maximum buying cap of 7.5 million USDC. The starting price of CLOUD was set by the amount of USDC in the vault, ranging from $0.001 to a maximum of $0.5 on the LFG Curve. If USDC deposits exceeded the cap, tokens were allocated proportionally, with any excess USDC returned to contributors.
The maximum price paid by vault buyers would be $0.15 per CLOUD if fully subscribed at $7.5m USD TVL. If not, both the spot price and vault buyer price would be lower.
Participants could deposit into the Alpha Vault for a discount with a six-month vesting period or buy on the open market for immediate liquidity. The Alpha Vault was open from July 16 to July 18, 2024.
The Alpha Vault was highly successful, oversubscribed by 416%, attracting long-term supporters and demonstrating strong interest and confidence in the Sanctum project.
Source: Meteora
Sanctum’s Optimistic Future: A Vision for What’s Ahead
CEX Listings and Defi Partner integrations
From the start, $CLOUD has stayed true to its commitment of not paying any CEX listing fees, yet it has successfully managed to grow its market presence through strategic listings on major exchanges such as Kraken, Bybit, and Bitget. These moves have improved liquidity and made it easier for traders and investors to access the token. Additionally, there are rumours of more listings on the horizon, which could further enhance the token’s visibility and its integration within the DeFi space.
Beyond just exchange listings, Sanctum has also built valuable partnerships within the DeFi sector to grow its ecosystem. Collaborations with platforms such as Kamino, Drift, Texture, and Orca each add unique advantages to the Sanctum network. Kamino improves liquidity through its pools, Drift introduces advanced trading options like perpetual swaps, Texture expands $CLOUD’s functionality with asset synthesis, and Orca simplifies token exchanges with its user-friendly interface.
Sanctum Launchpad
The founder of Sanctum, fplee, has unveiled plans to create a Launchpad that will kickstart the on-chain economy within the Sanctum community. This platform will utilise Liquidity Support Tokens (LSTs) to foster new projects and innovative products that the community is excited about. For example, the Pathfinders team is using pathSOL yields to finance the creation of a pioneering free NFT mint. This initiative isn’t limited to creative endeavours; it also aims to support businesses looking to adopt crypto-native frameworks. In partnership with Jupiter, Sanctum is developing the necessary infrastructure to support these projects, promoting a circular economy where each success paves the way for more, ultimately cultivating a vibrant on-chain ecosystem.
Sanctum Profiles V2
Sanctum has announced an upgrade to its profile features, designed to redefine identities within the Sanctum universe. These profiles allow users to establish and expand their reputations within the community, serving as a digital identity open to everyone. The forthcoming Sanctum Profiles V2 aims to transform social interaction and loyalty programs on the Solana blockchain by introducing a customizable layer that anyone can tailor to their needs.
With Sanctum Profiles V2, users will have the ability to create their own LSTs, enabling them to monetize their activities in various ways. The platform will go beyond standard communication channels like private Discord or Telegram chats. For instance, Greythorn can produce research that is exclusively accessible to holders of their LSTs (greythornSOL), available on platforms such as Twitter or other websites. This enhancement will allow users to recognize and reward their followers with unique content, deepening connections within the community.
Sanctum Pay
Sanctum Pay is also being developed in collaboration with BasedApp, a Web3.0 financial platform. This innovative project involves the creation of the first LST-powered debit card. By converting staking yields from cardSOL directly into USDC, Sanctum Pay allows users to make purchases without having to liquidate their SOL holdings. This integration aims to eliminate the need for traditional cash-outs, making it an easy experience for users to manage their transactions directly through the debit card.
Final Thoughts
We believe Sanctum offers a novel and compelling solution to the liquidity issues in traditional staking. By acting as a liquidity backstop, it allows staked SOL to be used more flexibly in DeFi, significantly enhancing the utility and accessibility of staked assets. Many other potential future growth opportunities such as paying subscription, mobile plans and others are outlined by James Hanley which could present a positive flow for Sanctum.
With a healthy upward trend in TVL, nearing ~$1 billion USD (5.54 million SOL), Sanctum has already secured integrations with Jupiter Exchange, Kamino, and several other platforms. These integrations are likely to attract more users, boosting its adoption and growth.
Source: DeFiLlama
Sanctum’s plan to establish a DAO for decentralized governance ensures that it evolves based on community consensus. This approach brings trust and participation from the growing Solana community.
Considering these factors, Sanctum’s $CLOUD governance token, with a market cap of $53 million and a FDV under $300 million, presents an interesting protocol to watch.
However, the DeFi space on Solana is highly competitive, with multiple projects competing for liquidity and user adoption. Sanctum must continuously innovate and provide superior value to stay ahead of its competitors, which can be challenging.
We hope our Sanctum Research Series has provided valuable insights. Please remember, nothing we publish should be interpreted as financial advice. These are simply our thoughts and views as we navigate these markets. The protocols we research do not necessarily represent our investment portfolio.
Source: Greythorn
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Thank you for your time,
The Greythorn Team.
Disclaimer
This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.
