Solana's Hottest Ecosystem Tokens

Over the past four months, we’ve rated a series of Solana ecosystem altcoins in our Token Hub product, with a healthy chunk of them receiving bullish ratings.

These include Kamino (KMNO), Drift (DRIFT), Sanctum (CLOUD), and Jito (JTO). While most have netted significant gains, as high as 111% in the case of Kamino, we still believe they have room to run. 

With the market turning increasingly positive, it's time to revisit each of these tokens to dig into their bull cases and examine what forces may support them going forward.

⚫️ Kamino

Website | Twitter | Performance Since Rating: +111%

Kamino Finance on Solana is the top platform for yields on major assets like stablecoins and LSTs; recent growth has taken its TVL to $1.6B. 

Tools like leveraged LST staking, liquidity provision, and lending markets have helped Kamino outperform other protocols, solidifying its lead as ecosystem activity and competition have increased. The rise of stablecoins on Solana, especially PYUSD’s launch, has made Kamino a top destination for yield, with PYUSD yields hitting 30% in July before tapering off. This strong foundation sets the stage for Kamino’s Lend V2, which will introduce new primitives, products, and upgrades, evolving Kamino into a comprehensive DeFi layer.

The first primitive in V2 will be the Market Layer, which enables permissionless creation of different lending markets. These can be customized to include new assets currently unsupported in Kamino’s four live markets, catering to a wider range of user risk profiles.

The second primitive, the Vault Layer, will optimize yields across multiple markets. For instance, a stablecoin vault could switch between JLP and Ethena Markets for the best yield. It can also be customized to risk tolerances, such as only deploying to markets with deep liquidity and low volatility. With the vault layer will come partner and curator vaults, opening the doors for further institutional use. With tailored yield strategies, institutions could set their own risk and liquidity preferences, while retail users could access vaults curated by experts, who will share in the interest generated from these vaults. The upgrade also sets the stage for future use cases, including real-world assets (RWAs) and peer-to-peer lending, tapping into more practical applications of DeFi.

Additionally, Lend V2 introduces new products to Kamino, such as Spot Leverage, a Lending Orderbook, and Limit Orders. These product innovations are supported by other key upgrades in V2, such as Scam Wick Protection and Liquidation Auctions, which help protect users during market volatility and reduce liquidation penalties. Additionally, Isolated and Cross Mode improve risk management, ensuring safer borrowing across different asset types.

Overall, these innovations and upgrades have a high likelihood of helping Kamino strengthen its foundational role in Solana’s DeFi ecosystem, providing enhanced yield opportunities and expanding its capabilities to become a core financial primitive for the chain.

🔵 Sanctum

Website | Twitter | Performance Since Rating: +89%

At its base, Sanctum offers the ability for whitelisted validators to launch their own liquid staking tokens, increasing pull to their protocols since, on Solana, the more stake a protocol’s value has, the more their transactions are prioritized. 

This has already attracted many participants, such as Jupiter’s JupSOL, which already controls 10% of all staked SOL, while Sanctum-supported LSTs account for at least 23% of all LSTs on the network. This rapid uptake highlights Sanctum’s ability to unlock value in Solana’s staking economy. Given that Solana has ~$62B in staked capital, 68.7% of its total supply, surpassing Ethereum in total amount staked, though far behind in liquid staking —  Ethereum has 65% of its staked ETH in liquid form, whereas only 6.5% of Solana's staked SOL is in LSTs — there is a significant growth opportunity for Solana that’s already capturing the attention of major players like Binance, Bybit, and BitGo, all of whom have launched or will launch Solana LSTs with Sanctum, adding hundreds of millions of dollars to the TVL of Sanctum-launched LSTs.

Binance and Bybit To Launch Solana Liquid Staking Tokens on Bankless

Binance and Bybit will launch BNSOL and bbSOL via Sanctum, potentially boosting Solana’s liquid staking and attracting institutional interest.

BanklessDavid C

This all affects CLOUD in a few ways. First, if we expect Sanctum’s whitelisted validator list to continue increasing, then it will have a direct deflationary effect on CLOUD as validators must stake CLOUD to launch their LST with Sanctum, as well as must be staked to vote on which validators become Sanctum partners. Further, while less concrete, there is much more room for CLOUD to play an active role in Sanctum's expanding network of products, which range from cost-free LSTs to creator coins and debit cards with reward programs tied into the ecosystem. 

In summary, with an immense capital opportunity for LSTs on Solana, Sanctum is uniquely positioned as a protocol to help validators, companies, and all in between capitalize on this liquid staking expansion, capturing value in the process and growing its role in the ecosystem.

🟣 Drift

Website | Twitter | Performance Since Rating: +55%

Drift Protocol has solidified its place as a leader in the Solana ecosystem by becoming the first platform to introduce a prediction market to the network. 

The newly launched BET feature allows users to speculate on future outcomes using a capital-efficient model similar to perpetual futures trading. Users can place bets not only in USDC but also via SOL and longer-tail ecosystem assets, broadening the appeal and use cases for this Solana-native market.

 Prediction markets have already found success on other chains, such as Polygon’s Polymarket, but Drift’s first-mover advantage on Solana puts it in a prime position to capture attention and liquidity from the chain’s active user base. With its ability to leverage Solana's fast, low-cost transactions, Drift’s BET product could become a major driver of user engagement, particularly in the lead-up to the U.S. general elections in November.

Drift’s introduction of account margin for prediction markets enhances the platform’s usability but also adds inherent risk. Nevertheless, the bullish outlook for Drift is driven by its ability to tap into Solana’s degen class, positioning the protocol as a major contender for attracting capital and user attention during this election season.

⚫️ Jito

Website | Twitter | Performance Since Rating: -12%

Leading Solana liquid protocol Jito had been rumored to be developing restaking synergistic with its existing staking infrastructure, and on July 25, the protocol announced the launch of Jito Restaking, a vault-managed restaking concept that will enable users to earn yield in exchange for providing crypto economic security to applications using any Solana-based token.

 The code for Jito Restaking is now open-sourced for public review, and the contracts are now entering the formal audit and verification process, with an unclear timeline for their mainnet deployment. While longer-tail Solana-native assets are lower quality collateral assets than Ether, the blockchain’s faster network speeds could create a unique value proposition for high-performance restaked applications.

As the leading Solana staking infrastructure provider with control over one-third of all liquid-staked SOL, Jito’s simplistic business model is particularly well positioned to benefit from an increasing SOL price, as its revenues are denominated in the token.

As Jito also offers MEV relay infrastructure and plans on offering restaking, it is frequently described as the “Lido x Flashbots x EigenLayer” of Solana. Considering that Solana-native staking yields are higher than those offered by Ethereum and Jito has functionality beyond a normal liquid staking protocol, many industry observers believe Jito should trade at an elevated valuation in comparison to adjacent competitors.

Future Outlook

Over the past four months, we’ve observed a positive trajectory across a range of Solana-based altcoins, many of which show potential for continued growth. 

Kamino has established itself as a leader in yield generation and a central DeFi hub, a role which is likely to only expand with its upcoming Lend V2. Sanctum, with its unique whitelisted validator structure, is positioned to fuel the expansion of LSTs on Solana, unlocking a massive capital opportunity for its staking economy. Drift has been a first mover in introducing prediction markets to Solana, providing it the potential to drive significant user engagement as it taps into upcoming election season hype. Meanwhile, Jito, despite underperforming thus far, continues to evolve as a crucial player in the ecosystem, adding restaking to its arsenal, which, coupled with the dominance of JitoSOL, positions it to be the heart of restaking as the chain evolves.

Together, these protocols act as integral growth catalysts for Solana’s ecosystem and stand to outperform other tokens in the ecosystem.