FragmetricSolana's liquid staking ecosystem has rapidly expanded due to high staking rewards and the emergence of various liquid staking protocols. This growth has led to a more decentralized and diverse ecosystem compared to Ethereum. However, the proliferation of different Liquid Staking Tokens (LSTs) can complicate user experience and reduce economic efficiency.
Fragmetric started as a solution to address problems with LSTs and LRTs (Liquid Restaking Tokens) and is expanding into a standard that allows various assets to be automatically operated and liquidated. To achieve this, they developed the FRAG-22 standard using Solana's Token-2022 protocol, presenting a solution that integrates and manages assets with various reward mechanisms into a single token and simplifies complex reward mechanisms through a single interface. By leveraging Solana's high throughput and low costs to perform all reward calculations on-chain, they overcame the limitations that Ethereum-based restaking projects had to rely on off-chain systems, implementing a transparent and verifiable reward system.
Fragmetric's structure creates a flywheel where higher yields attract more asset inflows, which in turn leads to enhanced network security, positioning itself as fundamental infrastructure that simultaneously strengthens capital efficiency and security in the Solana ecosystem.
Source: Amazon
Proof of Stake (PoS) has established itself as the consensus mechanism for major blockchains like Ethereum and Solana due to its intuitive economic disincentives for malicious behavior and lower energy consumption compared to Proof of Work (PoW). However, PoS systems have the critical drawback of sacrificing asset’s liquidity for security.
Ethereum, in particular, required existing holders to lock up their ETH on the network during the transition from PoW to PoS. The inability to move, sell, or trade ETH for any purpose during the expected 2+ year period until the PoS upgrade completion created significant inconvenience.
Since staking in PoS systems significantly sacrifices asset liquidity for economic security, profits must be sufficient to compensate for opportunity costs in DeFi activities like on-chain lending. This issue was early identified by Tarun from Gauntlet and Haseeb from Dragonfly. Ethereum's staking incentives were relatively low at around 2%, and the excessively long lockup period for initial deployment made liquidity solutions essential.
Source: Lido
Driven by this demand, Lido launched liquid staking in October 2020, proposing to liquidate staked asset claims in the form of stETH tokens, marking the beginning of the staked asset liquidity era. Lido received ETH from users, staked it with partner validators on their behalf, and returned stETH to users as claims on the staked assets.
stETH holds the right to exchange one-to-one with staked ETH after Ethereum's PoS transition and carries claims to staking rewards. Therefore, stETH was treated at nearly identical prices to native ETH in the market, allowing users to contribute to Ethereum's PoS transition without compromising ETH liquidity. Ethereum's liquid staking ecosystem has continued to grow with projects like Rocket Pool following Lido, and currently, approximately 29.7% of staked ETH is liquidated in the form of Liquid Staking Tokens (LSTs).
Liquid staking offers another advantage beyond asset liquidity: security liquidity. While it's obvious that LSTs liquidate staked assets, why do they inherit security?
In PoS chains, stake itself represents the chain's security. If someone maliciously purchases ETH and controls two-thirds of the total amount staked on Ethereum, they could completely control Ethereum. Since LSTs hold one-to-one claims on staked ETH, they can be considered to have nearly the same level of security importance as ETH.
Using this characteristic of LSTs, the act of having them re-staked as collateral by validators of other protocols is called restaking, where protocols using LSTs as collateral inherit a substantial portion of the Layer 1 chain's security. Restaked assets are exposed to various types of slashing risks but have the advantage of receiving rewards from multiple protocols.
EigenLayer first proposed restaking, drawing attention by building a validation layer using staked LSTs as economic collateral. EigenLayer aims to provide operators (validators) based on Ethereum's economic security to services requiring validators that operate in off-chain environments or as single entities, such as bridges, oracles, and data availability layers. Services validated through operators are called AVS (Actively Validated Services), a term now commonly used across various restaking projects.
Source: Dune(@blocklytics)
Currently, Ethereum's restaking ecosystem includes not only EigenLayer but also various restaking platforms like Symbiotic and Karak. As of May 2025, their total TVL reaches ~$13B, demonstrating that the restaking sector has not only grown rapidly but has also established itself as essential infrastructure.
Liquid staking and restaking are not limited to the Ethereum ecosystem. Solana, also being a PoS-based chain, couldn't avoid the drawback of sacrificing staked asset liquidity, leading to the emergence of liquid staking projects to address this issue.
The biggest characteristic of Solana's ecosystem is that validator rewards, namely SOL staking rewards, play a core role in the ecosystem's economy. Solana's inflation model starts at 8% annually and decreases by 15% each year, currently maintaining an inflation rate of about 4.6%, more than double that of Ethereum. This means high-yield native token farming is possible through user stake delegation alone, leading to discussions across the Solana community to address inflation and DeFi utility reduction issues (SIMD-228). Due to these high yields, approximately 66% of SOL's total supply is currently in staking state.
Source: Coinbase
Solana's high staking rewards present potential issues of market selling pressure due to SOL inflation, but this can conversely lead to high utility for liquid staking and restaking. From a user perspective, restaking is an attractive product that allows receiving both staking rewards from LSTs themselves and separate rewards from restaking-based services.
From a security perspective, Solana is also in an advantageous position. Unlike Ethereum, Solana can perform complex calculations like epoch-based on-chain stake calculations in an on-chain environment based on high throughput and low costs. This enables solving slashing-related calculations on-chain that projects like EigenLayer had to rely on off-chain systems for, creating a structurally decisive differentiator. The security inherited by Solana's restaking also doesn't show overwhelming differences compared to Ethereum-based restaking, as the scale of native tokens staked on chains is currently about $8.3 billion for Ethereum and about $5.8 billion for Solana, not showing overwhelming differences.
Fragmetric aims to contribute to Solana network's economic security through collaboration with Jito, the core restaking protocol of the Solana ecosystem. This section covers Jito's structure and its significance in the Solana ecosystem.
Jito is an infrastructure project that first enabled capturing and distributing MEV on the Solana blockchain, currently securing approximately 97% of the entire Solana network's stake and establishing itself as core Solana infrastructure. In Q4 2024 alone, Solana generated $1.4 billion in tips and fees, recording Real Economic Value (REV) that surpassed Ethereum, with Jito playing a central role in this value distribution. Currently, approximately $2.5 billion in annual SOL MEV fees are distributed to validators and stakers through Jito, serving as a core driver of the Solana ecosystem economy.
Jito consists of three main components: Relayer, Block Engine, and Tip Distribution Program, which work closely together to manage the entire process of MEV capture and distribution.
2.1.1 Relayer
The relayer serves as the gateway of the Jito system, acting as a relay service that all transactions pass through before reaching validators. The relayer's most important function is delaying incoming transactions by 200 milliseconds, providing time for searchers to capture MEV opportunities and form bundles. The relayer also filters spam transactions and serves as a TPU (Transaction Processing Unit) proxy that forwards transaction bundles to validators and block engines, reducing network congestion and maintaining overall stability.
2.1.2 Block Engine
Jito's core begins with a block auction mechanism similar to Ethereum's Flashbots. This system allows external searchers to bid on profitable transaction bundles, enabling validators to include the most valuable transaction combinations in blocks.
However, creating combinations without causing transaction delays in Solana's very high throughput on-chain environment is extremely difficult. Therefore, Jito implements a memory pool off-chain that doesn't exist in the existing Solana network, allowing searchers to quickly capture MEV and supporting the auction mechanism's efficiency. Jito also implements a Block Engine that simulates transaction combinations within the virtual memory pool to determine block compositions that maximize MEV.
2.1.3 Tip Distribution System
What's particularly noteworthy in Jito's structure is Jito's Tip Distribution Program. While users pay fees when sending transactions on Solana, Jito-Solana introduced an auction mechanism where users can bid "tips" for additional transaction inclusion guarantees in parallel. Jito receives SOL deposits from users and issues liquid staking tokens called jitoSOL, distributing portions of profits captured through MEV and tips to jitoSOL holders. Jito distributes MEV profits to validators and stakers in a verifiable form through the Tip Payment Program.
In 2024, Jito introduced restaking mechanisms beyond liquid staking, extending Solana's security to other services and providing users with additional reward opportunities. Jito operates by re-staking jitoSOL to Node Consensus Networks (NCNs), similar to EigenLayer's AVS, supporting security for various on-chain services. Users also receive VRT (Vault Receipt Tokens) as Liquid Restaking Tokens (LRT), maintaining liquidity for restaked tokens.
Jito restaking consists of two core components: Vault Program and Restaking Program.
Vault Program: The vault program is an on-chain program that manages VRT creation and operation. Jito vaults support deposits of all SPL assets including SOL, jitoSOL, and project tokens, handling VRT issuance/burning, asset delegation, and slashing condition enforcement.
Restaking Program: The restaking program is the module that connects all elements, managing NCN and node operator registration. The restaking program allows NCNs to self-define parameters such as vaults to receive liquidity, reward structures, and slashing conditions.
2.2.1 Core of Jito Restaking: Tip Router
Jito's first NCN and the representative NCN of Solana's restaking ecosystem is the Tip Router, which aims to decentralize the MEV tip distribution process that was previously computed off-chain and dependent on Jito, enhancing transparency and security.
The Tip Router's operation begins with users restaking jitoSOL to the Tip Router to participate in NCN's validation process. At the end of each Solana epoch, node operators use distributed open-source software to reach consensus on the Merkle Root for proper Jito tip distribution. When two-thirds of the total staked voting rights agree, the Merkle Root is confirmed, and the NCN program automatically posts it to the on-chain Tip Distribution Program.
The Tip Router collects tips generated from Solana transactions and distributes them to restakers and validators. Of the annual $2.5 billion in Jito MEV fees, 3% is distributed through the Tip Router NCN, with 2.7% going to the Jito DAO treasury and 0.3% equally distributed to jitoSOL stakers, JTO restakers, and node operators. The remaining 97% is paid to validators and stakers as before. This entire process is automated through on-chain smart contracts.
More importantly, Jito designed the Tip Router's operation to be adjustable through community proposals. Through governance proposals like JIP-8, JIP-10, and JIP-12, the Jito DAO adopted the Tip Router implementation and determined parameters for MEV tip distribution. Recently published JIP-16 in March discussed changes to the Tip Router's priority fee distribution method and proposals to transfer the tip distribution program to DAO ownership. This approach demonstrates Jito's commitment to completely decentralizing Solana's MEV distribution method through the Tip Router.
2.2.2 Integration with Other NCN Services
Beyond the Tip Router, Jito's restaking integrates with various NCN services to enhance Solana ecosystem scalability. Squads is a Solana Virtual Machine-based smart account project that uses Jito's restaking-based NCN to verify transaction policy violations, enhancing smart account security and reliability. Sonic is a Solana network extension chain that uses Jito's restaking for state verification, drawing significant attention for its approach that inherits Solana's security while operating independent networks.
Source: Fragmetric
In August 2024, Fragmetric and Jito announced a strategic partnership and launched fragSOL, Solana's first native LRT. fragSOL was born from combining Jito's VRT system with Fragmetric's unique approach, noted as an innovative attempt that presents new standards for the entire restaking ecosystem on the Solana network, going beyond simple collaboration. Building on fragSOL's success, Fragmetric launched fragJTO, a liquid restaking token based on Jito's governance token JTO, in January 2025, further strengthening its position in the Solana ecosystem. Fragmetric enabled users to stake JTO while contributing to Tip Router security, demonstrating expansion possibilities for various Solana ecosystem tokens beyond SOL.
The reason Jito chose Fragmetric as a partner was clear. Existing Ethereum-based liquid restaking protocols struggled with effective distribution of AVS rewards, and practical solutions for determining appropriate slashing ratios when multiple LSTs participate in AVS validation were absent. Fragmetric was the only protocol that could solve these problems using Solana's unique features. The next section covers the problems faced by restaking and liquid staking ecosystems before Fragmetric's emergence and the methods Fragmetric designed to solve them.
Fragmetric emerged like a comet in the Solana ecosystem to solve problems in existing Ethereum ecosystem restaking and liquid restaking. Fragmetric started as Solana's first native liquid restaking protocol, operating based on Jito restaking. What problems were they initially trying to solve?
Note that the problems they initially sought to solve were covered in detail in the previous article "Fragmetric: The New Standard of Restaking, Only Possible on Solana", and below we'll briefly examine them.
3.1.1 Difficulty in Holder Tracking and Reward Distribution
The first issue is the difficulty in holder tracking and reward distribution. Rewards for liquid staking or restaking require complex calculations based on numerous users' token holdings over a period or users' contributions to restaking services. In Ethereum's case, gas costs for accessing past block states are too burdensome, requiring reliance on off-chain calculations.
Fragmetric can perform all reward calculations on-chain based on Solana's high throughput. Particularly, using Solana's Token-2022 framework's transfer hook feature, which will be explained later, users' fragSOL reward contribution information can be easily calculated on-chain. This allows users to verify reward distribution fairness in real-time and eliminates dependence on external oracles or off-chain systems.
3.1.2 Token Selling Pressure in AVS Ecosystem
Even if reward distribution can be easily calculated on-chain, another problem is that AVS rewards are diverse. Since restaking protocols handle security for numerous types of AVSs, ETH restakers can receive many types of token rewards beyond ETH rewards. This presents several problems:
If users directly claim various types of rewards, gas costs are passed to users.
In LRT protocols, operators often participate in different types of AVS. This results in operators receiving different types of rewards, making it impossible to provide uniform rewards to LRT holders.
The solution to these problems at once is not providing AVS tokens directly to LRT holders, but selling AVS token rewards for ETH and increasing the LRT's ETH exchange rate. This prevents LRT holders from choosing AVS rewards and automatically creates selling pressure on AVS protocol tokens, negatively affecting the entire ecosystem.
As examined above, Fragmetric can accurately calculate and distribute LRT holder rewards on-chain based on Solana network scalability and transfer hook features. This ensures users receive fair and efficient reward distribution while alleviating selling pressure on tokens of protocols using Fragmetric's security.
3.1.3 Fragmentation of the Solana LST Ecosystem
Source: DefiLlama
Solana's liquid staking ecosystem has expanded rapidly based on high staking rewards and network economic efficiency. Since Jito opened the liquid staking floodgates by issuing jitoSOL that distributes MEV profits, various projects have introduced Liquid Staking Tokens (LSTs) with different incentive structures.
Exchanges like Binance and Bybit also launched LSTs providing rewards linked to their respective Web3 products, adding to ecosystem diversity. Additionally, projects like Sanctum that enable individual validators to easily deploy and manage LSTs have emerged, leading to the deployment and operation of at least 1,360 LSTs, significantly expanding the ecosystem.
Unlike Ethereum's staking ecosystem, which has always been criticized for centralization issues led by Lido, Solana's liquid staking ecosystem's rapid growth has resulted in diversity and is evaluated as highly decentralized, but has also created fragmentation problems.
Each Solana LST has unique reward mechanisms, claim cycles, and distribution methods, making user experience complex. While intuitive LSTs like jitoSOL provide rewards based on MEV profits, many LSTs with complex reward systems using point systems or proprietary token multipliers also exist. When users want to obtain various rewards through multiple LSTs, they must navigate multiple platforms and periodically manage rewards, leading to inefficient experiences that consume time and effort.
LST reward mechanism fragmentation leads to reduced economic efficiency in the Solana ecosystem. Users end up selectively holding only a few LSTs due to management complexity, limiting utilization of potentially high-value smaller LSTs. According to Dune Analytics (@ilemi), smaller tokens currently account for about 73.3% of Solana LST DEX and lending market share, clearly demonstrating the need for a framework that can integrate and manage distributed LSTs.
Source: Dune (@ilemi)
This fragmentation doesn't end at the LST level. As various liquid staking protocols plan token launches, they're creating products with more complex reward mechanisms by integrating LSTs with DeFi protocols. Marinade, a major liquid staking protocol, launched a program allowing users to deposit their LST mSOL into Kamino's mSOL-USDC liquidity vault to receive their native token $MNDE as additional rewards. SolBlaze also introduced products providing additional rewards through LST liquidity provision in collaboration with Kamino. With the emergence of various LSTs and DeFi products utilizing them, real-time reward management for users is becoming increasingly difficult.
To solve this, Fragmetric supports restaking of various types of LSTs through the Normalized Token Program, which will be examined in more detail below. Fragmetric enables unified management of various LSTs in the form of a single token program called fragAsset. For example, when users deposit their jitoSOL and mSOL to Fragmetric, they receive fragSOL, and rewards for all deposited assets are managed through the user's fragSOL. fragSOL comprehensively reflects the value of all deposited assets and can simplify reward claiming and management through a single interface.
In summary, Fragmetric enables users to manage various LSTs as one fragAsset without complex portfolio management, allows transparent and efficient on-chain reward tracking, and improves security by eliminating dependence on external oracles. These advantages result from combining Solana's on-chain environment, transfer hook features, and the Normalized Token Program, representing unique strengths that are difficult to implement in Ethereum-based restaking projects.
Source: DefiLlama
Fragmetric is growing rapidly with unique strengths like transparency, efficiency, and convenience. According to DefiLlama, assets deposited in Fragmetric continue to increase, recording approximately $228M in TVL (Total Value Locked) as of May 23, 2025, ranking #1 among Solana-based liquid restaking platforms.
Fragmetric has also secured $12 million in funding with their vision recognized by major investors. They raised $7 million in their seed round co-led by Finality Capital Partners and Hashed, followed by an additional $5 million in a strategic round led by RockawayX based on a $125 million valuation.
Fragmetric doesn't limit fragAsset's potential to simple liquid restaking protocols but seeks to expand its potential to all types of tokens and positions that generate interest. fragJTO launched after fragSOL and fragBTC, a DeFi-based rather than staking-based asset, are good examples showing Fragmetric's next journey. How can Fragmetric expand its influence from liquid restaking to yield-bearing tokens?
So far, Fragmetric has 1) enabled easy management of various types of Solana LSTs as one fragAsset through the Normalized Token Program, and 2) enabled transparent and efficient on-chain distribution of various types of rewards using Solana network scalability and transfer hook features.
Let's reverse this thinking. Fragmetric's unique strengths don't need to apply only to restaking. The core of the Normalized Token Program is enabling representation and management of various tokens as one token, and the core of transfer hook features is enabling easy on-chain calculation of interest that token holders should receive. In other words, these features can apply to all types of yield-bearing tokens that generate interest.
Fragmetric proposes the FRAG-22 token standard to realize the massive potential of yield-bearing tokens.
The FRAG-22 standard is a universal token standard developed by Fragmetric based on Solana's Token-2022 standard's transfer hook features, easily adoptable by anyone for interest-generating tokens and positions. This can extend beyond traditional staking to various fields like liquidity provision and stablecoins.
Token-2022 is an extension of Solana's existing token program, allowing free addition of useful extension features to token programs. Representative features include Transfer Fee (collecting certain amounts of tokens as fees during transfers), Transfer Hook (checking specific conditions or executing additional logic during transfers), and Metadata addition functionality.
Representative Token-2022 implementations include Paxos's stablecoin USDP, which applies Confidential Transfer features that encrypt transfer amounts and sender balances using zero-knowledge proofs, and Permanent Delegate features that allow administrative recovery of regulated subject balances.
However, Token-2022 has been difficult to find meaningful use cases beyond USDP, mainly used for meme coins that impose transfer fees.
I evaluate transfer hooks among Token-2022's various extension features as the most powerful, as they enable token-level implementation of various features that Uniswap V4 currently supports at the liquidity pool level through hook features. FRAG-22 actively utilizes Token-2022's previously underutilized transfer hook features despite their powerful potential, aiming to build native restaking ecosystems only possible on Solana and fully on-chain asset management protocols that integrate various assets.
FRAG-22 provides the following strengths:
Unified Multi-Asset Deposits: FRAG-22 can precisely normalize various token values using Normalized Token Pools and simplify complex multi-asset management. This improves liquidity efficiency from a protocol perspective and enhances UX from a user perspective.
Precision Real-Time Multi-Reward Distribution: FRAG-22 can track fragAsset holders using Solana's Token-2022 transfer hook features and efficiently calculate rewards to be paid to them. This entire process occurs accurately and fairly on-chain in real-time.
Modular Yield Integration Framework: FRAG-22 was designed to be modular from the beginning. This means FRAG-22 can be easily adopted by any yield source that generates interest (e.g., liquidity pools, lending, structured products, stablecoins, etc.).
In other words, Fragmetric's mission through FRAG-22 is clear: to present a new standard for yield-bearing tokens in the Solana ecosystem.
Let's briefly examine the process of how Fragmetric can revolutionize asset management on the Solana ecosystem through FRAG-22. Note that the mentioned modules will be examined in more detail in Part 4.3, so don't worry and first understand the big picture.
Deposit and Minting: When users deposit various types of tokens (e.g., JitoSOL) into the "Fund Reserve Account," the "Normalized Token Pool" evaluates the real-time value of deposited assets and issues fragAssets (e.g., fragSOL) of equal value.
Reward Tracking and Claiming: FRAG-22's Reward Module continuously tracks accruing interest, and token holders' reward contributions are calculated on-chain through transfer hook features. Accordingly, token holders can claim their corresponding interest rewards at any time.
Yield Optimization: Fragmetric automatically deposits tokens stored in the "Fund Reserve Account" into various yield sources through "Yield Source Adaptors" and periodically harvests interest, storing it in the "Fund Reward Pool."
Unstaking and Withdrawal: When users request withdrawals, fragAssets are burned and tokens previously deposited in the "Fund Reserve Account" are returned to users.
Fragmetric's Normalized Token Pool is Fragmetric's core engine, serving to receive various asset deposits from users and exchange them for fragAssets that can manage reward mechanisms at once. This forms the core foundation of FRAG-22.
Let's examine using LRT as an example. When users deposit SOL or LSTs into the normalized token pool, it issues FRAG-22-based fragAssets (e.g., fragSOL) and transfers them to users. Users' deposited assets are transferred to Fragmetric's vault and delegated to NCN/AVS by partner validators, with rewards generated during delegation calculated in real-time through transfer hooks when users transfer fragAssets. fragAsset holders can claim rewards at any time, with reward amounts calculated in verifiable form on-chain by Fragmetric's reward module.
FRAG-22 utilizes various modules based on normalized token pools:
Asset Module: The asset module performs three main functions: user asset deposits and fragAsset issuance, withdrawal request processing, and fragAsset pricing. When users request withdrawals, the asset module burns corresponding fragSOL and reserves corresponding amounts of SOL for user claiming. fragAsset prices are dynamically calculated based on the total value of LSTs managed by the asset module, ensuring tokens accurately reflect each user's share in pooled assets.
Reward Module: The reward module is Fragmetric's core system, designed to accurately distribute various rewards obtained through restaking. The reward module uses fragAsset transfer hooks to detect user wallet balance changes and provides on-chain calculations so users can verify eligible rewards.
Yield Source Module: Beyond simply calculating rewards for user-deposited assets, Fragmetric implemented its own strategy module called the yield source module to ensure users receive optimal rewards. The yield source module analyzes market conditions, DeFi pool yields, lending protocols, structured products, and various DeFi opportunities in real-time, periodically rebalancing user assets based on results to pursue maximum yields.
Operator Module: The operator module is the management layer responsible for core operations of the Fragmetric system. It strategically allocates user-deposited assets to various restaking protocols and NCNs, periodically collecting profits generated from each protocol and accumulating them in reward pools. It also maintains appropriate liquidity levels for user withdrawal requests and rebalances asset allocation according to market condition changes. Operators have execution authority for core system functions like normalized token issuance/burning and reward settlement, with these authorities strictly defined and limited to ensure security. Fragmetric currently transparently discloses operator authorities in their official documentation.
Wrap Module: The wrap module serves as a bridge providing compatibility with existing DeFi protocols by converting FRAG-22-based fragAssets into general token forms. It creates wrapped tokens like wfragSOL, wfragJTO, and wfragBTC so DeFi protocols that don't support Solana's Token-2022 standard can utilize fragAssets. Wrapped tokens are pegged one-to-one with original fragAssets, and users can freely convert between the two forms through wrapping and unwrapping at any time.
The advantages of Fragmetric's normalized token pool don't end with improving user-side convenience in managing interest rewards. Using the LRT ecosystem as an example, normalized token pools solve the most complex problem in existing LST ecosystems: fair integrated management of LSTs with different values.
For example, jitoSOL reflects MEV profits while mSOL reflects Marinade's staking rewards, each forming independent prices. Previously, reflecting these value differences required real-time oracle queries to apply conversion ratios. This structure presents security threats from oracle manipulation and potential risks from external service dependence. Fragmetric actively utilizes Solana environment's high throughput to calculate complex LST exchange ratios in real-time, computing accurate withdrawal amounts upon user requests and configuring modules to preserve each LST's reward mechanisms, eliminating oracle dependence.
4.3.1 In Detail: Technical Structure of Fragmetric's Reward System
If you understand that assets deposited in normalized token pools are abstracted as fragAssets and users can manage and claim rewards for all their deposited tokens through one fragAsset, you can be considered to understand almost everything about Fragmetric.
However, the technical structure Fragmetric implemented to provide users with abstracted experiences is far from simple, requiring somewhat more complex explanations for complete understanding. This section examines in more detail how Fragmetric integrated different LSTs' reward mechanisms using LRT use cases as examples.
Fragmetric's reward distribution system is largely divided into contribution calculation and settlement.
Contribution Calculation
Contribution is the degree users have contributed to restaking services, calculated based not simply on the number of fragAssets users currently hold, but on the amount of fragAssets users have held over a period. From each restaking project's perspective, economic security contributed to services increases or decreases each time users deposit or withdraw fragAssets. This factor also makes on-chain reward calculation difficult for restaking projects other than Fragmetric.
Contribution accumulates continuously while users hold fragAssets, with accumulated contribution determining each user's reward share. Users holding more fragAssets for longer periods have higher contributions, resulting in larger shares of rewards distributed by the system.
The contribution system operates in the following steps:
First, fragAsset movement occurs. Users deposit assets like SOL or liquid staking tokens to receive issued fragAssets.
Next, the reward system is activated. Users who receive or obtain fragAsset tokens can activate wallet reward systems while holding fragAssets.
The contribution accumulation starting point is set.
When user reward accounts are created, contribution accumulation begins from the activation slot. From this point, wallets start earning contributions in each active reward pool, with real-time contribution adjustments.
Contributions are updated in real-time based on on-chain events like fragAsset holding amount changes or reward claims.
Contribution is determined by two factors: the amount of fragAssets held and the holding period. The more fragSOL tokens users hold, the greater their contribution, and contribution also increases with the length of time users have held fragSOL starting from activation. Certain rewards provide customized accumulation rates allowing deposits to accumulate contributions faster, providing higher rewards and encouraging participation in specific pools.
Reward Pools and Settlement Block Mechanism
Reward pools can be considered the backend where Fragmetric manages various LST reward mechanisms. Fragmetric built a system that accumulates and manages various rewards generated from LSTs and restaking protocols, making efforts to design structures for transparent and accurate distribution to users.
Fragmetric manages rewards for deposited assets at two levels: asset and user, with each managed by separate accounts. Accounts managing asset-level rewards track and manage global rewards for all assets managed by Fragmetric, while accounts managing user-level rewards handle calculations of reward amounts to be distributed to individual users through the previously mentioned contribution calculations.
Before distributing rewards to users, Fragmetric undergoes a settlement procedure to verify calculated reward amounts and record data about paid rewards in verifiable form. Settlement blocks are created whenever rewards collected by reward pools are ready for distribution, with Fragmetric currently set to maintain only the most recent 64 settlement blocks. This process ensures all user contributions are accurately calculated and rewards are fairly distributed while providing transparency for users to verify their rewards weren't arbitrarily modified.
Consequently, reward accumulation for user-deposited assets and reward distribution by user claims undergo the following process:
User-deposited assets move to normalized token pools and are used for active interest/reward extraction by yield source modules. Users receive fragAssets corresponding to deposited assets.
Rewards for deposited assets are periodically calculated by reward modules, with contributions individually assigned based on users' fragAsset holdings. When users move fragAssets, transfer hooks call reward modules to update contributions reflecting current holdings.
When users claim rewards for their fragAssets, reward modules determine rewards directed to users through accumulated reward amounts in reward pools and user contributions.
Once user reward amounts are determined, reward modules create settlement blocks for both user and reward accounts, verifying integrity.
Users receive rewards, and data regarding reward pools and contributions are updated.
Thus, Fragmetric's reward calculation mechanism maximizes transparency and efficiency using Solana's on-chain environment. Based on FRAG-22's transfer hooks, they sought to reflect user contributions in real-time and ensured reward integrity is user-verifiable by recording settlement data on-chain.
Source: Fragmetric
Beyond the LRT ecosystem, Fragmetric is opening new possibilities for BTCFi through fragBTC based on FRAG-22, bringing Bitcoin (BTC) liquidity to the Solana ecosystem. While the Bitcoin market boasts approximately $1 trillion in scale, BTCFi faces adoption challenges due to complex bridging processes, low incentives, and high risks. Fragmetric addresses this by integrating Solana's native BTCFi strategies to provide user-friendly high-yield products.
5.1.1 fragBTC Operating Principle
fragBTC generates base yields through SolvBTC.JUP, a BTC yield strategy built by Solv Protocol. This strategy provides liquidity to Jupiter's liquidity provider pool JLP (Jupiter Liquidity Provider) and establishes Bitcoin short positions on centralized exchanges (CEX) using a delta-neutral approach. This strategy forms stable interest rates based on funding fees from Bitcoin short position establishment and JLP pool fees.
In more detail, users bridge Bitcoin through Zeus Network to receive zBTC. Users then stake zBTC to Fragmetric to receive fragBTC, while Fragmetric uses user-deposited zBTC for yield farming in SolvBTC and pays rewards to users.
5.1.2 fragBTC Operation Risks
fragBTC operations involve multiple layers of risk. The first risk is Bitcoin bridging through Zeus Network. However, Zeus Network is among projects with the highest security assumptions in current BTCFi, using structures close to Wormhole's model. It uses methods where enterprise-level validators participate as guardians to verify bridge validity, providing superior security compared to other multisig or off-chain operator-based bridges.
The second risk is JLP's inherent risk. JLP currently has $1.59B deposited with BTC comprising about 13.7%. JLP operates as a counterparty to leveraged trading like Hyperliquid's HLP, but no JLP attacks have occurred to date, with real-time risk tracking by DeFi risk analysis expert groups like Chaos Labs and Gauntlet.
The third risk is farming risk in Solv Protocol, including Solv Protocol's smart contract risk and hedging risk on CEX. Solv Protocol's smart contracts have undergone security audits by Salus and Quantstamp, and to supplement audit incompleteness, Solv Protocol operates Solv Guard, an asset movement verification system through multisig-based guardians (a type of validator group) and Safe{Wallet}.
Source: Switchboard
Switchboard is the first external NCN developed using Jito's restaking infrastructure, aiming to build a permissionless-based oracle network. Switchboard adopted Fragmetric as its exclusive Vault Receipt Token (VRT) provider, meaning tokens deposited in Switchboard NCN are strategically distributed to restaking services by Fragmetric.
Fragmetric's real-time on-chain reward calculation module played a decisive role in Switchboard's choice of Fragmetric as an exclusive partner. The two most important attributes Switchboard values as an oracle are permissionlessness and decentralization, and Fragmetric's FRAG-22-based reward calculation solution is suitable for distributing rewards for multiple network contributions while eliminating dependence on centralized external solutions through complete on-chain calculation mechanisms.
Additionally, since Switchboard aims to provide oracles for Solana projects, it requires high throughput and low latency, and Fragmetric's design maximizing Solana's on-chain computational capabilities makes it a more suitable solution for Switchboard compared to existing general restaking solutions.
Source: Ping Network
Ping Network is a DePIN project in the Solana ecosystem, utilizing various physical resources from global data centers to personal smartphones to provide scalable and cost-effective decentralized bandwidth services to enterprises.
Ping Network was built as a Solana-based rollup to stably operate this global network and operates a validator set to manage network components. Network validators verify each node providing bandwidth activity, evaluate performance, and submit to Solana's reward program. Since validators handle the entire network's reward mechanism, high integrity levels are required, and Ping Network collaborated with Fragmetric to deploy NCN integrating Jito's restaking model. Validators can deposit assets to NCN to earn additional Jito restaking-based rewards, with assets slashed for malicious or poor performance.
This structure benefits both Ping Network and network participants. Users can contribute to Ping Network security enhancement through Fragmetric restaking while generating multi-layered profits including Ping Network participation points, Solana native staking rewards, Jito MEV rewards, and other NCN restaking rewards. From Ping Network's perspective, they can secure network integrity through economically collateralized validators and achieve high decentralization levels through restaking-based governance.
Ping Network plans to provide various services including VPN routing, residential IP-based data crawling for AI services, and CDN (Content Delivery Network) for content platforms based on decentralized bandwidth infrastructure. This demonstrates that Fragmetric's security scope can extend beyond the Solana ecosystem to decentralized internet-based services overall.
Beyond making LST reward mechanisms convenient, Fragmetric has another powerful advantage: complete liquidity provided by fragAssets. Since Fragmetric enables users to maintain complete asset liquidity while receiving restaking rewards through the FRAG-22 standard, it can integrate with Solana's DeFi ecosystem to provide users opportunities to simultaneously pursue restaking rewards and DeFi profits. Fragmetric currently supports fragAsset holders in generating additional profits through collaboration with various DeFi protocols:
5.4.1 Liquidity Provision on Orca
Fragmetric supports fragAsset exposure to Orca's CLAMM (Concentrated Liquidity Automated Market Maker) through collaboration with Orca. fragAsset holders can provide liquidity to pools like wfragSOL-JitoSOL or wfragJTO-JTO to acquire portions of trading fees generated from asset swaps, ensuring continuous rewards.
5.4.2 Deposits in Kamino's Automated Liquidity Vaults
Kamino's liquidity vaults are automated liquidity solutions enabling users to earn profits from cryptocurrency assets by providing liquidity to CLMM.
Fragmetric enabled fragAsset deposits in CLMM vaults through collaboration with Kamino. Therefore, fragAsset holders can simply deposit assets using Kamino's automated liquidity vaults and earn both trading fees generated from CLMM and rewards from fragAsset holdings.
5.4.3 Leveraged Trading on Exponent and RateX
Exponent and RateX are yield exchange protocols on Solana. Like Pendle in the Ethereum ecosystem, users can exchange separate yield-generating assets (e.g., lending positions, yield-bearing tokens, etc.) for fixed yields or leveraged yields.
Fragmetric enables users to participate in yield trading for fragAssets through these platforms. Users preferring high-risk strategies can maximize exposure to F Points that will be reflected in future Fragmetric token airdrops by taking long positions on YT-fragAssets, while users seeking relatively stable profits can earn staking rewards, swap fees, and additional points through liquidity provision.
Generally, higher profits tend to weaken structural risks or security, and as mentioned in "Fragmetric: The New Standard of Restaking, Only Possible on Solana", Ethereum's restaking ecosystem has also experienced vicious cycles where rewards distributed from AVS are sold for ETH due to reward distribution convenience. However, Fragmetric's structure fundamentally addresses the problem of reward tokens creating selling pressure by accumulating rewards from NCN/AVS in its own reward pools and allowing users to claim them directly, greatly contributing to Solana restaking ecosystem sustainability.
Fragmetric's structure creates a flywheel where user profits and ecosystem security form a virtuous cycle. Through deep integration with core infrastructure like Switchboard and Jito, Fragmetric strengthens overall Solana ecosystem security while providing users with higher yields. This induces more assets to participate in restaking through network effects, ultimately strengthening Solana network's economic security.
Fragmetric's role doesn't end in the staking ecosystem. Fragmetric has great significance in proposing the FRAG-22 standard using Solana's high throughput and low costs, achieving transparent and verifiable on-chain reward distribution that other chains like Ethereum couldn't solve. In other words, Fragmetric aims to become an on-chain asset management solution supporting management of all reward-generating assets on the Solana network.
In conclusion, Fragmetric is expected to become indispensable not only for Solana ecosystem security but also for interest-generating ecosystems, while establishing itself as an innovative asset management platform providing users with higher yields and better user experiences.
