Last month, INF's APY spike broke our own chart.
This is because INF is not like a normal LST.
INF has a Magic Ingredient. That is, it acts like a Lemonade Stand for LSTs.
Let me explain
INF’s primary purpose is to enable swaps for LSTs on Solana.
And, in doing so, INF has also become the best place to grow SOL.
This is because when INF provides liquidity for LST swaps, it earns extra fees.
These fees are on top of the APY it earns from the LSTs it holds.
But don't take my word for it, the proof is in the pudding.
You can see INF (blue bar) considerably outperform the median LST (green line) and JitoSOL (green bar) this year.
This is due to what I'm calling INF's Magic LST lemonade stand.
So what do I mean by ‘Lemonade Stand’?
Imagine a Lemonade Stand. But not just any lemonade stand - a lemonade stand full of LSTs. Since we're using our imaginations, we might even call this LST lemonade stand 'INF'.
Every few days, the lemonade stand's LSTs grow in value as they earn rewards (APY) from the Solana network.
But, at any moment, anyone can walk up to the stand and swap an LST from their pocket for one on the counter.
As a matter of fact, they can do any of the following combinations:
- swap an LST they own for one on the stand;
- swap SOL they own for an LST on the stand; or
- swap an LST they own for SOL from the stand.
When a swapper decides to do one of these, they put in the thing they own and get back ever so slightly less (SOL value) in return. The difference is the fee they pay to the stand.
Alright, so how does the swap and fee part actually work?
Introducing... the Magic Swap Box: where one Asset goes in and another Asset comes out. This box sits on the lemonade stand.
Now, someone comes along to the ~~Lemonade~~ LST stand, they open Jupiter on their phone, and request to swap some of their JupSOL for SOL.
Mr. INF, operating the LST stand, turns on the Magic Swap box and checks the two assets that the swapper wishes to swap. In this case, they want to:
- Asset In = JupSOL; and
- Asset out = SOL
The total fee Mr. INF will charge them is the [Input fee] for JupSOL plus the [Output fee] for SOL. Because JupSOL is going 'in' and SOL is coming 'out'.
Mr. INF looks at his clipboard. Here, he keeps a long list of every LST he's willing to accept at his stand.
Note: the input output fees above are for illustration purposes only and are regularly adjusted by Mr. INF and his team (Sanctum) based on a number of factors.
So, he tallies up the [Input fee] for JupSOL (6bps) with the [Output fee] for SOL (3bps) in the magic swap box, giving him the total fee to offer the swapper of 9 basis points.
That's 0.09%.
Pretty good deal, the swapper thinks!
So the swapper and Mr. INF shake hands, the swapper happy with his instantly unstaked SOL and Mr. INF pleased that the value of his LST stand just increased by 0.09% (of the swap value).
And what's more, Mr. INF just got more of his favourite LST, JupSOL.
Happiest of all, however, are the shareholders of Mr. INF's LST Lemonade Stand. They call themselves 'INF holders'.
The value of their shares of the Lemonade Stand just increased - and they see a long line of people forming to swap at the stand!