CF Benchmarks is excited to announce that the latest regulated benchmarks to be added to our CF Staking Series are the first institutional-grade indices of Solana staking rewards.
Chiefly, these comprise the two key benchmarks below:
Additionally, CF Benchmarks is incepting several index variants known as the CF SOL Staking Blend Baskets. These represent the portfolio performance of specific ‘blends’ of staked SOL assets, and non-staked SOL assets. Assets in each variant are of fixed weight, and each blend is rebalanced quarterly.
The Solana blockchain has evolved rapidly since its proposal in a whitepaper by developer Anatoly Yakovenko in 2017, followed by its launch in 2020.
Solana's raison d'être largely grew from the search by the crypto community for a Proof of Stake (PoS) network that would avoid the challenges faced by Ethereum; chiefly limits on throughput, and volatile transaction costs.
Solana quickly attracted decentralized finance (DeFi) applications aiming to provide scalable and efficient financial services.
By late September 2024, the network was ranked by data aggregator DefiLlama as 2nd in terms of Total Value Locked (TVL), with a TVL value of $11.60bn.
The network's native token SOL is the third-largest asset by free float market capitalization within CF Benchmarks' CF Ultra Cap 5 index.
Even before the recent re-election of Donald Trump as U.S. President, several investment management firms filed applications to list exchange traded products on U.S. exchanges, that would invest in spot Solana.
That’s despite the fact that, just like the Ether ETFs already listed there, funds in that jurisdiction investing in PoS assets are not currently permitted to stake their holdings, nor provide exposure to staking rewards.
Nevertheless, with Trump re-elected, amid expectations of a more crypto-friendly regulatory regime, hopes are rising that listed funds investing in PoS tokens have a higher chance of regulatory approval for staking.
However, institutional participants seeking to reap the considerable benefits of staking SOL, face risks related to the unavoidable dependence on third-party data, with ample scope for concerns about data reliability, accuracy, representativeness and integrity.
CF SOL Staking Reward Rate indices strongly mitigate such risks.
As regulated benchmarks under the UK Benchmarks Regulation (BMR), CF SOL Staking Reward Rate indices are designed to promote replicability, representativeness and manipulation resistance, for financial product providers engaging in non-custodial staking on the Solana blockchain, with institutional-grade Constituent Staking Service Providers (SSPs).
In order to maintain the inherent standards of market integrity, data reliability and accuracy of a regulated benchmark, the CF SOL Staking Reward Rate only observes a carefully selected subset of eligible professional validators, excluding validators that have not consistently maintained the requisite standards.
CF SOL Staking Reward Rate Methodology summarized
Read the full CF Staking Series Methodology Guide here.
The flexibility offered by our suite of SOL Staking Reward Rate indices, together with their transparency, accuracy and high standards of market integrity, opens a wide range of institutional deployment options, or use cases.
We outline the key ones below.
In summary, our new CF SOL Staking Reward Rate Index and its supplementary sub-series benchmarks, the CF SOL Staked Return Index, and CF SOL Staking Blend Baskets, introduce a higher standard of trustworthiness, flexibility and price integrity for the most important aspect of SOL staking for institutional participants, the reward rate itself.
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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell any of the underlying instruments cited including but not limited to cryptoassets, financial instruments or any instruments that reference any index provided by CF Benchmarks Ltd. This communication is not intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. Please contact your financial adviser or professional before making an investment decision.
Note: Some of the underlying instruments cited within this material may be restricted to certain customer categories in certain jurisdictions.