A Beginner's Guide to Jito

The Jito Network is the first Solana-based liquid staking protocol that utilizes maximum extractable value (MEV) to reward its liquid stakers. It also has its own token, known as the JTO token.

Blockchains like Solana allow users to stake tokens to help secure the network and support operations. This network participation allows stakers to earn staking rewards paid out in additional tokens. MEV is key to liquid staking protocols as it helps to grow the staking rewards for stakers.

Jito was created to ease the negative effects of MEV on the Solana network. At its core, the Jito network works to redistribute MEV profits to stakers equitably. Read on to find out more about the Jito Network.

Getting Started

Before we get started, remember that you can deposit and manage JTO using Trust Wallet. Trust Wallet can be downloaded as a mobile app, or you can install the Trust Wallet Extension for your desktop browser.

Get the most updated version of Trust Wallet

Below you’ll see the steps to create a new wallet, but you could just as easily import an existing Web3 wallet to Trust Wallet, if that’s your preference.

To create a new wallet:

• Install, then open Trust Wallet

• Choose “Create a new wallet”.

• Choose your backup option, or you can optionally postpone the backup process by choosing “Skip”.

• Start using Trust Wallet.

How to Transfer JTO to Your Trust Wallet

You can deposit JTO easily and here’s how.

• Select “Receive” from the home screen.

• Search for “JTO” and select it.

From here you have two options. You can either

1. Copy your deposit address and use that on your exchange account or other wallet to send funds to.

2. Use the “Deposit from exchange” option to deposit crypto seamlessly from your exchange account (depends on if the exchange supports this asset).

Understanding the Basics of Jito

Before delving deeper into the Jito Network, let's cover the basics.

The Jito Network is based on the Solana blockchain. Founded in 2017, Solana is an open-source blockchain created to host scalable, decentralized applications (dApps) powered by the network’s native token, SOL.

The Solana blockchain was developed as an alternative to leading smart contract-enabled blockchains like Ethereum but with the ability to process transactions a lot faster (50,000 transactions per second) coupled with comparatively lower transaction fees.

Utilizing both Proof-of-Stake (PoS) and Proof-of-History (PoH) consensus mechanisms, Solana achieves greater cost-effectiveness, efficiency, and environmental friendliness compared to many of its peers. This has made it a popular chain for building decentralized protocols, such as liquid staking protocols like Jito.

Liquid staking is a technique that allows crypto holders to put what would otherwise be their ‘idle’ tokens into use to earn rewards. Staking is the process of locking up crypto tokens as collateral to help secure a network and its operations.

With liquid staking, platforms take user deposits and issue them with a redeemable receipt for their staked tokens in the form of a new token. The new token can also be used or traded in other decentralized finance (DeFi) protocols to generate additional reward and yield opportunities.

Liquid staking has several benefits, which include:

• Composability in DeFi: The redeemable receipts that represent staked tokens can be utilized across an array of protocols, like lending pools or prediction markets, in the DeFi ecosystem.

• Outsource framework requirements: Liquid staking pools allow people to earn and share the staking rewards from a staking pool without the need to maintain a complex staking architecture.

• Reward opportunities: Liquid staking allows users to continue earning rewards from their staked tokens, which they can then withdraw and put into other DeFi protocols to potentially earn more yield.

• Unlocked liquidity: Investors who stake their tokens on a protocol like Jito can’t trade them or use them as collateral, but they can access a representative of it and use them on other DeFi platforms to earn more rewards.

And at the heart of liquid staking is MEV. In crypto, MEV refers to the maximum value that can be derived from block production through the inclusion, exclusion, or alteration of a transaction order in a block by block producers.

MEV essentially helps to increase the staking rewards for stakers on various blockchain networks by reducing transaction costs, increasing efficiency, and supporting decentralization.

Jito Network - A Deep Dive

Jito Network is a new permissionless liquid staking protocol based on the Solana blockchain. It was built to counteract the negative effects of MEV on the Solana network. by equitably redistributing MEV profits to stakers.

On Jito, users can stake their Solana tokens in the Jito staking pool and receive JitoSOL - a depositary receipt for the staked SOL tokens - in return.

JitoSOL is a flagship product for the Jito network and can also be used as collateral or traded.

The Jito staking pool then assigns the staked tokens to MEV-enabled validators, who get to earn rewards from transaction arbitrage, re-ordering, and a mix of other strategies. These rewards can then be reinvested to increase the yield for JitoSOL holders, enabling them to gain from both MEV rewards and staking yields. The Jito Network also has its own native token that trades with the ticker symbol JTO.

The JTO token serves as the governance token of the Jito Network. Similar to other governance tokens, the JTO token makes it possible for the Jito Network community members to partake in decision-making regarding the direction of the liquid staking protocol.

Beyond voting, the JTO token is also used to calibrate and adjust fees for the JitoSOL staking pool, as well as to update transference strategies in StakeNet.

StakeNet is a platform that the JitoSOL staking pool harnesses for its operations, thanks to its permissionless nature. The JTO token is also used to develop and enhance the product portfolio of the Jito Network and handle any fees generated from the DAO treasury and JitoSOL staking pool.

JTO has a limited supply of 1 billion tokens that will all be used to manage the Jito Network. The Jito Foundation is currently conducting an ongoing airdrop of JTO tokens. The airdrop began on December 7, 2023, and is expected to distribute 100 million.

Conclusion

The Jito Network plays an important role in the Solana ecosystem by helping it sustain its decentralized nature, as staking pools contribute to the network’s decentralization while still enhancing efficiency and lowering transaction fees. Jito does this by creating a balance between offering high yields without departing from Solana’s decentralization objectives.

Given that Jito is still in its nascent stages and evolving, it's still a little too early to speak of its full potential and how this will impact the Solana blockchain. However, there’s no denying that Jito is blazing the trail in liquid staking by providing a platform that allows stakers to gain equitably from MEV rewards, depending on their contributions.

Given that Jito combines two burgeoning innovations - liquid staking and MEV - its growth prospects in the coming months seem promising.

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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.