Bybit Staked SOL (bbSOL): The World’s First Exchange-Backed LST

In an exciting development for crypto enthusiasts, Bybit has launched bbSOL, the world's first exchange-backed liquid staking token (LST) for Solana. This innovative product allows users to earn staking rewards while retaining liquidity, opening new avenues within both centralized finance (CeFi) and decentralized finance (DeFi). 

From providing liquidity and restaking to understanding how restaking works, this comprehensive guide will equip you with all the essential information to make the most of Bybit's latest offering.

Key Takeaways:

• bbSOL allows users to earn staking rewards on Solana while retaining liquidity, making it a versatile tool within the realms of CeFi and DeFi.

• Bybit's liquid staking protocol automatically reflects rewards in bbSOL's value, enabling seamless participation in DeFi activities without manual intervention.

• Despite potential risks, such as slashing and value fluctuations, bbSOL's security, fee structure and multiple use cases make it a strong option for maximizing crypto assets.

What is bbSOL?

bbSOL is a liquid staking token you receive when staking SOL on Bybit. It represents your staked SOL in Bybit’s stake pool, and serves as a receipt to later redeem your SOL along with any earned rewards.

How does bbSOL work?

When you stake SOL, you receive bbSOL tokens in return, representing your staked assets. These tokens allow you to earn staking rewards and participate in CeFi and DeFi activities without giving up access to your original tokens.

The process works by depositing SOL into Bybit’s liquid staking protocol, which manages staking for you. As rewards accumulate, the value of bbSOL steadily increases relative to SOL, reflecting the staking rewards earned after each Solana epoch (every 2–3 days). For example, if you hold bbSOL for one year, its value against SOL could rise significantly.

Your rewards are automatically reflected in the growing value of bbSOL, with no manual claiming necessary. When you decide to unstake, you can easily exchange bbSOL for SOL, along with any accrued rewards, with Bybit offering instant unstake options.

However, using bbSOL comes with risks, such as slashing penalties if the validator misbehaves, as well as potential volatility in bbSOL’s value as compared to the underlying SOL. However, despite these risks, bbSOL provides a convenient way to earn staking rewards while participating in the DeFi ecosystem.

What can I do with bbSOL?

As the liquid staking token for Solana, bbSOL offers several functionalities for users looking to maximize their crypto assets both on-chain and off-chain.

Within Bybit Exchange

Spot Margin trading

Trade bbSOL with up to 10x leverage by using your Unified Trading Account. Margin trading allows you to amplify your exposure and potential returns while retaining access to your bbSOL holdings.

Crypto Loans

Use bbSOL as collateral to borrow a wide range of crypto assets. Bybit Crypto Loans enables you to unlock liquidity or pursue trading opportunities without selling your bbSOL, allowing you to hold onto your staking rewards.

Flexible Savings

Subscribe to Bybit Flexible Savings to earn hourly interest on your bbSOL holdings. This low-risk, passive income strategy lets you generate yield while keeping your funds readily available for withdrawal or use.

Institutional Loans

Institutional users can leverage bbSOL as collateral to access larger credit lines via Bybit Institutional Loan services. This service unlocks greater capital efficiency for firms seeking to optimize their treasury or trading strategies.

Within Solana’s ecosystem

Provide liquidity

You can provide liquidity in pools that feature bbSOL in order to earn trading fees and incentives. This strategy can also help you hedge against impermanent loss, which can occur when the value of your deposited assets decreases from the time you initially deposited them. The loss only becomes permanent if you withdraw at the lower value.

Trade on DEXs and CEXs

You can trade bbSOL on decentralized exchanges (DEXs) and on Bybit — giving you the flexibility to make the most of its benefits within both the Solana and Bybit ecosystems.

Restake

Restaking allows you to stake your bbSOL tokens again to earn extra rewards, further supporting the Solana network's security and efficiency. Solayer, a leading protocol in this area, offers a shared validator network that helps secure other Solana-integrated systems. By restaking with Solayer, you can increase your returns while contributing to the overall strength of the network.

Borrow and Lend

Bybit’s crypto loan service enables you to use bbSOL as collateral, giving you the flexibility to borrow over 160 crypto assets. This means you can unlock extra liquidity or investment opportunities without unstaking your bbSOL, so you can continue earning rewards while maximizing your assets.

Fees on bbSOL

bbSOL comes with a straightforward fee structure, with the withdrawal fee based on Solana:

• 0% deposit fee

• 0.1% withdrawal fee

• SOL Withdrawal Fee: A 0.1% fee is applied during withdrawal. For instance, withdrawing 100 bbSOL incurs a 0.1 bbSOL fee, with the remaining 99.9 bbSOL converted to SOL and sent to the user.

• 5% epoch fee(deducted from staking rewards after validator commission)

• It’s currently set at 2.5% (charged on rewards) and is set to increase to 5% after one month.

• Computation: (Pool actual rewards = Total rewards * (1 − commission rate) * (1 − epoch fee rate))

• For example, with an 8% validator commission and a 2% epoch fee, if a stake earns 100 SOL pre-commission, it will yield 90.16 SOL after commission and fee.

Frequently asked questions regarding fees

1. Why are these fees charged?

Fees are charged to maintain the sustainability and fairness of the bbSOL staking system.

• SOL Withdrawal Fee: Deters arbitrage strategies that could diminish returns for long-term bbSOL holders.

• bbSOL rewards accumulate based on Solana epochs. Some users may attempt to stake just before an epoch update, collect the rewards and immediately unstake, thereby capturing rewards unfairly and diminishing returns for long-term holders.

• Epoch Fee: Covers the project’s daily operational costs.

2. How are fees collected? Do users pay extra?

• Withdrawal Fees are integrated into the bbSOL-to-SOL exchange rate; users don’t incur additional charges. For example, with a 0.1% fee, 1 bbSOL would convert to 0.999 SOL (at a 1:1 exchange rate).

• Epoch Fees are charged on staking rewards. Users don’t pay extra for epoch fees.

3. How long should I hold bbSOL to generate positive returns?

Considering the 0.1% withdrawal fee, it typically takes two to three epochs (approximately four to six days) to break even and start earning positive returns.

4. What happens if I invest in bbSOL and redeem it immediately?

Immediate redemption may result in a minor loss due to the fee structure.

5. What are the staking and redemption mechanisms for bbSOL?

• Staking: Following Solana's LST model, a user deposits SOL to receive bbSOL; no deposit fee is charged.

• Redemption

• Instant Redemption: Allows immediate withdrawals up to 400K SOL, with potential slippage up to 8%, depending upon the amount size, initiated by the Sanctum AMM router.

• Delayed Redemption: Takes approximately four days (T+4) and requires manual claim, but ensures full principal and rewards without slippage.

How to obtain bbSOL on Bybit Exchange

Before you get started, please ensure that you’ve already created a Bybit account. If you don’t have one, you may follow our sign-up guide here.

Spot Trading 

Step 1: Log in to your Bybit account and hover your cursor over the Trade tab on the navigation bar at the top of the page. Then, click on Spot.

Step 2: Click on the three horizontal lines located at the top-right corner of the page to search for bbSOL trading pairs. There are a total of three pairs: bbSOL/USDT, bbSOL/USDC and bbSOL/SOL.

Step 3: Input the amount of bbSOL you would like to purchase in the trading pane on the right side of the page. Once you’ve confirmed the details, click on Buy BBSOL.

On-Chain Earn

Step 1: After you’re logged into your Bybit account, hover your cursor over the Finance tab on the navigation bar at the top of the page. Then, hover your cursor over Earn and click on On-Chain Earn.

Step 2: Click on the Stake Now button under Stake SOL for BBSOL.

Step 3: A pop-up window will appear for you to input the amount of SOL you would like to stake to receive bbSOL. Once you’ve checked the accuracy of all the details, click on Stake Now.

Convert

Step 1: After you’ve logged in to your Bybit account, hover your cursor over the Buy Crypto tab and click on Convert.

Step 2: Click on the USDT drop-down and select BBSOL.

Step 3: Select your preferred asset to convert to BBSOL by clicking on the drop-down for BTC. Then, input the amount, verify the details and click on Get a Quote.

How to redeem your rewards through On-Chain Earn

Step 1: To redeem your rewards, head to the On-Chain Earn page and click on the corresponding Redeem Now button of the SOL product.

Step 2: Click on Redeem BBSOL for SOL.

Step 3: Input the amount of BBSOL you would like to redeem, verify your details and click on Redeem Now.

How to obtain bbSOL on Bybit Web3

Step 1: Navigate to the Bybit homepage and click on the WEB3 tab at the top left corner of the page. 

Step 2: Click on Connect Wallet.

Step 3: Click on Log In and proceed to create your Bybit Wallet.

Step 4: Once your Bybit Wallet has been created, hover your cursor over the Trade tab and click on DEX Pro.

Step 5: Enter the amount of SOL you would like to purchase in the order pane on the right side of the page, and click on Buy SOL.

Step 6: Once you’ve purchased SOL, hover your cursor over the Earn tab and click on Bybit Staked SOL (bbSOL).

Step 7: On the right side of the page, indicate the amount of SOL you would like to stake and click Stake Now. 

You’ll then be able to view your bbSOL holdings, total SOL yield and total SOL investment under the Performance tab.

How to redeem your rewards

Step 1: To redeem your rewards, click on the Performance tab and click Redeem.

Step 2: Choose your preferred redemption method and click Confirm to proceed. 

You can choose Postponed Redemption, where it may take up to four days for you principal and yield to be fully redeemed. Once the process is complete, you’ll need to manually claim them to your wallet. Alternatively, you can choose Redeem Now, to receive instant redemption. However, please note that you may lose some of your yield when choosing to do so. 

How to maximize your bbSOL returns

To get the most out of your bbSOL returns on Bybit, consider using various platforms and strategies for restaking. Here’s how you can make the most of each option.

Within Bybit Exchange

bbSOL HODLverse

bbSOL HODLverse is a recurring rewards event whereby simply holding bbSOL can earn you bonus tokens — no extra steps required. During each round, Bybit takes daily snapshots of your bbSOL balance in your Bybit Exchange account or Bybit Web3 Wallet, and rewards you based on how much you hold. Most recently, users shared a 2,000,000 LAYER prize pool just by HODLing bbSOL. 

While the latest event has ended, these campaigns take place regularly, so keep an eye on announcements to catch the next opportunity to grow your portfolio passively.

bbSOL Launchpool

bbSOL may occasionally be featured in Bybit Launchpool events, so users can stake their tokens to earn rewards in the form of newly launched cryptocurrencies. These events provide a chance to gain early access to promising projects while continuing to hold bbSOL. Keep an eye out for upcoming Launchpool campaigns, as they offer a simple way to boost your potential returns without needing to unstake or trade your existing assets.

Within Solana Ecosystem

Sanctum

Sanctum (CLOUD) is the platform on which bbSOL is deployed and managed by approved validators. It not only hosts bbSOL, but also offers the opportunity to restake your bbSOL for additional rewards. By participating in liquidity pools or using staking options on Sanctum, you can enhance your returns through various yield farming strategies.

Kamino

Kamino (KMNO) is a Solana DeFi protocol that offers automated tools for liquidity provision and yield optimization. Connecting your bbSOL holdings to Kamino allows you to automatically manage your liquidity positions and maximize returns through smart asset allocation across multiple DeFi protocols.

Solayer

Solayer is a restaking network on Solana that helps stakers maximize their returns by using their staked assets as collateral across multiple PoS systems. It supports both native and liquid staking pools, offering a three-layer yield stack from native staking rewards, Solayer incentives and additional network yields. By restaking bbSOL within Solayer’s ecosystem, you can earn these rewards while also benefiting from potential price appreciation of your assets.

Orca

Orca is a DEX on Solana that lets you contribute bbSOL to liquidity pools. Depositing your bbSOL in Orca’s liquidity pools is a great way to earn trading fees and additional rewards, further increasing your overall returns.

Is bbSOL safe?

While risks are inherent in any crypto environment, Bybit has implemented stringent audits and security measures to safeguard your assets. bbSOL benefits from Bybit’s strong infrastructure and security protocols, with a combination of on-chain and off-chain mechanisms ensuring the safety and growth of your SOL stake.

Although bbSOL offers numerous opportunities to earn rewards, it's important to be aware of the associated risks. The value of bbSOL can fluctuate relative to that of SOL, and there are potential slashing penalties if validators misbehave. 

However, the rewards, flexibility and ease of participating in both CeFi and DeFi activities make bbSOL an attractive option for those looking to maximize their crypto earnings while supporting the security and efficiency of the Solana network.

Closing thoughts

bbSOL, Bybit’s LST, gives you the chance to earn staking rewards while maintaining liquidity and flexibility in the crypto space. With its robust security measures, straightforward fee structure and diverse use cases, bbSOL offers a compelling way to grow your crypto assets while contributing to the Solana network's overall strength and security.

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