A16z Crypto, the digital asset investment division of the venture firm Andreessen Horowitz, has committed $50 million to Jito, a liquid staking protocol integral to the Solana ecosystem. This investment is significant as US regulators start to provide clearer guidance on how such products align with securities law.

According to Fortune, the terms of this deal include an undisclosed amount of Jito’s native tokens, which a16z will acquire at a discounted price.

Brian Smith, the executive director of the Jito Foundation, remarked that the foundation has an “exceptionally long time horizon,” and emphasized that this funding will enable efforts to establish Solana as a pivotal player in internet capital markets for the coming decade.

Launched in 2022, Jito allows users to stake SOL tokens and earn rewards while still maintaining liquidity through its derivative, JitoSOL. The governance and token distribution of the protocol is managed by the Jito Foundation, while its core development is spearheaded by Jito Labs.

Notably, Andreessen Horowitz is recognized for its backing of transformative technology and cryptographic startups. Its a16z Crypto division focuses on investments in Web3 infrastructure, decentralized finance (DeFi), and blockchain technologies.

This latest investment follows a $55 million acquisition of tokens from LayerZero, a Canada-based cross-chain messaging service, and a $25 million capital round in Miden, a zero-knowledge proof blockchain.

Regulatory Landscape for Liquid Staking

The concept of liquid staking, essential for proof-of-stake blockchains like Solana, remains a hot topic amid ongoing debates within the US regulatory framework. Rebecca Rettig, leading legal counsel at Jito Labs, met with the Trump administration to advocate for clearer regulations surrounding liquid staking, asserting that such clarity could facilitate JitoSOL’s inclusion in exchange-traded funds (ETFs) and products, which is vital for the ecosystem’s growth.

On July 31, Jito Labs partnered with asset managers VanEck and Bitwise to lobby the SEC to permit liquid staking in several proposed Solana-based ETPs. They presented their argument citing that liquid staking tokens enhance capital efficiency and resilience in ETP structures.

Regulatory tensions continue as the SEC’s guidelines indicate that certain forms of liquid staking may not be classified as securities offerings, although specifics depend on individual circumstances. While these developments were initially perceived positively, not all SEC officials concurred, with Commissioner Caroline Crenshaw expressing her concerns that the guidance could complicate matters further, urging companies in liquid staking to proceed cautiously.

Despite prevailing uncertainties, liquid staking remains fundamental to the decentralized finance ecosystem. Reports from DefiLlama indicate Jito’s protocol currently manages nearly $2.8 billion in total value locked (TVL), surpassing that of Marinade, another player in the Solana space, which holds around $1.9 billion, and significantly trailing Ethereum’s leading liquid staking service Lido, valued at approximately $33.9 billion.

Recently, MoonPay launched a program offering liquid staking for Solana, promoting annual yields of up to 8.49% on SOL holdings.