The Staking Paradox That Institutional SOL Holders Could Not Solve
Institutions holding Solana have faced an expensive choice: stake SOL and earn roughly 7% yield, or unstake and use it as collateral for borrowing. Doing both at the same time, within the compliance framework that institutional treasuries require, was not possible.
Solana Company (NASDAQ: HSDT) just eliminated that trade-off. On February 13, the Newtown, Pennsylvania-based digital asset treasury announced a collaboration with Anchorage Digital and Kamino to create a first-of-its-kind tri-party custody model. The structure allows institutions to borrow against natively staked SOL while the assets remain in segregated, qualified custody at Anchorage Digital Bank.
HSDT shares responded immediately, closing up 14.51% on the day with a peak intraday move of 15.4%. Trading volume hit 622,588 shares, roughly 1.38x the stock's normal daily turnover.
How Three Parties Make SOL Do Double Duty
The model splits responsibilities across three specialized participants, each handling what they do best.
Solana Company is the borrower and SOL holder. As the second-largest publicly traded holder of SOL, the company created the demand side of this equation. The firm was built in partnership with Pantera Capital and Summer Capital specifically to accumulate and deploy SOL at institutional scale.
Anchorage Digital serves as both the qualified custodian and the collateral manager. Their Atlas system provides 24/7 automated monitoring of loan-to-value ratios, margin requirements, and rules-based liquidation triggers. Critically, all collateral remains in the borrower's segregated account at Anchorage, meaning the SOL never moves to a third-party balance sheet.
Kamino provides the on-chain lending market. As one of Solana's largest DeFi lending protocols, Kamino enables the actual borrowing and liquidity access. The capital flows on-chain, but the custody and compliance layer stays off-chain, within a federally chartered bank.
"This structure demonstrates how institutional-grade infrastructure can unlock deeper participation on Solana," said Cosmo Jiang, a Pantera Capital board member at Solana Company.
Why 7% Yield on Collateral Changes the Math
The key insight is that SOL is not like Bitcoin when it comes to institutional treasury management. BTC earns nothing sitting in custody. SOL earns approximately 7% annually through native staking, which means every day an institution unstakes to borrow, it is paying an invisible 7% opportunity cost on top of whatever loan interest it incurs.
The tri-party model eliminates that cost. Institutions now earn staking rewards and borrow against the same tokens simultaneously, without moving assets out of qualified custody. For a treasury holding millions in SOL, the compounding difference is substantial.
Nathan McCauley, CEO of Anchorage Digital, framed the demand clearly: "Institutions want access to the most efficient sources of on-chain liquidity, but they aren't willing to compromise on custody, compliance, or operational control."
The Solana network's throughput supports the model's operational demands. With 3,500+ transactions per second, approximately 3.7 million daily active wallets, and 23 billion year-to-date transactions, the infrastructure can handle the volume that institutional borrowing generates without bottlenecking settlement.
What HSDT Shareholders and SOL Holders Should Watch
For HSDT shareholders, the immediate question is whether this model translates into improved capital efficiency on the balance sheet. If Solana Company can borrow against its SOL holdings at rates below the 7% staking yield, the spread becomes a net revenue generator, not just a cost reduction.
The market's initial reaction suggests confidence. HSDT's market cap jumped from $77.85 million to $97 million on the announcement day, a $12 million valuation increase driven entirely by the structural innovation rather than new SOL purchases.
For broader SOL holders, the model matters because it creates a new demand floor for staked SOL. When institutions can use staked tokens as productive collateral, there is less incentive to unstake during market stress. That dynamic could reduce selling pressure during downturns and increase the total percentage of SOL that remains staked.
Cheryl Chan, Kamino's Head of Strategy, highlighted the scalability: "This collaboration unlocks meaningful institutional demand to borrow against assets held in qualified custody, bringing new liquidity to Solana's lending markets."
A Repeatable Blueprint, Not a One-Off Deal
The most significant aspect of this announcement is not the single transaction. It is the architecture. Solana Company, Anchorage, and Kamino designed the tri-party model as a repeatable template that other institutional investors, venture firms, and protocols can adopt.
This matters for the broader Solana ecosystem, including the growing number of consumer products built on it. Cards from Solflare, KAST, and Jupiter all depend on a healthy Solana economy with deep liquidity. Institutional capital flowing into Solana's DeFi lending markets through qualified custody channels strengthens the same infrastructure these consumer spending products rely on.
The pattern also addresses a structural gap in crypto lending that has persisted since the collapse of centralized lenders like Celsius, Voyager, and BlockFi in 2022. Those platforms failed because they commingled customer assets and lent against them without proper custody controls. The tri-party model explicitly avoids this: the custodian (Anchorage) is a federally chartered bank, the collateral stays in segregated accounts, and the lending market (Kamino) operates transparently on-chain.
For institutions that watched billions vanish in the CeFi lending implosion, this custody-first approach is the minimum viable compliance standard before they will re-engage with crypto lending.
The Institutional Floodgate Solana Has Been Building Toward
This model does not exist in isolation. It arrives alongside 21Shares paying its first Solana ETF staking reward, Solana processing 35 million x402 AI agent payment transactions, and multiple card issuers building payment rails on the network.
The common thread is that Solana is becoming the default chain for institutional crypto products that need both speed and yield. Bitcoin has the store-of-value narrative. Ethereum has the smart contract legacy. Solana is carving out the "productive asset" lane, where tokens earn yield natively and that yield can be leveraged without sacrificing compliance.
If the tri-party model sees adoption beyond Solana Company, the effect on staking participation, lending market depth, and overall network value accrual could be significant. The $97 million HSDT valuation is a small proof point. The real signal will be whether other NASDAQ-listed treasuries and institutional funds adopt the same Anchorage-Kamino structure in the coming quarters.
FAQ
What is the tri-party custody model for SOL? It is a structure where three parties, a borrower (Solana Company), a custodian/collateral manager (Anchorage Digital), and a lender (Kamino), work together so institutions can borrow against staked SOL without unstaking or moving assets out of qualified custody.
How much staking yield does SOL generate? SOL currently offers approximately 7% annual native staking yield, making it one of the highest-yielding major crypto assets for institutional treasuries.
What happened to HSDT stock after the announcement? Shares of Solana Company (NASDAQ: HSDT) rose 14.51% on the day, with a peak intraday gain of 15.4%. Trading volume was 1.38x above normal, and the market cap increased from $77.85 million to $97 million.
Is this model available to other institutions? Yes. The tri-party structure was designed as a repeatable blueprint. Other investors, venture firms, and protocols can adopt the same Anchorage-Kamino framework for their own SOL holdings.
Overview
Solana Company partnered with Anchorage Digital and Kamino to launch the first tri-party custody model enabling institutions to borrow against natively staked SOL. The structure keeps all collateral in segregated accounts at a federally chartered bank while maintaining 7% staking yield, solving the institutional choice between earning and borrowing. HSDT shares surged 14.5% on the news, adding $12 million in market cap. Designed as a repeatable template, the model could reshape how institutional capital interacts with Solana's DeFi ecosystem by bringing compliance-grade lending to on-chain markets without the custodial risks that destroyed previous crypto lending platforms.
Recommended Reading
- 21Shares Pays Its First Solana ETF Staking Reward, and Wall Street's Passive Income Experiment Just Got Real
- Solana Declares AI Agents Will Outspend Humans, Backing the Claim With 35 Million x402 Transactions
- Ethereum's Staking Ratio Surpasses 30% for the First Time, Locking $120 Billion and Tightening Liquid Supply
