According to Smith, the deal encourages “long-term alignment” between Andreessen Horowitz and the crypto protocol. He also said this was the largest ever commitment from one investor into Jito. “If you’re accepting long-term alignment where you can’t sell for a while, then there’s traditionally some modest discount associated with that,” added Smith, who declined to provide specifics about the transaction.
Even though Jito doesn’t have brand-name appeal beyond in-the-know crypto investors and traders, the protocol is a key part of the infrastructure for Solana, one of the most popular blockchains on the market. “We’re intricately tied to Solana’s growth,” said Smith.
Blockchains are akin to decentralized cloud computing networks where unaffiliated servers compute data and process transactions. To incentivize these computer servers, or what those in crypto call “validators,” from faking transactions and committing fraud, validators must often put a certain amount of the network’s cryptocurrency in escrow.
Blockchains require validators to stake large amounts of cryptocurrency, which can lock up a significant amount of a token’s supply. “Liquid staking” solutions, like Jito for the Solana blockchain, allow validators to essentially trade their staked cryptocurrency as if it weren’t in escrow.
Jito also lets developers prioritize how fast their transactions are processed on Solana, added Smith.
