AppWorks Ventures: Why Did We Invest in Sanctum?

We are pleased to announce that AppWorks has invested in Sanctum's native token, $CLOUD. This investment symbolizes our long-term belief in the Sanctum founding team and our recognition of the strong moat they have built over the years.

In this article, we will share why we believe Sanctum is one of the most important infrastructures in the Solana ecosystem; how it will reshape one of the most misunderstood verticals in the cryptocurrency space; and why Sanctum is on the verge of explosive growth.

Sanctum: Breaking the Mold of Solana LST

To understand Sanctum, we first need to understand the history of Solana Liquid Staking Tokens (LST).

For a long time, most people assumed that Solana's liquidity staking market would follow Ethereum's script: a dominant player (like Lido) would emerge, and the market share of other competitors would gradually be eroded by that dominant player. Therefore, in the early days of Solana's liquidity staking market, many protocols rushed to replicate the Lido model, attempting to achieve economies of scale early on and dominate the track.

However, the most insightful founders often see details that others overlook.

Sanctum founder FP Lee, a core contributor to the design of the Solana staking account contract, knew early on that Solana's architecture was fundamentally different from Ethereum's. Each staking account is essentially modular, transferable, and composable. This means that all LSTs on Solana are essentially fungible at the core level; they are simply different wrappers around the same underlying staking account.

With this understanding, the next question becomes obvious: assuming a world with multiple LSTs is destined to happen, what are we still missing?

Upon closer inspection, the staking pool serves three distinct purposes:

1. Tokenization : Converting native staking accounts into interest-bearing SPL tokens.

2. Delegation : Enables high staking yields and decentralized network.

3. Liquidity : Provides instant liquidity for staked SOL.

For FP, his answer is "liquidity".

The reason is simple: Ethereum has already conducted this experiment. Lido's dominance on Ethereum is largely due to stETH's integration with all major DeFi protocols and its extremely high composability. Years of integration have made it the most composable asset on the network, and its distribution advantage has snowballed, helping Lido achieve its dominance.

On Solana, the same conclusion is even clearer: staked accounts are interchangeable; each staked SOL carries the same economic weight in the trading flow. In this world, the future of "multiple LSTs coexisting" is the default state, and whoever can coordinate liquidity will win this competition.

Therefore, FP did not try to compete to become the single largest staking pool, but saw a greater opportunity: to become the liquidity layer connecting all LSTs on Solana.

This is where Sanctum began.

Their solution to this problem is closely related to the insights mentioned above. First, they created "Sanctum Router" for exchanging between thousands of LSTs. This exchange can be accomplished simply by "unwrapping" and "re-wrapping" the underlying staking accounts.

If necessary, these swaps can also be routed to the Infinity Pool , which can be viewed as a basket of LSTs managed by Sanctum, all of which operate under Sanctum's LST issuance infrastructure. When a swap is routed to Infinity, the transaction fees are distributed to the liquidity providers (i.e., $INF holders) of the Infinity Pool.

This design enhances the liquidity of the entire Sanctum LST ecosystem while making $INF itself one of the most attractive LSTs on Solana.

Finally, Sanctum manages a substantial native $SOL reserve, shared by all Sanctum-branded LSTs. For any project, there's no need to build millions of dollars in liquidity pools themselves; they can simply issue their LSTs through Sanctum without worrying about the cold start of liquidity.

In less than two years, Sanctum has partnered with major players in the industry, including Bybit, Crypto.com, Backpack, and Jupiter, managing over $2 billion in SOL. As of the end of 2025, Sanctum ended the year with record metrics: total assets under management reached 14.36 million SOL (a 96% year-over-year increase), and annual revenue reached $5.85 million (a 226% year-over-year increase).

Another impressive metric is Sanctum's dominance over the Solana LST category in 2025; Sanctum achieved a net cumulative inflow of nearly 8 million $SOL, while its two major competitors, Jito and Marinede, ended the year with net outflows in their LST products. This gap highlights the compounding competitive advantage of Sanctum's liquidity moat in the LST market.

Looking back, it's easy to think that all of this happened naturally, as if Sanctum's rise was inevitable. But the truth is, it was the result of the Sanctum team's relentless efforts, continuous iteration, and unwavering belief during a market downturn over the past five years. This leads us to the first and most important reason for investment: founder FP Lee.

Investment Argument #1: Our Core Beliefs in Founder FP Lee

Seeking insights beyond consensus

We see a unique ability in FPs: they can see what others miss and delve into a concept until a reverse insight emerges.

In 2023, while many were racing to create a "Solana version of Lido," FP noticed something upstream: Solana's staking accounts were modular and homogeneous in design. This single observation revolutionized the entire game. Instead of competing to become the largest staking pool, he built Sanctum as the liquidity layer connecting every LST, completely changing the game.

Now, after years of building the Solana ecosystem, he has discovered another little-noticed inefficiency: the unpredictability of the Solana transaction layer. In short, we believe his recent acquisition of Ironforge and launch of Gateway reflect the same pattern: dig deep enough to find structural bottlenecks, and then build the missing infrastructure that others often take for granted.

Deep connection with the community

We believe that founders' ability to build communities in the Crypto world is often underestimated. To us, FP is one of the few founders who not only "manages" the community, but also "co-builds" it.

Sanctum's Wonderland event, held before the Token Generation Event (TGE), was more than just another points farm; Sanctum transformed it into a collaborative, gamified task layer where users staked LST to earn experience points and collectively complete community challenges, making engagement sticky rather than just about profit.

The results were stunning; Sanctum's TVL increased by 171% in 38 days. The community forums spawned regular events (such as the Cloudfam Emoji Clan competition), allowing members to continue creating and recruiting long after the initial airdrop, demonstrating organic momentum rather than purchased traffic. Its community (later affectionately known as CloudFam) became one of the most powerful grassroots movements on Solana.

What most people don't know is how much effort FP and the team put in to demonstrate this dedication. When $CLOUD airdrops, they don't just run scripts or do number calculations in spreadsheets. They manually sifted through thousands of Discord channels and Telegram chat logs to identify true die-hard users and reward them with far more generous rewards than most projects.

Ultimately, the token is the founder's second product. Doing a good job in "Token IR" is more than just managing the price; it's about building trust, transparency, and a sense of belonging. Many founders say they care about token holders, but few truly match their words with actions.

FP is one of the few founders who lives by his word. From releasing monthly updates to continuously engaging with users on Discord, he treats community building as something he continues to optimize and is passionate about. Over time, this authenticity will have a compounding effect, transforming the user base into a force closer to "movement." We believe this will remain one of Sanctum's strongest long-term differentiating advantages.

Find your destiny

FP didn't initially intend to be a founder. Before entering the cryptocurrency field, he was just a young software engineer trying to find his direction. He stumbled into Solana out of curiosity and a desire for growth, and the reason he stayed was because he found his calling on the journey.

This sense of destiny stems from doing what you truly love. After years of building in the crypto space, FP has witnessed many things: the collapse of FTX, numerous founders absconding with user funds, projects recklessly gambling away the entire national treasury, and more. In an industry often shrouded in short-sightedness and greed, FP wants to prove that in 2026, you can still build a great product, maintain transparency, and succeed the right way.

Although it may sound somewhat abstract or even old-fashioned, we believe it is one of the most lacking yet powerful driving forces in this industry, and that is precisely the mission we want to support.

Investment Argument #2: Many positive factors for Sanctum LST are brewing.

We see several catalysts for Sanctum LST and are convinced that everything is ready except for the final push.

Solana LST is still in its early stages and is growing.

Solana LST penetration has increased 4.4 times in two years, from 3% to 13.3%. This acceleration is driven by the emergence of ecosystem infrastructure like Sanctum and the growing demand from node operators to capture LSTfi market share.

However, this 13.3% penetration rate means that most staked $SOL remains illiquid. Compared to Ethereum's more mature market (with an LST penetration rate close to 35-40%), Solana's liquid staking layer—the key to unlocking capital efficiency and composability—is clearly still in its early stages.

Against this backdrop, we believe Sanctum is at that turning point. Sanctum's product suite (Router, Reserve, Infinity) is explicitly designed as a neutral liquidity hub. This creates a strong moat, making Sanctum the pre-set aggregation point in this rapidly expanding and fragmented market.

LST network effect

For any protocol issuing new LST, they don't want to build millions of dollars in liquidity pools themselves. Instead, the simplest approach is to integrate with Sanctum and focus solely on branding, core products, and distribution; Sanctum provides a liquidity layer (Router + Reserve + Infinity) that allows these LSTs to be swapped with the rest of Solana from day one. This is what we've witnessed. This alliance is growing stronger every day. To date, Sanctum is serving all the largest clients, such as Jupiter, Bybit, and Backpack.

More integration → More supported LSTs → More interchangeable paths → Deeper utility across DeFi. This flywheel effect is hard to catch up with.

The organization is also adopting Solana LST

Competition for Solana yields is rapidly evolving beyond the realm of native DeFi protocols. A new wave of larger, more established capital, ranging from traditional financial asset management firms and potential Solana-staking ETFs to publicly traded companies like DATs, is entering the arena.

For these entities, the basic staking yield is just the beginning. To attract substantial assets under management (AUM), they must offer compliant, branded, and highly differentiated liquidity products. This requires building upon the basic LST with unique validator strategies, transparent reporting, and deep DeFi integration.

This is precisely where Sanctum becomes a key enabling infrastructure. As a neutral, modular platform, it provides a full-fledged "Staking-as-a-Service" solution, allowing any entity to issue its own LST. It allows them to retain complete control over their financial strategies and branding while outsourcing deep technical complexities to Sanctum's proven liquidity layer and composable backend.

We have already seen strong validation. In May 2025, publicly traded DeFi Development Corp (NASDAQ: DFDV) launched dfdvSOL using Sanctum's infrastructure. This marked the first time a publicly traded company held and used a custom Solana LST . Their explicit goal was to contribute liquidity back to the Solana DeFi ecosystem, creating a flywheel effect that would also benefit their own company's balance sheet.

Our core belief is that as more structured SOL products emerge to compete for this new wave of capital, Sanctum will become their pre-selected issuance partner and liquidity backbone.

Our argument is clear: in the short to medium term, Sanctum is the most undervalued infrastructure target in this wave of institutional investment, and they are quietly becoming an essential pipeline that every major Solana product relies on.

Investment Argument #3: The Sanctum App will become the de facto entry point for Solana.

At the Solana Breakpoint conference in 2025, Sanctum unveiled its latest creation: the Sanctum App. This lightweight mobile application is designed to help users easily grow their $SOL holdings through daily rewards in a fun, gamified environment.

Returning to our initial argument, the main reason Sanctum LST hasn't reached peak market penetration is the inherent friction of the current DeFi user experience (UX). It's easy to forget that many $SOL holders exist entirely outside the "DeFi bubble." They're not interested in Solana's technical inner workings or the complex mathematics behind LST yields; the only way to engage with them is to abstract away those complexities.

Following the tremendous success of Wonderland, we are even more convinced that the Sanctum founding team is one of the few teams with this "gene": not only capable of building a community, but more importantly, earning its lasting trust. From this team's genetic standpoint, we are confident they can create miracles again.

From a product perspective, this journey has formed a complete closed loop. The Sanctum team pioneered the transformation of the complex concept of staking accounts into an easy-to-use LST. Now, they are extending this mission to a wider audience. Looking ahead, we anticipate the Sanctum App will become the primary interface and entry point for everyday users, while the Sanctum LST will continue to serve as a cornerstone of the entire Solana infrastructure.

Summarize

When we see Sanctum, we see more than just a protocol; we see the foundation for the next chapter of Solana: at its core is FP, a founder with a long-term vision, building products with conviction and passion, who has led Sanctum from a simple idea into Solana's liquidity fabric, and now further expands into trading infrastructure. In addition, we expect the LST business to continue generating compound interest through strong network effects, institutional adoption, and deep integration across ecosystems.

This is why we invested. FP and Sanctum represent everything we believe in.

About AppWorks

Founded in 2010, AppWorks is a leading startup accelerator and venture capital firm in Asia. Its ecosystem comprises over 2,000 entrepreneurs, with funds under management totaling $386 million. The AppWorks Accelerator focuses on helping early-stage startups achieve their initial success, while the AppWorks Venture Capital Fund supports teams in scaling their growth.