As crypto and traditional finance markets reel in response to the escalating Russia-Ukraine conflict
, now might not be the best time to take a position considering the uncertainties.
However, this shouldn’t deter you from making the most of your crypto funds, especially if you’re invested for the long term. In times like this, with ETH gas prices still very high, low-cost transactions can really come in handy, which is why we chose to highlight Solana (SOL)
The world’s fastest and cheapest layer-1
network has been having a bit of a rough time of late, with various mishaps such as the Wormhole hack
, network congestion, and multiple outages
contributing to the slow slide of SOL’s price after its meteoric rise in 2021.
Considering that Solana is still only in its testnet
phase, has attracted incredible traction from developers and projects, and is perfectly positioned to capitalize on the surge of interest in GameFi
and metaverse industries, it feels like only a matter of time before the network will turn its ship around and resume its upward trajectory. Therefore, the more SOL you can accumulate now at low risk, the better your portfolio will look by the end of 2022.
This deep dive explores various types of Solana staking strategies that enable users to earn interest from their holdings without spending more.
You may also check out our video on top crypto projects on Solana:
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is a setup where a user (staker) designates his SOL tokens to a validator in order to receive token rewards paid out in SOL while helping the network remain secure and decentralized
. This process is similar to earning interest on a savings account, where your earnings are proportional to the number of crypto holdings staked.
By staking your tokens, you become a delegator, someone who allocates their resources to validators
to help support the Solana ecosystem. Note that staking requires putting a certain degree of trust in a validator since your stake will add “weight” to the validator’s voting power. Hence, it is important to do your due diligence as choosing a malicious or incompetent validator could result in a loss when they get penalized for illegal behavior.
Staking on Solana means agreeing to lock up your tokens for a chosen period of time, which means that they won’t be spendable while they’re staked. There is a possible workaround to this, but we’ll get to that in the Liquid Staking section. Lastly, while you can unstake your tokens anytime you choose, you need to wait for the Cooldown periods to complete before you can transfer the tokens.
is a user who runs a full validator node that actively participates in the verification and consensus of the network, maintaining its speed, security, and censorship resistance
. Running a validator node requires computer hardware with high specifications. For more information, check the hardware requirements
A delegator (staker), on the other hand, simply assigns his voting power to validators. In order to become one, you only need some SOL and a device that can connect to the Solana network.
Solana utilizes a novel proof-of-stake (PoS)
consensus model that leverages the so-called proof-of-history (PoH) to add time as a variable to the process. PoH enables
cryptographic verification on the passage of time between two events, linking messages from nodes
regarding the validity of blocks in order to create a chronology of events independent of local timestamps
. Similar to other PoS models, staking
a native asset is required for the Solana blockchain to operate.
Here are the steps required to become a SOL staker.
Installing a Solana Wallet
In order to stake, you first need to download a Solana wallet that supports staking. These are the recommended options:
Phantom is the most popular wallet on Solana right now, thanks to its simplicity and broad functionality. The wallet’s interface allows you to start staking with just a few clicks. You can download the Phantom Wallet
app as a Chrome Extension or on your iOS device.
Sollet, created by the Serum team, is a browser-based crypto wallet and extension that allows users to safely manage their SOL and SPL assets on the Solana blockchain.
Solflare has a strong reputation when it comes to Solana wallets. You can download the Solflare extension
or mobile wallet.Ledger Nano (Cold Storage)
If you want the best security features available for staking, we recommend that you invest in a hardware wallet like Ledger
. The Ledger Live app enables you to securely access several non-fungible token (NFT)
and decentralized finance (DeFi)
services seamlessly using your hardware device. Furthermore, Ledger is also compatible with Phantom and Solflare.
Solong may be one of the less popular Solana wallets, however, it is still a great option for beginners thanks to its simple interface and lightweight feel. You can download the Chrome extension wallet here
Depositing SOL into Your Wallet
After you’ve chosen a wallet, it’s time to put some SOL in it. There is no hard minimum required for staking. However, it is recommended to have extra SOL in order to pay for fees and enjoy lucrative rewards. You can buy the coin on any exchange like Binance
and send it to your wallet.
Delegating to a Validator
Once you have SOL in your wallet, you can now stake them. If you’re using Phantom, simply click on “Solana,” then “Start earning SOL.” You will be directed to a list of available validators.
Choosing the Right Validator
We recommend that you spend the time to find a reliable validator
in order to maximize your earnings and help prevent losses, which are quite rare but possible.
Choose a Small or Medium-sized Validator
As tempting as it is to choose the “top” validators, note that most lists sort validators by the total funds staked. However, delegating to large operators won’t make your earnings necessarily higher. In fact, it might actually lower your rewards due to saturation. Moreover, delegating to a small- or medium-sized validator helps avoid a concentration of stake to the largest operators, which is crucial in maintaining the network’s decentralization.
Check a Validator’s Overall Performance
You need to choose a validator that is stable and has historically performed well. If a validator constantly gets disconnected from the network, the staking rewards of its delegators suffer. You can check out validator statistics on the Solana ecosystem on Solana Beach
Check the Fees
Validator fees typically range from zero to 10%. Note that commissions will only be taken from your rewards, not your stake.
After you’ve chosen your validator, head back to your wallet and stake your coins. Note that you won’t be earning rewards until the Solana blockchain goes through two epochs (one epoch is equivalent to two to four days).
Note that you don’t need to manually claim your SOL rewards as they are automatically added to your stake balance.
The amount you earn from staking highly depends on multiple factors including your chosen validator, the state of the network, and the amount of SOL you stake. As of February 2022, the average reward ranges from around 6-8% percent annually
. To ensure that you have updated data, check the network stats. If you were to add your SOL to liquidity pairs on some DeFi protocols, you can earn significantly more, but run additional risks such as impermanent loss,
hacks and rug pulls
Delegating your tokens doesn’t mean you are entrusting them to a validator. When you stake your SOL, your funds will remain inside your wallet, which makes it as safe as holding them. However, your stake may be at risk of slashing
, which happens
if your chosen validator is deemed to be malicious or is attempting to violate the safety rules in place.
Note that slashing is not automatically enabled on Solana as of February 2022. However, validators can be manually slashed after a network restart. Therefore, the best way to protect your funds and maximize earnings from staking is to choose a great validator and follow proper wallet safety procedures.
Besides SOL, you can also stake many other tokens on Solana.
DeFi Staking on Solana
The Solana ecosystem is teeming with DeFi
applications that allow you to stake SPL (Solana-based) tokens and earn generous rewards. This loosely falls under the category of “DeFi staking.” Here are some of the top platforms for staking tokens on the network.
Raydium is the first automated market maker (AMM)
and liquidity provider
platform on Solana. It allows users to stake RAY
natively on the platform and earn interest. Moreover, the protocol also allows you to compound your rewards by staking liquidity provider (LP) tokens
to earn yield farming rewards, which can be acquired by depositing liquidity on the platform.
Saber is a decentralized exchange (DEX)
and liquidity protocol that is optimized for asset pairs that have similar values. The platform enables users to deposit liquidity on stable pairs
like USDT-USDC, mSOL-SOL, etc. which have no risk of impermanent loss
. Users can stake their token pairs in the Farms
to earn SBR
Orca is another Solana DEX that is designed to be user-friendly, cost-effective, and fast. Users can deposit liquidity on various trading pairs
to earn ORCA
and a share of the DEX fees.
The non-fungible token (NFT)
space on Solana continues to thrive as founders, artists, and collectors seek efficient and cheaper alternatives to Ethereum
-based NFTs. In fact, the number of NFT collections is growing by the day as many users are looking into monetization options for their mints.
Solana NFTs are built on the standard laid out by Metaplex, an ecosystem of NFT marketplaces, projects, and communities. While only a few projects offer native staking, some protocols specialize in offering staking opportunities for multiple collections.
Honey Finance is a DeFi protocol that aims to unlock the liquid properties of NFTs by providing yield for certain collections that can be utilized for DeFi activities, bridging the gap between both crypto sub-sectors. You can check out its Farm
to see the available NFT collections to stake. Stakers are rewarded either in pHONEY, HONEY, or other tokens. Some of its popular collections include Bone World
and Asgard Army
Solvent is a liquidity protocol
that enables users to deposit their NFTs in exchange for fungible tokens that can be traded on DEXs. Each NFT project has its own unique token called droplets, as well as a liquidity pool
. For instance, Degenerate Ape Academy
has $DAPE, Galactic Geckos
have $GGSG, and Solana Monkey Business
There are several NFT collections that offer native staking features, including Stoned Ape Crew
, Danger Valley Ducks
, and CyberKatz.
is a process that allows users to utilize their staked funds to participate in DeFi activities, providing them with liquidity and flexibility while they continue to accrue staking rewards. Normally, when you stake your assets, they get locked, which prevents you from using them until you decide to unstake. Liquid staking essentially eliminates the need to unstake by issuing a tokenized version of the staked funds.
Let’s explore the top liquid staking platforms on Solana.
Marinade Finance is a non-custodial protocol
that allows users to stake their SOL and receive marinated SOL (mSOL)
, a tokenized version of your stake that can be used in DeFi. There are several AMM, lending, and other platforms that support mSOL trading pairs.
Lido started out as an Ethereum consensus layer (formerly called Eth 2.0) liquid staking protocol that has now branched out into the Terra
ecosystems. Users who stake their SOL on the platform receive stSOL
Staking on Solana has proven to be easy, cheap, and lucrative. At the very least, it’s worth your consideration. Moreover, the protocol is backed by many of the biggest giants
in the industry such as Sam Bankman-Fried’s Alameda Research, and has flourishing DeFi, NFT, and even Web 3.0
ecosystems. Unless something crazy happens, Solana should be here for the foreseeable future, as its incredible adoption and growth
If you’re someone who still holds SOL, Solana-based tokens, or Metaplex-based NFTs despite the market crash (or correction, if you’re an optimist), then it’s a no-brainer to get into staking. With that being said, you also need to consider the minimal risks involved, such as slashing for SOL staking. DeFi, NFT, and liquid staking might pose relatively higher risks since your funds will be locked up somewhere else.
As always, research is paramount when it comes to your investments. If you got this far in the article, it means you took the right first step. Good luck!
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