Solana saw blockbuster growth throughout 2021, and the fledgling crypto is now ranked in the top 10 crypto assets by market cap. It has far outpaced the price performance of better-known cryptocurrencies such as Bitcoin and Ethereum, making Solana a top contender in the crypto space.
But while investors may be able to win big by betting on Solana, price gains aren’t the only way to profit from Solana (SOL). As a proof-of-stake cryptocurrency, Solana also offers investors the opportunity to earn passive returns through staking. Solana staking can provide additional returns if you plan to hold your tokens and helps secure the network. If you’ve been wondering how to maximize the returns on your investment into SOL, here’s what you need to know about Solana staking.
What is Solana?
Solana is a decentralized blockchain that was built to enable scalable, user-friendly apps. It is the fastest blockchain in the world — and is also the fastest growing crypto ecosystem — with thousands of projects that span DeFi, NFTs, Web3 and more.
Solana’s sole focus is speed, with 400 millisecond block times. As hardware gets faster, so does the network — but the price doesn’t increase with the speed. The scalability of this project ensures that the transaction fees remain less than $0.01 for both developers and users.
And that’s what makes it stand out — the promise of lower overall costs and faster transactions.
How does Solana staking work?
When transactions need to be verified, staked tokens play a role in the process. In return, staked tokens earn a reward for helping to secure the network.
Rather than leave your Solana tokens sitting idle on an exchange or in a wallet, you can earn a variable interest rate by staking your tokens to help secure the network and validate transactions.
Solana secures its network through a combination of Proof of Stake (PoS) and Proof of History (PoH) to maximize speeds. With Solana staking, PoH is used in place of Proof of Work (PoW), which is the typical option on other platforms, like Bitcoin.
You can stake Solana two ways: either through a wallet that supports staking, running a validator node, or through a staking pool. If Solana goes up in value, you get access to the gains when you unstake your tokens and trade. However, tokens that are staked can’t be used or traded until they are unstaked.
Luckily, Solana staking and unstaking is simple, and allows you to remain nimble in a fast-moving crypto market. Where and how you choose to stake your Solana can make a difference in the rewards rate and your ability to trade, though.
Potential returns for staking Solana
Solana staking generally does not offer a fixed interest rate. Rather, the rate can fluctuate based on network conditions — with rates generally based on the amount of SOL tokens staked compared to the supply of tokens.
In general, you can expect an annual percentage yield (APY) that starts at about 6%. That can and will change, but the range has consistently hovered at about 6% recently.
As with other interest-bearing financial products, SOL rewards earnings are driven by the amount you deposit — or, in this case, the amount you stake. The length of time you choose to stake will also affect your overall earnings. Staking for a shorter period or staking a smaller amount can limit your earning potential.
If you see an offer of significantly higher staking rates on certain platforms, be sure to check the fine print before making a decision. The platform you’re considering may be using locked staking that commits you to stake your SOL tokens for a longer period of time. This can result in higher returns — but can also put you at risk if the price of SOL changes and you want to sell but can’t due to locked tokens.
How much can you make for staking Solana?
$1,000 in SOL
$10,000 in SOL
$100,000 in SOL
$100,000 in SOL
$100,000 in SOL
Solana staking rewards are paid in Solana tokens, but we can use a dollar value to better understand earnings potential through staking.
One of the biggest factors for returns is the amount of SOL you stake. For example, let’s say you choose to stake $1,000 worth of SOL tokens with a total reward rate of 5.78%. Over the course of a year, your $1,000 stake may earn an additional $57.86. On the other hand, a $10,000 stake may earn $578 annually at that rate — and a $100,000 stake may earn about $5,783 annually.
The staking period you choose will also have an effect on your rewards. Staking for a shorter period of time will result in lower rewards because your staked tokens won’t spend as much time earning as they otherwise would. While a $100,000 stake may earn about $5,783 annually, staking for half the time (a 180-day stake) at the same rate and with $100,000 worth of SOL could result in rewards that are worth about $2,884 — which is significantly less than the annual rewards.
In the above example, the rate hasn’t changed, but the stake duration has. However, rates will fluctuate over time, and the effective reward rate can also vary based on network conditions and fees from the staking provider you choose.
What to know about returns for staking SOL
There’s a supply and demand element to staking Solana. In the examples above, we assumed that 75% of the total SOL supply is currently being staked.
Solana pays staking rewards once per epoch, with each epoch being about 60 hours — or two to three days. Rewards are paid to the validators, delegators, and people who have SOL staked. While yields are expressed on an annual basis, staking Solana typically results in receiving rewards more than 100 times per year.
Rewards are paid to your staking account or wallet and are automatically staked in addition to your initial stake. You can also unstake your rewards — or your initial stake — but rewards and stakes are subject to a short cooling down period of two to three days. By leaving your rewards staked, though, you can get larger returns over time through the magic of compound interest.
The rewards rates can also vary based on whether you delegate your SOL, run a Solana validator, or lend your SOL. It’s worth noting that lending SOL isn’t technically staking, but is often referred to as staking online.
In most cases, the easiest solution is to delegate your SOL tokens, although this typically earns a slightly lower rate compared to running a validator since validators usually charge a commission.
Right now, about 99.77% of all Solana staked tokens are delegated to a validator to earn rewards. The remaining 0.23% run a validator. Running a validator isn’t for beginners and can have significant costs.
What to know about Solana validators
Before discussing staking pools, which is a popular way to earn with SOL, it may be helpful to discuss validators.
In essence, a validator is both a record keeper and a (paid) voting board member. Validators process transactions on the Solana network and participate in consensus, which refers to an agreement on the order of transactions.
Validators provide a decentralized structure for Solana. This is used in place of having one central authority that determines the validity of transactions or a handful of powerful entities controlling much of the transaction volume.
On a related note, you’ll also encounter the term “delegators” when researching validators. A delegator assigns staked tokens to a validator.
In many cases, the delegator is you — the investor staking Solana tokens. However, many Solana staking pools can provide passive delegation, automatically choosing a validator for each SOL stake.
What to know about Solana staking pools
Solana staking pools offer a way to help decentralize the Solana network and can sometimes lead to higher yields. By distributing Solana stakes across a wider range of validators, a Solana staking pool helps build a wider and safer network, and some staking pools offer access to hundreds of validators.
Without pools, much of Solana’s staking activity would be limited to a small group of validators, making the network more centralized. Other cryptocurrencies, such as Bitcoin, face similar challenges, with just a few mining groups controlling the vast majority of all newly-mined Bitcoins.
In general, staking pools are considered to be safe, but each can have a slightly different structure or offer different ways to earn. Staking pools can also come with an extra cost, although typically just a small percentage of earnings.
For example, Marinade, among the largest SOL staking pools, offers access to over 450 validators and deducts a 2% fee from pool rewards each epoch. The average APY for SOL staking on Marinade ranged from just over 6% to 6.11% in recent weeks.
How to choose a Solana validator
When it comes to choosing a validator, it can be useful to weigh several factors.
However, some criteria can be counterintuitive. For example, a large validator may not always be the best choice, particularly if you favor a decentralized network. Well-established validators may also charge higher fees.
Some of the factors you may want to weigh include:
Size: It can be helpful to weigh the number of delegators or the total amount staked when choosing a validator. However, larger validators generally don’t make staking any safer, and smaller ones don’t make staking any less safe. In some cases, however, larger validators will have more funding to purchase faster hardware or network capacity.
Commission (fees): Expect to find fees ranging from 0% for new validators trying to attract stakes up to 10% on the high end. When you earn staking rewards, the validator deducts the fee from the reward for each epoch.
Speed and reliability: Slower (or offline) validators can cost you money. The Solana network is focused on speed, so validators that are slower (or offline) may be skipped for consensus, which may result in lower earnings over time.
Tools you can use to help you choose a validator that matches your priorities include:
You also have the option to set up your own validator, but it’s helpful to be aware of the upfront costs and ongoing expenses associated with doing so.
The Solana documentation suggests a 16-core processor with 256 GB of RAM and multiple SSDs, including a 1TB or higher SSD for ledger storage. In addition to hardware investments, you’ll want to become familiar with the minimum requirements to participate in consensus. Sending vote transactions can cost up to 1.1 SOL per day.
That said, running a validator can be profitable, but profits aren’t guaranteed. You’ll likely have carrying costs until your validator attracts enough delegators to turn a profit.
Is it safe to stake Solana?
Staking doesn’t pose a risk to your SOL tokens themselves. Solana staking is non-custodial, meaning you don’t lose possession of your tokens. It’s not like making a deposit in a bank — only to find the bank boarded up the next day.
However, risks can arise in other ways when staking Solana. These include:
Volatility: Crypto prices move quickly, and when your tokens are staked, you can’t trade or spend them. In most cases, you can exit a stake and can trade the previously staked tokens again within two to three days, but some platforms may require longer commitments.
Earnings risks: A number of factors can affect your rewards earnings, including validator downtime or slow validators that get skipped for consensus. There’s also the risk that a validator can change their fee before the new epoch, reducing your earnings. Of these risks, slow validators are likely the largest concern. There are tools available to gauge speed and historical uptime before choosing.
How to stake Solana
The two primary ways to stake Solana work similarly. You can choose to stake Solana through a validator you choose or you can stake Solana through a staking pool.
To stake Solana directly through a validator, you can follow these steps:
Choose a wallet that supports Solana staking.
Fund your wallet. You may have Solana tokens on an exchange or in other wallets. Transfer some of your tokens to your Solana wallet that supports staking.
Choose the amount you want to stake. Bear in mind that you don’t need to stake all your tokens but the amount you stake impacts your earning potential. Yields (rewards) aren’t affected by stake amounts but the amount you stake drives your earnings. A larger stake can earn more.
Choose a Solana validator. While validators earn the same reward, fees and server efficiency can play a role in how much of the staking reward reaches you.
Delegate your Solana tokens to the validator you’ve chosen. Each wallet has a slightly different user interface, but functionality is usually similar. Look for the staking section in your wallet. If you’re using the Phantom wallet, for example, you can search for your preferred validator by name and then enter the number of SOL tokens you want to stake.
Start earning Solana rewards. Your stake helps validate transactions on the network. At the end of each epoch, you’ll earn rewards for your stake — minus any fees deducted by the validator. Rewards are automatically added to your stake amount, allowing you to compound your earnings.
You’ll follow similar steps during the process of staking Solana through a pool, with the primary difference being that you stake to a pool rather than directly to a validator. In many cases, the pool chooses a validator based on its own criteria. Some pools use algorithms to automate this process with the goal of higher yields or better decentralization — or both.
Is staking Solana right for me?
Many industry experts expect Solana to continue its price gains in the coming years, so staking can be a good way to earn a bit more while you wait to sell — if selling is your end goal.
There’s also limited risk with staking Solana. That’s because staking is non-custodial, so you always hold your own tokens. This structure largely limits any staking risks to what comes with choosing a slower validator or a pool with higher fees.
There’s also the risk of market volatility to take into consideration, as staking can make you less nimble, delaying your ability to trade by a few days.
That said, staking Solana can be a good bet for the right person. With the ability to stake directly to a validator through a wallet or to join a pool to help decentralize the network (and perhaps earn a bit more through validator optimization), staking Solana is often a safe, easy, and profitable way to build toward your future.
Frequently asked questions
Can you compound your Solana staking?
You can earn compound returns through staking Solana. When you earn staking rewards, those rewards are automatically added to your stake. In turn, your earnings can earn even more earnings, much like a dividend stock or an interest-bearing bank account, assuming you don’t “withdraw” by unstaking your SOL tokens.
What is the minimum amount of Solana to stake?
Strictly speaking, there is no minimum amount for SOL staking. However, you may find some platforms require a minimum stake, but the required minimum amount (if any) is typically well within reach. For example, Exodus requires 0.01 SOL to begin staking. At today’s prices, that’s less than $1 worth of SOL.
What Solana wallet should I use when staking?
Choices abound for Solana wallets that enable staking. Options to consider include:
It can be helpful to weigh the pros and cons of each option before making a choice, and consider whether you need mobile app access. Some wallets don’t support all mobile platforms. It may also be helpful to give some thought to features you may want for yourself — as well as for the Solana network as a whole. Some wallets that offer SOL staking only use one validator, or just a handful at most, which ultimately makes the network less decentralized.
Should I use Coinbase to stake Solana?
While Coinbase does offer staking rewards for some cryptocurrencies, Solana hasn’t yet made the list. According to the Coinbase support center, you can earn up to 5% by staking the following crypto assets:
Today, Tulip Protocol made the announcement that they have integrated Chainlink Price Feeds in order to better secure their yield aggregating platform that is running on the Solana mainnet. The team had previously stated their intention to integrate Chainlink Price Feeds, and at this point, the connection has been completely put into action. Chainlink is the premier decentralized oracle network in the world, safeguarding tens of billions of dollars in smart contracts. It has diversified its offerings across other blockchains, notably Solana, Fantom, Polygon, BNB Chain, and others.
In a recent blog post, the team behind the Tulip Protocol explained that they had integrated Chainlink to provide users with more confidence that leveraged positions will be liquidated equitably using extremely accurate price data and that the protocol will continue to be completely collateralized at all times.
According to Tomasz Wojewoda, Head of Global Sales at Chainlink Labs:
“We’re pleased that Tulip Protocol has integrated Chainlink Price Feeds on Solana, helping secure its yield aggregation protocol with highly robust, decentralized market data. With the high-throughput performance of Solana and the strong security guarantees of the Chainlink Network, Tulip Protocol is able to empower users with a performant and secure platform.”
Tulip Protocol Seeks To Take Advantage Of Solana
Tulip Protocol brings together lenders who receive a return on their deposits and borrowers who are interested in gaining access to leverage. Users who initiate leverage positions are responsible for maintaining a loan-to-value (LTV) ratio that has been previously established. The Tulip Protocol then uses the asset price data that is provided by Chainlink Price Feeds to verify that this ratio is accurate. If the value of the collateral falls below the threshold that was established by the protocol, then their position will be immediately liquidated to assist in guaranteeing that the lenders will be repaid.
Tulip Protocol intends to capitalize on Solana by giving users the ability to more regularly reinvest their income and grow their assets without having to pay exorbitant amounts of gas expenses. Chainlink oracles can now be natively integrated on Solana, making it possible for Solana-based applications to benefit from enhanced levels of security and transparency. Yesterday, OpenOcean made the announcement that they would be integrating Chainlink Price Feeds in order to help secure the limited order functionality on many chains. These chains include Avalanche, Ethereum, Polygon, Fantom, and BNB Chain.
According to Senx, Co-Founder of Tulip Protocol:
“We’re excited to be using Chainlink Price Feeds on Solana to help secure our yield aggregation platform. By leveraging the most secure and reliable on-chain data available, we’re able to provide our lenders and borrowers with greater assurances that liquidations are based on accurate price data, and the protocol will maintain a healthy loan-to-value ratio through all market conditions.”
Allowing Stakers To Benefit From Higher APYs
Natives of the blockchain as well as newcomers to the technology are beginning to understand that decentralization does not necessarily equate to a secure platform. Given that Web3 services are currently disclosing their susceptibilities to attacks from both within and outside the network, further initiatives should be undertaken to improve the safety of user assets. Fortunately, a growing number of blockchain businesses are beginning to add various levels of security to their services in order to solidify the trust of their existing customers and attract additional investors in the near and distant future.
Tulip Protocol is the very first yield aggregation platform to be built on Solana, and it features auto-compounding vault techniques. The dApp was developed to make use of Solana’s blockchain, which has a low cost and high efficiency, hence enabling the vault techniques to compound frequently. Stakeholders are able to reap the benefits of greater APYs as a result, without the need for active management.
On this week’s episode of “The Market Report,” Cointelegraph’s resident experts discuss the latest updates concerning the recent Solana (SOL) hack.
To kick things off, we broke down the latest news in the markets this week:
Bitcoin realized price bands form key resistance as bulls lose $24K, significant whale activity between $22,000 and $24,800 adds to the complexity of the current spot market setup. Bitcoin (BTC) consolidated lower on Aug. 9 after familiar resistance preserved a multi-month trading range. When will we finally break out of this price range and make the move towards $30K?
Circle freezes blacklisted Tornado Cash smart contract addresses, Crypto data aggregator Dune Analytics said that, on Monday, Circle, the issuer of the USD Coin (USDC) stablecoin, froze over 75,000 USDC worth of funds linked to the 44 Tornado Cash addresses sanctioned by the U.S. Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons (SDN) list. Could this mark the end for Tornado Cash or is there a way they can redeem themselves?
Next up is a new segment called “Quick Crypto Tips,” which aims to give newcomers to the crypto industry quick and easy tips to get the most out of their experience. This week’s tip: Have some funds ready to buy further downturns.
Market expert Marcel Pechman then carefully examines the Bitcoin and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down. The experts also go over some markets news to bring you up to date on the latest regarding the top two cryptocurrencies.
After Marcel’s market analysis, our resident experts discuss whether your SOL is safe and the latest updates on the Solana hack. We also discuss why the network has been victim to so many hacks and downtimes. What exactly do these exploits mean for the Solana platform and if you should be worried.
Lastly, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. The analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week: Radicle’s RAD and DigiByte’s DGB.
Do you have a question about a coin or topic not covered here? Don’t worry. Join the YouTube chat room, and write your questions there. The person with the most interesting comment or question will be given a 1 month free subscription to markets Pro worth $100!
The Market Report streams live every Tuesday at 12:00 pm ET (4:00 pm UTC), so be sure to head on over to Cointelegraph’s YouTube page and smash those like and subscribe buttons for all our future videos and updates.
Singapore, Singapore , Aug. 09, 2022 (GLOBE NEWSWIRE) — Today, the ZepetoX team (ZTX, ZepetoX.io) announced its foray into the web3 space, sharing its vision to build an open world that empowers creators and communities to build, play and earn.
ZepetoX is the crypto metaverse initiative jointly incubated by ZEPETO – Asia’s largest metaverse platform with over 320 million registered users – alongside leading global blockchain organizations including Jump Crypto.
As the sole blockchain project comprehensively backed by ZEPETO, ZepetoX will have exclusive ties to ZEPETO in terms of IP including technological, design, and content assets as well as bridges to facilitate user onboarding between the two platforms. ZepetoX’s blockchain development efforts will be advised by Jump.
“ZepetoX is our official venture into the blockchain industry. We feel that web3 opportunities should be advanced through a crypto-native approach, which is why we are excited to have Jump as a contributor to developing a new platform that would have exclusive connections to ZEPETO. Overall, we believe that ZepetoX can build the ideal web3 platform to not only bring blockchain to our existing users but also to expand our footprint in the blockchain space through various disruptive initiatives,” said Daewook Kim, CEO of Naver Z – the operating entity of ZEPETO.
“We are excited to support ZepetoX’s efforts aimed at onboarding new audiences into the rapidly growing crypto space. ZEPETO’s expertise and technological know-hows accumulated over the past years from building an immersive social platform will serve as a springboard for ZepetoX,” said Saurabh Sharma, Partner at Jump Crypto.
Building on the Solana network, ZepetoX will offer a web-based 3D open world with varying levels of gamification integrated as well as opportunities for users to monetize via ownership of digital assets and social interaction. Ultimately, ZepetoX aims to empower self-expression through customizable avatars and lands that can be equipped with NFTs from a rich collection of assets created by diverse creators, DAOs, or communities.
“I am thrilled to see IP powerhouses like ZepetoX choosing to build their metaverse on Solana,” said Anatoly Yakovenko, Co-Founder of Solana. “Projects like ZepetoX create new pathways for onboarding millions of users to web3.”
“Our global team brings a depth of crypto native experiences and our goal is to build on the foundation of ZEPETO to spearhead the adoption of blockchain among metaverse users, developers, and creators,” said co-CEO of ZepetoX, Chris Chang.
In the coming months, ZepetoX will launch its first land sale. The lands will be tradable on the ZepetoX marketplace, which will feature a variety of different NFTs as the open world project evolves. Further details on the sale will be available on the ZepetoX website in the coming weeks.
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About ZepetoX: ZepetoX (ZTX) is a web3 company building an immersive content-driven platform for users to create, trade digital assets and enjoy social interaction. Founded in 2022, ZepetoX is the blockchain initiative of ZEPETO, widely regarded as the largest Asia-based metaverse platform boasting over 320 million lifetime users with over 2.5 billion virtual fashion items sold.