Note: This article is not financial advice. Hubble Protocol does not endorse any tokens or platforms mentioned in this article.
Key Takeaways
- There are multiple ways to stake SOL on Solana.
- Staking is an important function of securing the network.
- Users can earn rewards for staking their SOL.
This article explores safe staking possibilities on Solana. With over 2,000 Solana validators on the network, there are quite a few ways users can stake SOL, including liquid staking protocols that do a lot of the hard work to make sure Solana becomes further decentralized.
Hubble has recently written about staking on Solana in past articles. For any users new to staking, these posts can be a starting point to learn more about staking before taking the plunge into the world of staking SOL:
In the next two sections, this article will look at staking directly with Solana validators and staking through a pool. This article is not financial advice, but the resources within these paragraphs can be used to help better understand how to participate in staking SOL.
Staking SOL Directly with Solana Validators
If users want to stake directly with a Solana validator, they can do some research and delegate their SOL to a validator they think is a safe bet. Currently, slashing on Solana Mainnet Beta has not been implemented, so validators who go offline or miss votes are not subject to losing their stake from slashing, which can be a major concern.
Solana validators who go offline are not earning SOL while they fail to help validate transactions, and this can be problematic for users who delegate their SOL to a validator that isn’t operating in top form.
However, choosing to delegate to one of the validators in the staking super-minority, which includes 31 validators at present, doesn’t help decentralize the network, so some due diligence is required to vet validators outside this group.
Fortunately, several tools can be used to research validators on Solana. Users can find information about validators' recent rates and past performance on these sites:
Again, finding validators who perform well and are outside of the super-minority is an incredibly important part of strengthening Solana. If doing the research to find a deserving validator who votes on time and takes their position seriously is too much work, then staking SOL with a liquid staking pool is another option.
Staking SOL with a Liquid Staking Pool
Liquid staking pools provide an easy-to-use utility for SOL stakers who are interested in participating in decentralized finance (DeFi). Not only will a staking pool do users’ due diligence for them, but each protocol will provide users who stake through their platform with a liquid staking token that accrues staking yield at a rate of SOL Price + Staking Rewards.
Most of these protocols are helping decentralize Solana by staking SOL with deserving validators outside the super-minority and increasing Solana’s Nakamoto Coefficient, or the number of validators that would need to work together to overtake the network.
For users who are long-term SOL holders who also want to participate in DeFi, then participating in a liquid staking pool provides the opportunity to “have your cake and eat it too.”
- Marinade Finance: Stake mSOL
- Lido Finance: Stake stSOL
- Socean: Stake scnSOL
- JPool: Stake jSOL
- MonkeDAO: Stake daoSOL
The opportunities to earn yield from DeFi composability increase through staking with these protocols. For example, users on Hubble Protocol are earning ~10% APR in LDO rewards for borrowing USDH against stSOL.
The more users participate in composable DeFi, the more smart contract risk they become exposed to, and it should be noted that additional smart contract risk is introduced with liquid staking pools. Additionally, the stress of the market can knock a liquid staking token off of its peg with SOL, which can lead to liquidation if the token is used as collateral for borrowing.
Tons of Opportunities for Safe Staking SOL for APY
The number of Solana validators that users can delegate their SOL to for securing the network is increasing all the time. It seems like yesterday that there were only 1,000 Solana validators, and now that figure has doubled in very little time.
Solana is geared towards speed and performance, and making Solana the most performant blockchain in crypto relies on staking. If users don’t have the technical expertise or time to become a validator themselves, they can help increase the network’s Nakamoto Coefficient and make Solana one of the most decentralized public blockchains on the market by delegating SOL to a validator either by themselves or through a liquid staking pool.
Blockchains require user cooperation to function efficiently, and staking is one of the most basic ways to participate in the network. When users stake SOL, they’re doing their part to securely increase the network’s efficiency. As a reward for participating in the network in this way, users can earn rewards distributed in additional SOL—stake to participate, earn rewards, and that's DeFi.
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