An additional way to generate passive income in the crypto market is through the practice of staking. In return, your staked token rewards the chosen ecosystem with network efficiency and decentralization.
For Solana (SOL) holders, staking ensures the network works smoothly while your assets yield interest. In this guide, we outline all the steps needed to stake SOL tokens, the advantages and downsides, methods available, and how to unstake if you wish to access your funds.
If you are a first-timer or would like to sharpen your staking technique, this guide provides the right information to enable you to stake safely and efficiently.
What Is Solana Staking?
A hybrid PoS and PoH model serves Solana’s consensus model. Validators are given delegated SOL tokens, which they use to confirm transactions and secure the network. As an exchange, you receive rewards proportional to your stake, and these rewards are given every epoch, which is 2–3 days.
Staking SOL does not require a transfer. Hence, you retain full ownership of your tokens and can manage or withdraw them anytime, under the conditions set by the network for unstaking.
Why Stake SOL?
If you hold SOL or any other utility tokens, staking has many benefits.
- Earn Passive Income
Staking guarantees a passive income stream in the form of staking rewards. The annual percentage yield (APY) averages between 5% and 8%, driven by the validator’s performance and commission rates.
- Strengthen the Network
Staking aids in the security of the Solana blockchain. An increased stake improves the network’s attack resistance.
- No Minimum Required
There is no minimum amount required for staking. Even small fractions of SOL are more than enough for seasoned investors and new adopters.
Different Ways to Stake SOL
Based on your needs and experience, you can choose from native and liquid staking options.
- Native Staking
With native staking, you can delegate your SOL to a validator from your wallet. It doesn’t involve contracts with third parties, and it is fully secure, but your tokens will be staked for the lock period.
- Liquid Staking
With liquid staking, your staked SOL can generate a secondary income. Using Marinade or Jito, you receive tokens like mSOL or JitoSOL, which can come in handy in other DeFi protocols to earn additional yield.
Marinade or Jito prioritizes advanced strategies and is best suited for seasoned users seeking higher liquidity.
Step-by-Step Guide on Staking your SOL
Are you new or a seasonal staker? Stake your Solana tokens in just three steps:
Step 1: Get A Compatible Wallet
Your chosen wallet must support SOL. Popular options include:
- Phantom Wallet: A mobile app and Chrome extension-based option.
- Solflare: A mobile application and a web interface with built-in STSOL staking.
- Ledger Nano: A hardware wallet with relatively higher security.
Before proceeding to the next step, set up your wallet and fund it with SOL using centralized exchanges such as Binance, Kraken, or Coinbase.
Step 2: Select a Validator
Choosing a validator is crucial since they run the infrastructure for the SOL network. Make your choice based on,
- Reputation: Look at their community reception and how open they are.
- Commission rate: The lower the price charged, the better for you.
- Uptime: Process transactions with validators who have 100% uptime, as they are more reliable
You should explore validator dashboards like validators.app or Solana Beach before making your selections.
Step 3: Delegate Your Tokens
This step is wallet-specific. Here is how to do so with Phantom, Solflare, and Ledger.
If you use phantom wallets, follow these steps.
- Open your wallet and click on your SOL balance
- Click “Start Earning SOL”
- Choose a validator
- Enter the amount of SOL to stake
- Confirm the transaction
For Solflare:
- Go to the “Staking” section
- Select “Stake SOL”
- Choose a validator and amount
- Approve the transaction
For Ledger:
- Open Ledger Live and the Solana app
- Access the staking section
- Follow prompts to delegate SOL to a validator
After finishing all these steps, your stake becomes active after the next epoch.
How To Unstake SOL
Unstaking SOL is simple, but there is a known delay—the deactivation period.
Native Unstaking
- Open your Wallet
- Go to the staking panel.
- Locate the active delegated stake option and press “Deactivate.”
- Approve the transaction.
The SOL enters the deactivation phase, which lasts for one epoch (2-3 days). After this period, the tokens can be withdrawn or re-staked.
Liquid Unstaking
For liquid staking, swap your LSTs (liquid staking tokens) (for example, mSOL) back to SOL either on a decentralized exchange (DEX) or the protocol’s interface. While most protocols will allow you to unstake instantly, some may have liquidity-dependent rates.
How to Monitor Your Stake
Solana explorer tools can track rewards and blockchain validators within the wallet interface. You can also:
- Restake to increase your rewards.
- Change validators for better earnings.
- Manage multiple stake accounts if needed.
Risks and Considerations
While SOL staking holds great rewards, it also comes with some risks, including:
- Validator Risk: Your rewards can be adversely impacted by poor validator performance.
- Slasher Risk (Theoretical): While Solana does not implement slashing today, there are theoretical penalties for validator misbehavior in the future.
- Liquidity: Your tokens are locked for deactivation when using native staking.
- Smart Contract Risk: Liquid staking exposes assets to third-party contracts that could be compromised.
Final Thoughts
Staking SOL is an effortless strategy for building crypto assets while backing one of the fastest and most scalable blockchain networks. Remember to actively monitor your stake, understand the terms for unstaking, and choose reputable tools and validators to avoid pitfalls. This applies whether you choose native or liquid staking.
