Solana is one of the most popular proof-of-stake blockchain networks. It is well known for its fast transaction speeds and affordable transaction fees. SOL holders can earn rewards and generate passive income by staking their tokens.
In this guide, we’ll look into how staking works and show you how to start staking your SOL tokens. We’ll also look into the potential risks and benefits of staking and introduce you to the best wallet options for staking Solana.
How Does Solana Staking Work?
Holding your SOL is not the only way to grow your Solana investments. Staking allows you to generate passive income from your tokens by temporarily locking them up and delegating them to a validator.
Validators pool SOL to increase their “stake” in the blockchain and therefore chances of being selected to contribute to it. The more transactions the validator is able to contribute to the network, the more rewards the validator (and those delegating SOL to them) earn.
This is a mutually beneficial process since it helps secure the Solana network and while providing validators rewards for their contribution.
What role do Validators play in Solana Staking?
Validators process transactions on specially configured systems which helps to run the Solana network. Since validators must cover the costs of setting up, maintaining and operating their systems, they charge their delegators commissions to make up for these expenses. Commissions are collected as a percentage of the rewards earned by each SOL delegator.
Different validators can vary in terms of their performance, commissions and APY. Investors should do their research on different validators given the current market conditions. Ultimately, it is up to each user to select the validator they feel the most confident in.
How To Stake Solana
You can stake Solana by becoming a validator yourself or by delegating your SOL tokens to a validator, with the latter being the more convenient choice for most. In order to do this you will first need to relocate your SOL to a wallet that supports crypto staking for Solana. Then you’ll need to follow these steps:
- Create a staking account on your chosen crypto wallet for Solana.
- Select a validator to delegate your tokens to. There are different validators you can choose from, depending on your own preferences.
- Delegate your tokens to the validator of your choice as instructed by the wallet used.
Best Wallets To Stake Solana
SolFlare is a non-custodial software wallet for Solana that runs on the Google Chrome browser and desktop and mobile devices. To stake Solana on SolFlare you’ll first need to create and fund a wallet. Once your wallet is funded, you’ll be given the option to stake your SOL tokens, earning a given APY, right from the wallet interface.
Once you select the “start staking” option on your wallet all you have to do is set the amount you want to stake and select a validator from the options listed on a dropdown menu. When selecting a validator, you’ll be able to consult their address and stats.
After staking is complete, you have the option to split the coins at stake into a separate account, create an additional account to stake more tokens and undelegate your current stake.
The Phantom wallet, available as an extension for Google Chrome, Brave, Firefox and Edge browsers, allows its users to easily stake SOL tokens to earn rewards. To start staking on Phantom all you have to do is Install Phantom, create a wallet and fund it by depositing SOL.
Once you select the SOL tokens you have deposited on your wallet, you’ll be given the option to “Start earning SOL”. All you have to do is click on the button, set the amount you want to stake and choose a validator to delegate your stake to. Finally, just confirm the transaction by clicking on the “Stake” button.
Exodus is one of the multicurrency crypto wallets that supports Solana and SOL staking. The process of staking on Exodus is very simple. All you have to do is select your previously funded Solana wallet and click on the “earn rewards” option. Next, select the amount you want to stake and click on “stake”.
Staking or unstaking SOL can take between 2 to 4 days to process. You should also keep in mind that, unlike with other wallets, Exodus doesn’t ask its users to select a validator since assets are staked with a single validator.
Binance is a cryptocurrency exchange allowing users to generate earnings from their crypto, including Solana. If you are holding SOL on your Binance account, you have the option to generate earnings by staking your tokens. To stake on Binance simply go the Earn tab on Binance and select “Staking”. You’ll find Solana listed under the Locked Staking options. Here you’ll be able to see the estimated APY, staking duration options and minimum staking amount.
Unlike other options, Binance offers Locked Staking for Solana, giving its users multiple staking duration options. Users commit to stake their assets for a given period of time (in days) at an estimated APY%. While users do have the option to unstake their tokens before the set period of time has passed, doing so would result in missing out on the rewards.
Are There Any Risks To Staking Solana?
No investment is 100% risk free and the same can be said for Staking. When staking crypto, you should be wary of a process called “slashing” that can lead to losses. Slashing takes place when part of a validator’s stake is destroyed with malicious intent through invalid transactions or network censoring. In the given case this happens, all involved in the staking pool are affected, with a partial loss of staked amount and rewards for the validator and delegators.
If you are looking to generate a passive income with your crypto investments, staking Solana is a potentially lucrative investment to consider. By staking your Sol tokens on a wallet or exchange you can earn interest and rewards on your investment and increase your earnings.