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Solana (SOL) is a popular layer one (L1) blockchain network that has come closest to challenging Ethereum’s dominance in the smart contract platform sector.
In recent years, SOL crypto has attracted millions of investors and holders, who can now use its staking facility to earn yield on their idle tokens. More importantly, the process of staking allows token holders to contribute to the security and decentralization of Solana.
Are you interested in learning how to stake your Solana tokens? In this article, we discuss everything you need to know about Solana staking, validator requirements, various SOL staking methods, and more.
Key Takeaways
- Staking is a critical process to a PoS blockchain’s security.
- Solana staking yield stood at about 7% APY as of April 2024.
- Undelegated SOL tokens have to wait through a cooldown period to enable withdrawal.
- Solana staking methods include solo staking, delegation, and liquid staking.
- Key Solana staking risks are slashing, exchange failure, technical difficulties, and smart contract bugs.
What is Solana Staking?
Solana staking is the act of locking up SOL tokens in order to participate in the network’s consensus process. SOL stakers earn staking rewards for their contribution.
Like Ethereum, Solana uses the proof-of-stake (PoS) consensus mechanism, where network validators come together to validate transactions, produce new blocks, and maintain the state of the ledger.
In order to become a validator, users must lock up (or stake) SOL tokens as collateral.
Interested parties can either solo stake by running their own validator node or delegate their SOL tokens to existing validators.
How Does Solana Staking Work?
SOL is Solana’s native cryptocurrency. The token is primarily used for gas fee payment and staking.
Staking is a critical process to a PoS blockchain’s security. As the total amount of stake on the network increases and the validators set diversifies, it becomes increasingly difficult for malicious actors to coordinate an attack on the PoS blockchain.
In order to successfully gain control of a blockchain network, the attacker must hold enough stake to alter transactions and account balances. Therefore, if the total amount of stake on the network is high, it becomes economically unviable and unprofitable to attack the blockchain. This is the true meaning behind Solana staking.
How Do Solana Stakers Earn Rewards?
Solana validators earn block rewards for participating in consensus. They are tasked with verifying newly proposed blocks. Block rewards are distributed to all validators who successfully vote on blocks added to the Solana blockchain.
When the validator is the block proposer (aka leader), they can earn transaction fees and storage fees for each block that is added to the blockchain.
Users who do not want to run and maintain a validator node can simply delegate their SOL tokens to existing validators and earn rewards passively.
As of April 24, 2024, current rewards stood at about 7% annual percentage yield (APY).
Staking Requirements on Solana
Anyone can become a validator on Solana and start staking their tokens.
Unlike Ethereum’s minimum 32 ETH stake deposit required to be eligible for running a validator node, Solana does not impose such minimum stake requirements.
In order to participate in consensus, validators are required to have a vote account with a “rent-exempt reserve” of 0.02685864 SOL.
Validator voting requires the validator to send a vote transaction for each block which can cost up to 1.1 SOL per day
According to Solana Labs, here are the hardware recommendations to run a validator node on Solana:
- 12 cores / 24 threads, or more
- 2.8GHz base clock speed, or faster
- SHA extensions instruction support
- AMD Gen 3 or newer
- Intel Ice Lake or newer
- AVX2 instruction support
- Support for AVX512f is helpful
- 256GB or more
- Error Correction Code (ECC) memory is suggested
- Motherboard with 512GB capacity suggested
- PCIe Gen3 x4 NVME SSD, or better
- Accounts: 500GB, or larger. High TBW (Total Bytes Written)
- Ledger: 1TB or larger. High TBW suggested
- OS: (Optional) 500GB, or larger. SATA OK
- The OS may be installed on the ledger disk, though testing has shown better performance with the ledger on its own disk
- Accounts and ledger can be stored on the same disk, however due to high IOPS, this is not recommended
- The Samsung 970 and 980 Pro series SSDs are popular with the validator community
- Not necessary at this time
- Operators in the validator community do no use GPUs currently
Can You Use Your PC to Stake SOL & Become a Solana Validator?
According to Solana Labs, users can operate validator nodes using their PCs as long as their home computers and networks meet the hardware specifications mentioned above.
Validators must ensure that they have a reliable, fast Internet connection, knowledge of the Linux terminal, understanding of computer processes, knowledge of formatting and mounting drives, and the ability to respond quickly to validator issues.
Validators must also be adept in marketing and communications to attract delegators and fulfill customer support requirements.
According to Solana Labs, users can also run Solana validators on a cloud computing platform. However, Solana Labs added that it may not be cost-efficient over the long term.
Easiest Way to Stake SOL
If you are not interested in going through the hassle of managing a validator node and are still wondering how to stake Solana, we have got you covered.
The easiest way to stake Solana is by delegating your SOL tokens to existing validators.
Delegation refers to the act of assigning some or all of your SOL tokens to a particular validator or validators. Delegating does not give the validator control or ownership of your tokens. You can choose to withdraw your staked tokens at any time.
You can learn about Solana network validators and their performance metrics on community-operated sites such as Solanabeach.io and Validators.app.
Readers must note that validators charge a commission fee for providing staking services.
Here’s How to Stake Solana
In this section, we discuss how to stake SOL tokens via delegation.
Staking Via Self-Custodial Wallets
In order to stake your SOL tokens, you will need a Solana-compatible crypto wallet that supports staking.
You will also need to create a stake account that can be used to delegate your tokens to validators on the Solana network.
A stake account will have a unique address. You will be able to manage your stake account from your crypto wallet. You can create as many stake accounts as you like.
Once you have created stake accounts, you can start delegating your SOL tokens to validators of your choice.
A single stake account can only be delegated to a single validator at any time.
If you want to delegate to different validators, you will need to split your tokens between multiple stake accounts.
Staking Via Custodial Wallets or CEX Accounts
Several centralized crypto exchanges (CEX), including Binance and Coinbase, allow account holders to stake their SOL tokens.
This process is hassle-free and requires users to take minimum steps to stake their Solana tokens. Users do not have to move their SOL tokens out of their accounts, and they are not required to create stake accounts.
However, custodial staking may expose users to exchange failure risks in the event an exchange suddenly becomes unavailable, files for bankruptcy, or is banned.
Liquid Staking
Liquid staking is a staking process where the staker receives a receipt token that can be used on decentralized applications (DApps). Liquid staking solves the illiquidity problem that arises from locking up crypto tokens in the process of staking.
Users that hold their SOL tokens in self-custodial crypto wallets can use liquid staking services provided by DApps such as Marinade, Jito, and Blaze.
Factors to Consider When Choosing a Staking Method
SOL holders have three ways to stake their SOL tokens:
- Solo staking by running a validator node
- Staking via delegation using a self-custodial crypto wallet
- Staking via delegation through a CEX
When selecting a staking method for SOL, users should consider the following factors:
Withdrawing Your Stake of SOL
Let’s say you have a single stake account with 1000 SOL tokens delegated to a validator. Here is how to withdraw the staked SOL that you have delegated:
Undelegating
You can use the wallet interface to deactivate your stake delegation.State change
Your stake account will show that it is “deactivating.” Staked tokens that have been undelegated are not available. Newly undelegated tokens are initially considered “deactivating” or “cooling down.”Cooldown
Staked tokens change state at the beginning of a new epoch. An epoch is approximately 2 days long. Once your stake account status becomes “inactive” or “not delegated,” your staked tokens stop earning rewards and can be delegated.Withdrawal
Now, you can use the wallet interface to withdraw tokens from your staked account to your main wallet account.
Users can use the wallet interface called “split” to reduce their delegated staked amount without deactivating the entire staked balance.
Readers should note that the Solana protocol has a limit to how much total stake can change state in a single epoch across the entire network. According to Solana Labs, no more than 25% of the total active stake on the network can be activated or deactivated in a single epoch.
Benefits and Risks of Staking Solana
Benefits
- Passive income: Staking SOL allows users to earn rewards in the form of additional SOL tokens, providing a passive income stream.
- Network participation: By staking SOL, users actively contribute to the security and decentralization of the Solana network.
- Airdrops: Solana stakers may be eligible for various Solana-based airdrops.
Risks
- Loss of funds: Staking involves locking up SOL tokens, which may be at risk of loss due to technical failures, security breaches, or slashing penalties for validator misbehavior.
- Technical challenges: Setting up and maintaining a validator node requires technical expertise and may involve complexities such as hardware maintenance, software updates, and network monitoring.
- Market volatility: The value of SOL tokens and staking rewards may fluctuate due to market conditions, affecting the overall profitability of staking activities.
- Exchange failure risk: Token holders who staked via CEX are at the risk of losing their staked tokens if the CEX collapses, declares bankruptcy, gets hacked or gets banned.
The Bottom Line
Solana staking offers an opportunity for SOL holders to passively earn yield while contributing to the network’s security and decentralization.
However, it’s essential for users to understand the staking process, associated risks, and factors to consider when choosing a staking method.
FAQs
Is staking Solana worth it?
How do I stake Solana?
Is there a risk to staking Solana?
Can I lose my staked Solana?
How much does Solana charge for staking?
How do I choose a reliable Solana validator?
References
- Consensus Validator or RPC Node? | Solana Validator (Docs.solanalabs)
- Solana Validator Requirements | Solana Validator (Docs.solanalabs)
- Solana Validator Prerequisites | Solana Validator (Docs.solanalabs)
- Staking and Inflation FAQ (Solana)
- Dashboard | Solana Beach (Solanabeach)
- Solana Validators | www.validators.app (Validators)
- Stake Accounts (Solana)
- Staking and Inflation FAQ (Solana)
