You can stake Solana independently, via an exchange or non-custodial wallets. Want to jump straight into staking your Solana (SOL)? You can stake your crypto on reputable exchanges such as Coinbase, eToro, and Kraken.
Solana’s explosive week has gathered the attention of many in the crypto space as it is one of the big altcoin winners. Solana’s revival combined with the increasing popularity of staking makes people interested in the potential returns from staking Solana. Check out Benzinga’s price predictions for Solana to help determine if now is the right time for you to get started.
How Does Staking Work on Solana?
Solana (SOL) differs from traditional blockchain technology by using a proof-of-stake (PoS) consensus mechanism rather than proof of work (PoW). PoS uses validators that are delegated by individuals or entities known as stakers.
Individuals are required to lock up and assign a certain amount of collateral in the form of SOL to earn yield on their holdings. Solana stakers earn yield from transaction fees collected by validators on the blockchain.
How to Stake Solana (SOL)
Staking SOL can be done in a variety of ways. The most popular forms include independent staking, staking on a centralized exchange (CEX) such as Coinbase and eToro or using a non-custodial wallet.
Staking crypto is divided into two major categories — traditional staking and liquid staking.
- Traditional staking requires you to lock up funds in the form of crypto for a given period in which there is no ability to transfer or liquidate your stake.
- Contrarily, liquid staking allows you to have full access to your staked crypto at any time without a lock-up period.
How to Stake Solana Independently
Staking crypto independently refers to staking without the use of third-party services. Independent staking requires setting up and running your own nodes. This requires much more technological expertise and operational cost and puts the independent staker at risk for certain violations that accrue penalties.
How to Stake Solana via an Exchange
Staking SOL on a centralized exchange is the easiest compared to other staking options. This simplicity is favorable for newer crypto investors. Others prefer alternative staking options for higher returns.
Popular cryptocurrency exchanges such as Coinbase or eToro handle the technical aspects of staking. They make staking simple by selecting validators and managing delegation for you.
Centralized exchanges may have their own terms and conditions that can differ from decentralized staking options.
Steps to Stake via an Exchange like Coinbase
- Download Coinbase and make an account
- Purchase or transfer crypto funds into your Coinbase account
- Navigate to Earn and select an asset to stake
- Click Start Earning and stake your preferred amount
How to Stake Solana via Non-Custodial Wallets
Staking using a non-custodial wallet lets you avoid interaction with a third-party custodian. This method gives you full autonomy over your private keys and crypto funds.
Steps to Stake in a Non-Custodial Wallet
- Download a SOL-compatible non-custodial wallet like Phantom or Solflare
- Purchase SOL or transfer it into your wallet
- Navigate to Stake or Delegate and select a validator
- Delegate your SOL to your selected validator
- Confirm your stake and monitor your rewards
Benefits and Risks of Solana Staking
Although staking your Solana requires minimal effort to start earning, it’s important to be mindful of the pros and cons.
Pros of Staking SOL
- Earn passive income on your SOL holdings
- Promote decentralization
- Contribute to network security of Solana's blockchain network
Cons of Staking SOL
- Market volatility
- Loss of liquidity during lock-up periods
- Opportunity cost
How Long Does It Take to Earn Solana Staking Rewards?
Solana staking rewards are computed and issued approximately once every two days from the day you begin staking. This period between reward distributions is known as the epoch. Staking Solana on a centralized exchange may decrease this earning frequency to once every three days.
How Much Solana Do You Earn by Staking?
Yield from staking is calculated as an estimate of yearly return expressed as a percentage. This is known as Annual Percentage Yield (APY).
This number changes continuously and is affected by inflation, the number of compounding periods and supply and demand.
- Staking Solana on Coinbase: 5% APY
- Staking Solana on Phantom Wallet: 7.43% APY
Can You Lose Money With Solana Staking?
The short answer is yes. Like all investments, staking crypto comes along with its own set of risks. Staking, in particular, poses more risk than traditional investing because of the combination of lock-up periods and the volatile nature of the crypto market.
Where to Buy Solana via Exchange
Don’t already have SOL tokens in your wallet? Evaluate if this might be a good time to buy Solana to enhance your crypto portfolio today.
Staking Solana for Profit
Staking SOL offers a variety of enticing benefits alongside certain risks to consider. Average investors to those ready to run their node can capitalize on this new era of passive income. There are always risks especially with this crypto volatility but there are currently different opinions on SOL’s profitability at this crypto hike.
About Sean Rocker
Sean has been educating himself about the crypto space for many years and has been actively invested in crypto since 2019. He has passion for staking crypto and researching low market cap projects with specific interest in the AI, DePin and DeSci sectors. He currently attends Wayne State University’s College of Nursing and is striving for a Doctor of Nursing Practice degree.