Staking Solana

10 second summary: Staking Solana allows you to increase your portfolio reward substantially with next to no impact on your risk profile. It takes less than 10 minutes to read this article and start staking if you already hold SOL, and there are two clear-cut best options. You can either stake using FTX (10% APY, 7 day lockup), or alternatively by delegating your stake to a validator (approx. 8% APY, 3 day lockup). Guides and more detail for both options are laid out below.

 

Staking

Staking is an important benefit of holding a cryptocurrency, and dependent on the staking options and background tokenomics, staking your tokens whilst holding them can offer significant upside. To not get too technical regarding staking, let us compare staking to something most people are familiar with, a savings account at a bank. Similarly, to a savings accounts which pays you interest for storing your money with the bank and allowing them to use it, staking pays you interest for providing your tokens to help secure the network and validate transactions. For this reason, staking is available for most Proof of Stake based networks such as Solana, Algorand, Cosmos, Ethereum and Tezos amongst others. When following a long term holding strategy with your portfolio investments it is important to maximise their passive growth. We’ve all seen the classic graph about the difference in taking advantage of compounding interest at different ages.

As you can see compounding interest is not to be ignored, and the earlier you start the better. However, when staking your crypto, you receive your interest in crypto and not in fiat. As we will be looking at how to stake Solana, let us use an example of 100 SOL. SOL staking offers an interest rate of up to 10% per year currently. In terms of growth rate in crypto tokens, your portfolio follows the usual interest curve. So after one year you will have 110SOL (100SOL + 10 SOL), after two years you will have 121SOL (110SOL + 11SOL), year three you will have 133.1SOL (121SOL + 12.1SOL) and so forth. It allows you to increase your token holdings without having to deploy more capital, to take further advantage of the potential upside of Solana.

Option 1 – Staking with via an exchange

At the moment there are a couple of major exchanges that offer staking services for Solana, with different terms. The terms mentioned here are similar to those banks have with their saving accounts, and require you to wait for a certain period of time before being able to withdraw your savings/staked crypto. For example Binance was offering users who wished to stake SOL with them, lockup periods of 30, 60 and 90 days for an annualised interest rate of around 10%.

Once someone has staked their SOL and agreed to the lockup period, they cannot access their SOL until the lockup period is over, at which point their staked SOL will be returned to them along with the interest. The lockup periods offered by Binance are not ideal. Currently the best option on the market is Staking SOL via FTX. FTX offers a yearly 10% interest rate on the SOL you stake with them, with a 7day lockup period. So if I was to unstake my SOL today, I would receive it back in a weeks’ time. There is also the option to pay 10% of the amount you are looking to unstake to receive your funds back immediately. As you can see FTX offers a significantly better option than Binance, with a much shorter lockup period with a higher interest rate. In our opinion, out of all the exchange staking solutions, FTXs’ terms are the most user-friendly. So how do you stake SOL via FTX? The below steps and screenshots, with the relevant buttons highlighted in the red box will have you staking your SOL in under 2 minutes!

1 – Log in to FTX

2 – Go to your wallet

3 – Find the row for Solana in your wallet. On the right-hand side there will be a button which says ‘Stake’. If you can’t see it make sure that your browser window is full size or click the three vertical dots and a popup will appear. If using the mobile app, you simply tap on the row and a drop-down menu will appear. Click on ‘Stake’.

4 – On the ensuing menu, find the Stake button, and click it again. This will make a popup menu appear.

5 – Enter the amount of SOL you wish to stake. If using a computer, the staking menu will automatically be set up for Solana. Otherwise make sure you select Solana as the coin.

6 – Now click the Stake button which should be clickable as you have filled in the amount field.

7 – All done! A little white success popup at the bottom of your screen will appear. You can also confirm your staking was successful by checking the Staked and Available balances.

In case you wish to unstake your SOL, you carry out steps 1-3, and then for Step 4 you simply select the Unstake button which is next to the Stake button. This will bring up a similar popup like the one we filled out in Step 5, however it will be for unstaking. Once you have filled in how many SOL you wish to unstake, you can then select between two options. Option 1, pay 10% of the amount you wish unstake to receive it immediately, or Option 2, which is to wait 7 days to receive the amount you have unstaked. We recommend using Option 1 only in an extremely critical scenario, as it is too punitive otherwise. Once you select your option, everything is taken care of!

FTX inarguably offers the simplest option for staking your SOL, with the best interest rate on the market at 10%, a 7 day lockup period and hourly interest payments directly to your FTX wallet which you can withdraw. The 10% interest rate offered is higher than that which the best validator offers at 8%, and this is due to FTX not actually staking the SOL. We have been able to confirm this with FTX, and we suspect that the SOL provided by users via the staking function is used for a different purpose by FTX.

Option 2 – Staking with a validator

The only other competitive alternative for SOL staking apart from FTX is staking directly with a validator. This option offers a slightly lower interest rate between 7-8% dependent on how the validator and network as a whole is performing and the number of transactions being processed, but comes with a lockup period of a Solana epoch (between 2-3 days). This option does help the Solana network as opposed to staking with FTX. So for a reduction in yearly interest and a little bit more legwork, you have a smaller lockup period whilst also helping the network. Interest accrued is also received every 66 hours, as opposed to the hourly intervals offered by FTX.

Staking with a validator involves delegating your tokens to a validator. There are multiple methods to do this and many different validators you can choose. To make life easy for everyone we have conducted a review of validators, and objectively identified the validator with the best credentials.

We determined GenesysGo to be the best option for delegating your stake to, as they have been consistently at the top of the leaderboard in terms of validator performance and have also been vetted by the Solana Foundation. You can view validator performance here.

Disclaimer: Cryptonary receives no benefits or incentives of any kind and there is no conflict of interest present. The communications and collaboration with GensysGo was carried out in the best interests of Cryptonary members and Solana ecosystem participants, to make the staking process with a validator as easy as possible for everyone. Users are urged to do their own research on the validator they choose. As always, NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

 

We reached out and got in touch with them and collaborated on creating a staking guide as delegating to a validator is more complicated than staking via FTX. One of the founders of GenesysGo will also be appearing on our upcoming podcast and has some exciting news to share with everyone on the upcoming podcast! Below, you will find the step by step guide of how to stake your tokens with a validator, using solstake. We have found this to be the most user friendly method possible. Alternative options, such as using a SolFlare or Exodus wallets exist, however solstake is the easiest option and should work with whatever SPL based wallet you are currently using (Phantom, Sollet and Ledger integration).

If you wish to stake with a different validator, you will simply select a different option for Step 6 as shown below:

If you encounter any problems during the staking process or simply wish to speak directly to the people who run the validators, you will find GensysGo Discord here and can always drop them a message on Twitter.

Comparing the two options for Solana staking, staking via FTX is the easier alternative requiring less effort along with the best interest rate on the market at 10%, but does not help the Solana network and has a 7-day lockup period. Staking using a validator requires more effort and has a slightly smaller interest rate with rates of around 7-8%, but helps secure the network whilst having a smaller lockup period than FTX at 3 days. Both options are the clear cut best in market, and the final decision as to which avenue to use for staking is up the holder!

 

 

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