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How to stake Solana (SOL)
Learn how to stake Solana (SOL) by following a step-by-step guide. Start earning interest on your crypto today.
Solana is a high-throughput blockchain with a proof-of-stake (PoS) consensus mechanism, which means that you can't mine it as you would with a proof-of-work (PoW) blockchain like Ethereum (which is currently transitioning into a PoS network). Instead, the network is secured through staking and validating blocks.
Solana staking refers to a process where users earn rewards for locking SOL coins, which go to a validator of their choice, who then gives them a share of the profits of uncovering a new block. The process is similar to a bank paying users interest-based income calculated on the amount of their deposits.
Validating refers to the process where a user or group runs a powerful data server or computer to confirm transactions on the network. Validators earn large rewards from their contribution to the security of the blockchain, which they share with stakers who delegated their coins to them.
Staking vs validating
Staking and validating are the two main options for earning from the Solana network and they vary in terms of resources required. For the sake of simplicity, validators are analogous to mining pools in Bitcoin, while stakers function somewhat like miners.
Stakers don't require a lot of technical knowledge since they only need to look for reputable validators and delegate their stake.
However, validators require more technical knowledge on the operation of full nodes and a powerful computer. They'll also need large storage for the accounts and ledger.
Truth be told, being a validator is open to anyone but not a lot of people have the means to operate as one, which is why staking is the go-to option if you want to participate in securing Solana and earning money with no barriers.
Making a decision over which option to choose from will depend on your resources and how much commitment you can give to each role.
How to stake Solana in 4 steps
It is important to remember that as a staker, you are merely delegating your tokens to a validator, meaning you will not lose access to them. Your stake serves as a vote of confidence to a validator as they confirm transactions on the network. In fact, you can stake and un-stake your coins at any given time.
Here is the process:
Buy SOL from an exchange
The first step is to get some coins to stake. Please see our How to buy SOL guide for detailed instructions on how to purchase or trade fiat currency or other cryptocurrencies for SOL.
Get SOL tokens in a wallet
After acquiring your coins, you need to send them to a digital wallet that supports SLP assets.
Choose a validator
Once your wallet is set up, choose a validator from whatever platform you're using. Chances are, your chosen wallet already supports native staking. All you need to do is determine which validator has the right balance of annualised rewards, total stakes and reputation for your needs.
Determine the amount you want to stake
Finally, input the amount of coins you want to stake. Remember to leave a small amount of SOL in your wallet for transaction fees. Solana transactions are incredibly cheap to conduct and average only $0.00025 per transaction fee, which is exponentially cheaper than that of its main rival Ethereum. You can now start earning based on your contribution and the distribution schedule of rewards.
How much can a Solana staker earn?
Stakers can expect roughly 8% annual returns on the tokens they deposit. For instance, if you stake 100 SOL, you can earn as much as 8 coins per year.
Another possibility for boosting ROI through staking is the potential appreciation in value of SOL, as proven by its massive surge in 2021. It's incredible to think that 1 SOL changed hands at only $1.65 on 1 January 2021, ultimately reaching an all-time-high (ATH) of $2.14 on 9 September, making it one of the fastest-growing cryptocurrencies to date. With more projects and users flocking to its ecosystem every day, it seems almost certain that the coin is due for even greater highs in the future, considering its current status as the leading "Ethereum-killer" blockchain.
However, the opposite can also be true. Since the coin has already seen a meteoric rise this year, it could drop significantly as well. One thing is for certain though: while the value of SOL might drop, staking is guaranteed to help you increase your holdings.
The costs of staking and validating in Solana
Unlike Ethereum, there is no minimum amount of SOL required for staking or validating.
Staking has no extra cost other than the negligible transaction fees and the amount of SOL you stake, which you'll get back after.
Validating, on the other hand, can be costly.
Here are the current minimum technical requirements to run a Solana validator node:
- 12+ core CPU
- 128GB RAM
- 1TB NvME SSD or more
- 1 GBPS unmetered connection
On top of that, validators need to pay 3 SOL for every epoch, which happens roughly every 2 days. A Solana epoch is the length of a certain number of blocks ( known as "slots") during which its consensus algorithm's validator schedule is defined. For stakers this means that only when epochs change over can stakes be commenced or stopped and rewards distributed.
Frequently asked questionsIs Solana better to mine than Ethereum?
Firstly, there is no such thing as Solana mining since, unlike Ethereum, it was designed to be PoS from the start. When it comes to staking, its rewards are a bit similar since the APY for staking on Ethereum 2.0 in April 2021 was roughly 8.5%, which is just a cut above that of Solana's. Another thing to note is that APY usually dips over time as more users participate and dilute rewards distribution.
Staking SOL is definitely a lot cheaper and more accessible than Ethereum mining at present; however, the latter's deflationary EIP-1559 and PoS upgrade is set to bring down ETH gas fees exponentially in 2022. When it comes to staking, both are equally profitable and accessible, although staking on Ethereum now means you won't be able to access your coins until the merge in 2022. If you have to choose, go with whichever coin you'd want to hold long term.Is Solana proof of stake?
Yes, Solana powers a PoS blockchain that can handle up to 50,000 tps. Still, it's not immune to the problems other leading public blockchains often experience. Solana suffered an 11-hour outage on 15 September when bots sent as many as 400,000 transactions per second to its network, causing it to crash.Does Solana have a limited supply?
No, there is no official cap on the number of SOL in circulation according to CoinMarketCap, just like Ethereum. It currently has a total circulating supply of 296 million tokens and a total supply of 504 million coins. Solana does periodically burn tokens, such as with its August 2021 "Ignition" event to ensure it stays under its total supply issuance.
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