07 Sep 2021 9:42 AM +00:00

Solana Staking: How Does It Work?

Solana has taken the crypto world by storm over the past month, but how does SOL staking work?

Since the start of August, Solana has seen a price rise of nearly 400%, surging to $179.92 at the time of writing.

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If you’re one of the many crypto investors to recently take interest in SOL and want to start earning with your assets, here’s what you need to get started.

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How To Stake Solana

The first thing to do when staking Solana is to select a wallet or exchange that supports SOL staking.

How To Stake Solana on Exodus or Binance

Some of the easiest ways to quickly stake Solana is with either your Exodus wallet or Binance.

For Exodus, select your Solana funds and click on the settings button (the one with three dots). Here, choose Advanced Settings, before entering in the amount of SOL you want to stake, and hit the Stake SOL button. Staking on the mobile Exodus wallet follows a similar path, except select the arrow button in the top right corner, rather than Settings.

In Binance, head over to the Locked Staking section, or follow this link. Search for SOL, and choose Stake Now. Here, you can pick how much SOL to stake, and for how long, as well as seeing the different APY rates before finally staking your Solana. 

How To Stake Solana on SolFlare

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SolFlare is a Solana-specific web wallet that supports SOL staking. Once you’ve set up your wallet and transferred some SOL to you address (which you can see how to do here), you can then get started with staking. You’ll need to keep your Keystore key handy after doing this, as it will be needed for any transactions that you make in this process.

To stake with SolFlare, click the Staking section from your wallet, and create a stake account. You will then be prompted to transfer SOL into this staking account. SolFlare recommends leaving “at least 1 SOL” in your wallet, as you may still need to pay transaction fees.

Once your Staking Account is set up, you will need to choose a validator to delegate your SOL to. You can see a list of Solana validators from here, or go to this Solana Forum thread. It’s important to do your own research when choosing a validator. Various aspects, such as operator fees, will differ between them.

After choosing your validator, delegate your SOL to them from the Staking screen, and you’re all sorted.

Solana Staking Rewards

The current Solana staking rewards are 6.35% APR as of September 2021, according to StakingRewards.com.

However, these rewards will vary depending on the validator, and the APR is subject to change. Validators will also take a certain cut of a delegators reward, averaging a fee of 9.85%.

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Putting this into practice, if you staked 10 SOL for one year at these rates, you would earn 0.635 SOL. After paying a 9.85% validator fee, you would go home with 0.5724525 SOL – worth $103.01 at the time of writing.

Staking rewards are distributed once per epoch – which lasts around two days. However, there is a ‘Warm-Up period’ of one epoch for new stakers, meaning it could take between four or five days to receive your SOL rewards.

Can You Mine Solana?

It is not possible to ‘mine’ Solana in the same way you mine bitcoin, for example. Solana uses a proof-of-stake mechanism, validators secure the network through staking, not mining.

While in the battle of staking vs mining, both have the same overall goal of securing the blockchain, mining uses a proof-of-work mechanism that relies upon heavy computational power to solve complex maths problems as part of this strategy. This is why miners will often buy up high-end GPUs or ASIC miners.

These are not needed to earn on the Solana network, with stakers only needing to delegate their existing SOL.

Read More: Solana Roadmap: What New Updates Are Coming To Solana?