How to Stake Solana (SOL)

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Contributor, Benzinga
September 14, 2021

Want to jump straight to the answer? You can stake Solana on Coinbase.

With an exploding interest in decentralized finance or DeFi, the cryptocurrency market has begun a natural evolutionary process. And with its proof-of-stake platform for decentralized applications (dApps), Solana (SOL) has created the ultimate arena to showcase crypto’s latest transformation. 

As the native currency of this industry leading smart contract platform, SOL has seen fantastic gains in recent weeks. And simply holding this altcoin has net solid returns for its investors. But for interested parties investing in SOL long term, staking the token can be a great way to further capitalize on the company’s success.

But what is Solana (SOL), exactly? And how does staking work? The following guide will show you step-by-step how to stake Solana. 

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts

What is Solana?

Solana is a next generation smart contract platform that was created in 2017 for the development of dApps. It is decentralized, open-source and boasts incredible speeds and super low fees -- Solana has mastered the delivery of its services on a Layer 1 blockchain. And with a proof-of-stake consensus mechanism, the company is able to achieve a highly decentralized network of validators with massively improved energy efficiency.

Billed as the fastest blockchain in the world, Solana has clocked over 65,000 transactions per second (TPS) with 400ms block times. And with hundreds of projects built on the platform, the Solana ecosystem is growing at a faster rate than any in the market. It aims to provide a high-performance platform for decentralized applications (dApps), decentralized finance (DeFi), and other use cases that require quick and reliable transactions.

Perhaps the most important feature of the platform, however, are the low fees. The average transaction cost on the Solana network remains below $0.01. SOL is the native currency of the Solana ecosystem and is used to pay transaction fees and interact with smart contracts.

How Does Staking Work?

For most investors, staking crypto is analogous to earning interest on savings with a traditional bank account. By holding your crypto on an exchange, you provide needed liquidity to the platform. In trade for the privilege of holding your assets, investors are offered a competitive interest rate, usually paid in the currency staked on the exchange.

But SOL token holders can also earn rewards while securing the Solana network by staking their tokens to one or more network validators. In this way, any holder of SOL with a supported wallet can passively earn rewards on their crypto. Based on a number of factors including the amount of SOL staked, the current inflation rate and commission fee, rewards offered are often well worth the effort involved in network participation. 

In technical terms, Solana operates under a proof-of-stake (PoS) consensus mechanism. Simply out, this means that the likelihood that a validator is selected to validate a transaction and earn associated rewards is proportional to the amount of SOL staked. If a validator acts maliciously, their SOL is slashed (permanently removed as a form of penalization), therefore this process is constructed to incentivise users to act in the best interest of the network,

How to Stake Solana

Participating in the Solana network and staking SOL through a supported wallet is a great way for experienced traders to earn interest on the token. But the easiest way to stake SOL is directly through the exchange you purchased it on.

A number of cryptocurrency exchanges now offer fantastic rewards for holding digital assets on their trading platforms. From liquidity mining to staking for interest, these offers for passive earnings have altered the landscape of the altcoin market. 

Offering up to 5% annual rewards for a number of proof-of-stake tokens held on the exchange, Coinbase makes earning passive crypto as easy as clicking a few buttons. But for now, the top U.S exchange doesn’t offer rewards for staking SOL. 

Lastly, as a staker it is important to monitor your staked SOL to ensure that it is being managed appropriately and to claim any rewards that you have earned. If your platform of choice doesn't allow you to easily manage your staked SOL, there are several tools that can help. For example, block explorers and staking dashboards can be used to track staked SOL.

  • securely through Coinbase's website
    securely through Coinbase's website
    Best For:
    Coinbase Learn
    Rating:
    Read Review

    Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

  • securely through FTX Exchange Non US's website
    securely through FTX Exchange Non US's website
    Best For:
    Market-leading Liquidity
    Rating:
    Read Review

Where to Buy Solana

Despite, declining liquidity within its ecosystem, Solana is still a top 20 coin with a worldwide following. It is widely accessible and can be purchased through a vast range of exchanges. To buy SOL through a centralised exchange, simply create an account and follow the sign-up process.

For U.S. consumers, Crypto.com and Coinbase represent the best choices for buying SOL. With safety at the forefront of their ethos, these exchanges offer state-of-the-art security to protect your crypto — so you can feel safe purchasing, storing and staking your digital assets.

It's important to note that the availability of SOL and fees charged for trading SOL will vary from exchange to exchange. As a result, prudent investors will compare the transparency, prices and fees on multiple exchanges before deciding where to buy SOL.

BlockFi
Best For
  • No or Low Fees
securely through BlockFi's website

Earn Interest on Other Cryptocurrency with BlockFi

Not all cryptocurrencies are built with proof-of-stake consensus mechanisms. But that doesn’t mean you can’t earn interest with them. You can earn a great interest rate on a number of fantastic altcoins through BlockFi. 

BlockFi offers up to 8% APR for holding cryptocurrencies with a BlockFi interest account. Signing up takes less than 2 minutes, and investors can start earning interest immediately. BlockFi believes financial services should be as mobile as you are, and has made its platform available for Android and iPhone devices.

Is Staking Solana Worth It?

Proof-of-stake tokens like SOL represent an evolution in the cryptocurrency market. With Solana leading the industry in fast transactions and low fees, the company is poised to compete directly with Ethereum in the months and years to come. 

For long-term holders of SOL, staking represents an enticing option. And with a number of reputable exchanges offering competitive returns for staked crypto, the deals become harder for serious investors to pass up. 

Ultimately the decision to stake SOL on an exchange or with a validator on the Solana mainnet will depend on your own comfortability with the risks involved. Cryptocurrencies including SOL are incredibly risky, often fluctuating by large amounts over short periods of time due to their speculative nature. However, for informed traders ready to earn passive income on their SOL, the options for doing so have grown tremendously.

Can you stake Solana from a hardware wallet?

Yes! The Ledger Nano allows for staking SOL via Solflare.com. Representing the most secure way to hold and stake SOL, Ledger’s cold storage solutions continue to attract the attention of the industry’s most discerning investors.

How much interest can you make from staking SOL?

When staking SOL with a network validator, the rate of return can depend on a number of factors, including the current inflation rate. Solana’s initial inflation rate was set at 8% annually. Decreasing 15% each year, Solana will eventually reach a long-term fixed rate of 1.5%.  

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About Micah C. Miracle

Before writing for Benzinga, Micah’s work was featured on a number of ranking news sites, including The Merkle, Global Coin Report and the Crypto Gazette.