Solana is a high-performance layer-1 blockchain known for its incredible speed and low fees. It's designed to support decentralized applications (dApps) and cryptocurrencies without compromising scalability.
Solana stands out not just for its high scalability, boasting a capability of handling up to 65,000 transactions per second, but also as a flourishing ecosystem hosting over 440 innovative projects. SOL is Solana's native utility token. It is used for paying transaction fees, validating the network, and SOL staking.
Staking SOL lets you participate in the network’s consensus and become a stakeholder in one of the busiest and fastest-growing blockchain ecosystems of 2024.
Solana DeFi TVL | Source: Solscan
The Phantom wallet, a popular non-custodial crypto wallet for Solana, offers an easy way to stake SOL tokens. This guide provides clear instructions for using Phantom for Solana staking, as well as alternative beginner-friendly methods to earn passive income through staking Solana.
The Basics of Staking on Solana Network
Solana leverages a proof-of-stake (PoS) consensus mechanism with a unique twist - the Proof-of-History (PoH) protocol. Imagine a world where transactions don't just line up block by block but are swiftly ordered as they enter the network. That's the genius of PoH, catapulting the Solana blockchain into a high-speed network with low transaction costs.
Delegated Proof-of-Stake: Solana's Masterstroke
Solana uses a delegated proof-of-stake (DPoS) consensus mechanism, which is a modification of the traditional Proof-of-Stake (PoS) system. It involves a community-driven approach where staking SOL tokens is part of a larger voting and delegation process. This process is not only incentivized but also crucial for network security.
When users stake SOL, they contribute to the consensus operation by choosing delegates responsible for block production. The influence of these delegates is proportional to the amount of SOL they have staked. Therefore, the more SOL staked, the more influence they have in transaction validation. This system aims to balance power among validators and ensure that those who are most invested have a significant influence on the network's direction.
A Self-Regulating Ecosystem of Trust and Responsibility
The Delegated Proof-of-Stake (DPoS) model used by Solana is designed to uphold network integrity. This is achieved not only through the election of validators but also through a system of accountability and community trust. If a delegate proves unreliable, the community has the authority to remove them, thereby maintaining a consistently strong and trustworthy system. However, this level of self-regulation implies that the choice of delegate is important. It is crucial to stake SOL with a dependable validator, as their actions can directly affect the staking process.
Phantom Wallet: An Overview
Phantom is the Solana blockchain official wallet. It's known for its user-friendly interface, making it an excellent choice for both beginners and experienced users. Phantom allows you to manage your SOL tokens easily, interact with decentralized applications on the Solana blockchain, and, crucially, stake your SOL for passive income.
Why Phantom for Staking SOL
Phantom stands out as the preferred choice for staking SOL due to its compatibility, simplicity, and security. The wallet offers a seamless staking process integrated directly into its interface. It also provides versatile options to swap tokens, store NFTs, and interact with Solana’s DeFi ecosystem. Phantom also offers a secure environment for your assets, employing advanced security measures to protect your tokens.
Staking Solana on Phantom Wallet
Let’s explore a step-by-step guide on staking Solana using Phantom Wallet:
Step 1: Download and Set Up Your Phantom Wallet
The first step in staking Solana with the Phantom wallet is to download and create your Phantom wallet. Begin by visiting the official Phantom website and downloading the Phantom wallet extension for your preferred web browser. Phantom supports Firefox, Chrome, Brave, and Edge browsers. You can also download Phantom as a mobile app on your iOS and Android smartphone from the App Store or Play Store, respectively.
Once installed, follow the prompts to create a new wallet, ensuring you securely store the generated seed phrase for future access and recovery purposes.
Step 2: Fund Your Wallet with SOL Crypto
The first thing you need to do is deposit SOL to your wallet. You can fund your Phantom wallet by buying Solana on KuCoin and transferring your tokens to Phantom.
Once your Phantom wallet is funded with SOL tokens, select Solana from your list of assets. When you enter the menu, click on Start earning SOL.
Step 3: Select Your Solana Validator
Review the list of potential validators. For example, we used the first one — Phantom Validator. When you have chosen your validator, you should input the amount of SOL you want to stake.
Step 4: Review and Confirm Your Transaction
Verify all the data entered before proceeding. Once you click on Confirm, you will need to wait a bit.
That's it! You have now staked your SOL on Phantom Wallet. Enjoy your rewards!
Tools like Validators.app can help diversify your staked SOL to various validators, protecting your investment from potential issues such as validator downtime, commission increases, or malicious activity. Although this involves multiple transaction fees, Solana's low fees make it a worthwhile trade-off for increased security and risk management.
How to Stake Solana as a Validator
Becoming a Solana validator involves maintaining and securing the blockchain while earning an annual reward rate of around 5%. Running a validator node requires substantial technical knowledge and resources but offers the highest potential rewards and impact on the network.
Unlike several other blockchains, there is no minimum amount of SOL to stake to become a validator. However, validating blocks can cost you a transaction fee of 1.1 SOL per day, so that you can set your staking amount as a validator accordingly.
Prerequisites for Becoming a Solana Validator
Technical Expertise: Strong understanding of Linux, Solana protocol, validator setup, and maintenance.
Hardware: High-performance server with reliable internet connection and sufficient storage.
Solana Tokens: Enough SOL to meet the minimum staking requirement for validator activation (currently around 200 SOL).
Here’s a step-by-step guide on how you can become a validator on the Solana network:
Set Up Your Machine: Install Linux on your server, configure firewall and security settings, and ensure system stability.
Download Software: Get the latest Solana validator software and tools. Refer to the official validator documentation from Solana for more information on this.
Create Keys and Accounts: Generate keypairs for the validator identity, vote account, and stake account.
Configure and Launch: Set up configuration files, allocate stake, and launch the validator process.
Monitor and Maintain: Actively monitor your validator's performance, address any issues, and update software regularly.
Stake SOL on Solana’s Liquid Staking Protocols
Another way to stake Solana is via liquid staking. Liquid staking allows you to earn staking rewards without the technical complexities of running a validator. Instead of locking your SOL for a long time, you will receive liquid staked tokens (LSTs) which you can trade, swap, and use, without impacting liquidity. Here's a step-by-step guide on liquid staking Solana from your Phantom wallet:
Install and set up your Phantom wallet. Ensure that it is funded with SOL tokens.
Choose a reliable platform like Lido Finance, Marinade Finance, Jito, or StaFi.
Open Phantom and connect it to the liquid staking platform's website.
Choose a staking pool based on your preferred fees, rewards, and lockup period.
Approve the transaction to deposit your SOL tokens into the chosen pool.
You'll receive equivalent liquid staking tokens representing your deposit and accruing rewards.
Track your rewards, adjust your stake, or withdraw your tokens based on the platform's terms.
Risks and Rewards of Staking
As with any other investment, staking also involves risks. If you show signs of malicious behavior (such as generating invalid transactions or censoring certain types of transactions or participants in the network), your stake can be slashed.
Slashing is the process of destruction of a part of a validator's stake in the case of unwanted behavior. It is a punitive measure for malicious actions.
Even though labeled as a potential ''risk'', it is actually a safety measure since it poses a reputational risk. Such a validator will get fewer chances of validating again or accruing SOL rewards. However, you might also get punished if you are delegating your SOL stake to another validator and they act maliciously. To avoid this, you should delegate your tokens to reputable validators.
To choose a valid and good-natured validator, head to the Solana validators list and select the validator's detail page.
How to Stake Solana on KuCoin
If you prefer a less technical and easier approach, you can stake Solana on KuCoin too. In this tutorial, we will use the KuCoin app to stake SOL:
Step 1: Visit KuCoin Earn
For the first step, head over to KuCoin Earn. While on the Earn page, search for SOL. In our case, it was automatically listed below the search bar.
Step 2: Select the Staking Option
The next step is to select the staking option and input the number of SOL tokens you want to stake. The total amount automatically includes a gas fee.
Step 3: Confirm Your Transaction
Check the data of your transaction once again and click Confirm.
Great! You have now staked your SOL via KuCoin Earn!
Staking Solana lets you earn passive income while becoming an integral part of one of the fastest blockchain ecosystems in the industry. The Phantom wallet, with its intuitive design and robust security features, serves as the perfect gateway for both newcomers and seasoned crypto enthusiasts to embark on their staking adventures.
In conclusion, whether you want to diversify your investment portfolio, earn passive income, or simply be a part of a vibrant crypto community, staking SOL on the Phantom wallet presents an exciting and promising avenue.
FAQs on Staking Solana (SOL)
1. How Can I Claim My Staking Rewards After Staking SOL?
When you decide to stake SOL coins, be warned that you must wait for at least two epochs (4-8 days) to start earning rewards. From that point onwards, you will receive rewards after every epoch.
Your accrued rewards will be automatically claimed and added to your balance, allowing you to earn more rewards seamlessly. If you want to access your rewards, you first must unstake all your SOL and transfer it back to your chosen wallet.
2. What Happens If a Validator Is Slashed or Penalized on Solana Network?
Unfortunately, this is one of the risks involved with staking SOL. When a validator gets slashed, all holders who have delegated stakes to that validator are in danger of losing a part of their delegation.
On the other hand, this action keeps the network secure by preserving the interests of both validators and token holders.
3. Can I Stake SOL with More Than One Validator?
To fully secure your stakes, we recommend you spread it across multiple validators. In this Solana Forum thread, validators present themselves and their services.
Next, one of Solana's validators, Staking Facilities, has developed a website that gives an overview of the network using visual data. It also includes recent performance statistics for each listed validator.
4. What If I Want to Unstake My SOL Tokens?
Yes, you can unstake your stake SOL. For example, you can unstake SOL using your Solana wallet (like Exodus). By using Exodus, you can only unstake all of your staked balance.
It usually takes up to 3 days because of the system of epochs. When you deactivate your total stake, it will not withdraw automatically but will wait and remain active during the current epoch to ensure fairness and network security.
5. Is Staking Solana Safe and Secure?
Staking SOL coins is generally safe to do. We introduced you to some risks involved previously, and as operating with any crypto platform poses some risks, you always need to do your due diligence.
If you prefer a safe and straightforward experience, you can stake Solana via KuCoin Earn.