You own SOL. You know you should stake it, but you’re not sure how to do Solana staking. It doesn't matter, we are here to help you! This concise explanation provides a comprehensive overview of staking SOL. We answer the most common questions and cover all key areas. We also provide optional resources for those who wish to explore further.

Why stake SOL?

Staking SOL isn’t just about earning rewards – it’s critical to Solana’s decentralization and security. By staking, SOL token holders contribute to the network’s resiliency and governance. Choosing the right validator for staking is crucial. Delegating tokens to validators is similar to voting in a representative democracy, as it reflects trust in their ability to maintain consistent uptime and vote quickly and accurately. Other considerations include validators’ ethical conduct, reaction to hard forks, and contribution to the Solana ecosystem.

Staking that is properly distributed among reputable validators enhances the decentralization of the network. This makes it more difficult for any single, well-funded entity to manipulate consensus decisions for personal gain.

At Helius, our goal is to grow the Solana ecosystem. We are also committed to providing the best value to our stakers. We have a high level of trust, top-notch technical expertise, and complementary operations that allow us to provide the best rewards for stakers.

What happens to staking?

There are two forms of staking on Solana: native staking and liquid staking. Currently, 94% of pledged SOL is native pledged, which is the main focus of this article. Liquidity staking will be discussed in a later section. Users can perform native staking through many platforms. These include multi-signature treasury management tools like Squads, popular wallets and dedicated staking sites. To perform native staking, users need to deposit their tokens into a staking account. This will be delegated to the validator’s voting account. A single user can create multiple staking accounts. Each account can be delegated to the same or different validators.

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Above:A single staker is delegated to multiple validators

Each pledge account has two key permissions: staking permissions and withdrawal permissions. The system defines these permissions when creating an account and assigns them to the user's wallet address by default. Each permission has different responsibilities. Withdrawal Permissions Have greater control over your account. It has the authority to remove tokens from staking accounts and can update staking permissions.

In staking, the most important time unit is a time period (epoch). Solana's time period lasts for 432,000 slots, which is approximately two days. The system issues staking rewards at the beginning of a new time period. The process is automatic; stakers will see their balance increase each time period. Users can harvest MEV rewards directly through the Jito website (more on this later).

When you natively stake SOL, you lock your tokens until the end of the current time period. If users deactivate their staking at the beginning of the time period, they may face a cooling period of up to two days before they can withdraw their tokens. If they are extracted at the end of the time period, the process can be completed almost instantaneously.

Similarly, activating staking requires a warm-up period, which may last two days or be almost instantaneous, depending on when the user launches the staking account. Users can consult the Solana block explorer to track progress during the current time period.

How do operators make money?

Validator operators (operators) can make money in three ways:

Issuance/inflation: new Issuance of Tokens

Priority Fee: Users send SOL to validators to prioritize their transactions

MEV Reward: Users provide Jito tips to validators to include transaction bundles

Validators earn exclusively in SOL, which is directly proportional to their staked amount. Operating costs are primarily fixed, measured in a mix of SOL and fiat.

Above: Solana verificationTotal staking rewards (data source: Dune Analytics, 21.co)‍

Issue

Solana distributes staking rewards every time period by creating new SOL tokens based on an inflation schedule. The current inflation rate is 4.9% and is gradually decreasing at a rate of 15% per year to a final rate of 1.5%.

A validator's staking reward is based on the amount of credit they receive. Validators earn credits by accurately voting for blocks that become part of the chain. Validators that experience downtime or fail to vote in time receive fewer credits. Typically, a validator holding 1% of total stake should receive approximately 1% of total inflation rewards. ‍

A validator’s staking rewards are distributed among its stakers according to the delegation size. Validators can collect a commission that is a percentage of the total inflation rewards issued by all stakers. Commission fees are usually a single-digit percentage, but can be any number from 0% to 100%. ‍

Above: Solana Inflation Plan

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Priority fees

The validators designated as current block builders will have their fees processed from A fee is charged on each transaction. There are two types of this: base fee and priority fee. These payments are immediately credited to the validator’s identity account. Previously, these rewards were split 50% between base and priority fees, with the remaining fees being burned. This structure will soon change with the passage of SIMD-96, allowing 100% of priority fees to go to the block maker.

Users pay a priority fee to have their transactions processed first. Securing priority is critical in many situations, including arbitrage, liquidation, and NFT minting. Complex transactions require more computing power and therefore pay higher priority fees. Popular coin accounts with strong demand require higher priority fees. ‍

Earnings from base fees are far less important than priority fees, but are necessary to prevent spam. The system fixes the base fee at 0 per signature.000005 SOL (5000 lamports). Most Solana transactions only require a single signature.

MEV (Jito) rewards

Validators operating the Jito validator client account for more than 90% of all pledges. Jito introduces an off-protocol block space auction. Blockspace auctions occur off-line. They allow searchers and applications to submit a set of transactions called a bundle. These bundles often contain time-sensitive transactions like arbitrage or liquidation. Each bundle comes with a "tip" for the block builder. These provide validators with an additional revenue stream separate from priority and base fees.

In 2024, Jito MEV revenue grows from a negligible number to a major validator revenue source. Jito charges a 5% fee on all tips. Validators can collect their own MEV commission using a mechanism similar to inflation rewards. Stakeholders are allocated remaining fees based on the relative size of their delegation to the block builder.

Above: Quantified priority fees and Jito tip growth data. Data source: Blockworks Research

Collaborative business

Helius validators collect issuance and MEV rewards 0% commission; our stakers enjoy the highest native yield. Our goal is to increase total staking volume and improve transaction speed for our customers. Using staked SOL for connectivity helps us reduce congestion and improve the performance of our core business.

Our previous article analyzed the costs and revenue of running a validator in more detail.

Where does APY come from?

Annualized percentage yield (APY) represents the annual compound percentage return of a staker staking for a full year at the current interest rate. Several factors influence this rate, including the network's current issuance rate, validator performance and uptime, how common it is for users to tip validators, and the current staking rate (i.e. the proportion of SOL staked). Several websites list validators ranked by APY, with StakeWiz being the mostA comprehensive one.

Specifically, APY will come from two main sources: issuance and MEV rewards.

Issuance

The verifier is among the pledgers according to the commission size of each pledger. Distribute staking rewards among them. Validators charge commissions ranging from 0% to 100% for their services. These rewards depend on the voting performance of validators. Points are awarded for each successful vote. Running a Solana validator is technically demanding. As the speed of the chain continues to increase, this difficulty increases.

Well-managed validators generate higher rewards due to:

Minimum downtime Time: Validators cannot participate in voting during downtime and therefore will not receive points.

Timely voting: If a validator continues to lag in consensus participation, it may receive fewer points.

Accurate voting: Points are awarded only for voting on subsequently confirmed blocks.

MEV (Jito) rewards

MEV rewards play a more important role in the composition of staking rewards. increasingly important role. This growth is driven by rising on-chain transaction volume and the arbitrage opportunities that come with it. Recently, Jito MEV tips have accounted for approximately 20-30% of total rewards, significantly increasing stakers’ returns. Similar to issuance rewards, validators receive a commission from 0% to 100% on MEV tips. Jito also charges a 5% commission on all MEV-related revenue.

Other considerations

Although low-commission validators have the potential for higher returns, many People still choose high commission validators like Coinbase. This is due to factors such as vendor lock-in and regulatory arbitrage. For example, funds using Coinbase Custody must be staked exclusively with Coinbase’s validators. Centralized exchanges benefit from retail users prioritizing convenience over revenue optimization. Off-chain users are insensitive to low returns, allowing exchanges to have flexibility in providing rewards.

Finally, new protocol mechanisms, such as SIMD-123, are designed to allow validators to share block rewards directly with stakers. If implemented, this will provide stakers with an additional source of income.

Solana Who are the key players in the staking ecosystem?

Solana Validators Can be divided into several categories

Ecosystem Team

Many well-known Solana application and infrastructure teams operate validators that complement their core business. For example, Helius operates a validator to Supports its RPC service

Example:

Helius

Mrgn

Jupiter

Drift

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Centralized exchange

Centralized exchange is one of the largest validators staking Solana. Provide one-click staking solutions for off-chain exchange customers

Example:

Kraken

Coinbase

Binance

Upbit

Institutional solutions provided Business

These companies focus on staking services tailored for institutional clients. They support multiple blockchains to meet a wider range of client needs.

Example:

Figment

Kiln< /p>

Twinstake

Chorus One

Independent team

Solana The validator ecosystem includes many independently operating mid-sized and long-tail validators. Multiple validators have been active since the network’s inception and contribute to the ecosystem through education, research, governance, and tool development.

Example:

Laine

Overclock

Solana Compass

Shinobi

Private validator

There are also over 200 private validators on the network. Their staking is self-delegated and may be controlled by an operating entity. These validators are distinguished by a 100% commission rate and a lack of public identity information on block explorers and dashboards.

What is liquid staking (liquid)?

Liquid Staking allows users to spread risk across multiple operators through staking pools that enable the issuance of Liquid Staking Tokens (LSTs). These tokens represent ownership of the underlying staking account.

LSTs are income assets that accumulate rewards based on the APY of the underlying staking account. With native staking, rewards increase the staked SOL balance every Epoch. In liquid staking, the number of tokens remains the same, but their value increases relative to the SOL token.

LSTs increase staking by unlocking DeFi opportunitiesCapital efficiency. The classic example is depositing LSTs as collateral on a lending platform. This allows users to borrow and borrow while still receiving staking rewards.

Helius launched our own LST (hSOL) via Sanctum, a popular LST launch platform. Our token is backed by a single validator staking pool. Helius stakers can convert existing stakes to hSOL using Sanctum’s platform, which offers a 0% fee interface for this conversion process.

Currently, only 7.8% of pledged SOL is liquid pledged, but this portion is growing rapidly. Liquid staking represents 32 million SOL, an 88% increase from 17 million at the start of 2024. JitoSOL is the most popular, accounting for 36% of all Solana LSTs. Other notable options include Marinade (mSOL) and JupiterSOL (jupSOL), which account for 17.5% and 11% of the market, respectively.

In many jurisdictions, issuance of staking rewards as tokens is considered a taxable event (similar to stock dividends) and is treated as income when received tax. However, LST allows users to earn rewards without such a taxable event. Their wallet balance remains the same; only the value increases. Always consult a financial expert for guidance specific to your situation.

Is it safe to stake SOL?

With native staking, stakers always maintain control and custody of their SOL. If a validator goes offline or performs poorly, non-custodial stakers are free to unstake and switch to other validators. In the event of network failure, staking positions will not be affected. Once network activity resumes, the location will remain unchanged.

Liquidity staking is also widely regarded as a safe option. Five reputable companies conducted nine audits of the staking pool process to ensure its robustness. During adverse market conditions or black swan events, LST may temporarily trade below its underlying value. While these deviations are typically short-lived, investors should consider tail risk, especially when using LST as collateral.

Cutting is a penalty mechanism that reduces delegated pledges to deter malicious or harmful behavior. Solana is not currently implementing reductions, but they are being considered and may be introduced in the future.

Finally, stakers should follow best practices to securely manage their private keys to prevent loss or theft.

What is the difference between staking SOL and staking ETH?

Solana differs from Ethereum in the way of staking. Solana integrates Delegated Proof of Stake (dPoS) directly into its core protocol, making delegation possible without relying on external solutions. Ethereum has transitioned from proof-of-work to proof-of-stake, relying mainly on third-party platforms like Lido and Rocket Pool for delegation and liquidity staking. Solana’s staking participation rate is 67.7% of the total supply, compared to Ethereum’s 28%.

On Ethereum, the only native staking option is family staking. This self-storage option requires technical proficiency and specialized hardware. Validators must stake at least 32 ETH and ensure their hardware remains online and properly maintained. A network of thousands of home stakers contributes to Ethereum’s reputation as a highly decentralized blockchain.

A handful of major platforms dominate liquidity staking on Ethereum. Lido dominates the market, controlling over 28% of the staked ETH supply. Lido issues stETH, a yield token that increases in value as rewards accumulate. Ethereum is an older network with lower inflation rewards. Staking ETH through Lido offers an annual yield of 2.9%, significantly lower than the return from staking SOL. Lido charges a 10% fee on staking rewards. stETH, like all LST, carries risks. These risks include smart contract vulnerabilities and the price of stETH deviating from ETH.

Finally, Ethereum includes a slashing mechanism to punish validator misbehavior, although slashing events are rare.

Conclusion

This article explores the concept and mechanics of Solana staking. Whether you are a seasoned participant or new to the ecosystem, understanding staking is critical to making informed decisions as a long-term SOL holder. Staking is a way to earn competitive income and a basic mechanism that supports network security and decentralization.