Staking on Solana
In this post, we will explain how to stake Solana tokens to generate a passive income of between 6% and 9% interest per year on those tokens.
You can put your Solana to work by staking other than simply holding your SOL tokens on an exchange such as Binance or FTX or a wallet such as Ledger or Trust. You will not only be able to earn rewards by staking your SOL tokens on the Solana blockchain, but you will also be contributing to the network’s security in the process.
Validation instructions from TopNode
To begin staking your tokens on Solana, you first need to have purchased or traded your tokens. Once you have your tokens, they will need to be moved to the platform that you have selected to use to stake your tokens.
When using Solana, you can use several different platforms or applications. To begin, you have the option of directly staking them on a supported exchange. In general, we do not advise storing your cryptocurrency on an exchange because you will not have access to your private keys; nevertheless, these sites can sometimes provide more favorable exchange rates. You also have the option of staking your Solana within a wallet, wherein you will maintain access to your private keys.
What is Solana (SOL)?
Solana is a blockchain network that is open-source and has smart contract capabilities. It is well recognized for its quick transaction speeds and the vast number of NFT marketplaces and Defi solutions it provides. For smart contracts to be carried out on the blockchain network, Proof-of-Stake and Proof-of-history mechanisms are implemented. Validators are given rewards in the form of an annual percentage yield, often known as an APY, which functions similarly to an interest rate. Rewards are issued to validators and participants who stake SOL tokens.
How to Choose a Solana Validator?
There are a few things to take into consideration while selecting a Solana validator, and these include the following:
Commission Rate: It is recommended that you go with a lower commission rate. Because of the effect this will have on the benefits you receive.
Uptime: It is essential to locate a validator that can guarantee uptime for their services close to one hundred percent.
Size: Some users want to delegate to smaller validators so that they can contribute to the decentralization of the network and the increase in the value of your SOL investment over the long term. However, many believe there is power in numbers and choose the more important validators. Consider validators dedicated to increasing Solana’s value by assisting the platform’s app development, tools, or educational content creation.
How Much Can You Earn From Staking SOL?
The amount of money you get through staking greatly depends on several different factors, some of which include the validator you choose, the current condition of the network, and the quantity of SOL you stake. As of June 2022, the typical return is between 6 and 8 percent annually. Checking the network stats will guarantee that you get the most recent information. If you were to add your SOL to liquidity pairs on some Defi protocols, you would be able to earn substantially more money. Still, you would also be subject to extra threats, such as the possibility of suffering a temporary loss, hacks, and rug pulls.
Risks
When you assign your SOL to a validator, you never lose control or ownership of it, which is why staking on Solana is referred to as a «non-custodial» activity. The validator does not have access to your funds, and as a result, they cannot take them from you or restrict you from unstaking them in any manner.
No system will allow you to lose staked SOL tokens on your account. Gains, however, are not guaranteed to be maintained. If a validator changes their commission immediately before the end of the epoch to 100 percent, that validator will end up with all your rewards. Now we are here in 2022and you are lucky because the crypto community has developed various tools that allow you to set up notifications for any validators you are staking with.