Introduction
Staking on Solana is an excellent way to earn rewards by holding SOL, but liquid staking takes this a step further by integrating decentralized finance (DeFi) into the staking process. This guide will cover the fundamentals of liquid staking tokens, including:
- Native Staking on Solana: Traditional staking locks SOL tokens to earn rewards but limits their utility in the DeFi ecosystem.
- Overview of Liquid Staking: Allows SOL holders to earn rewards while maintaining liquidity, enabling trading and usage via DeFi and Liquid Staking Tokens (LSTs).
- Top Solana Liquid Staking Providers: Such as Sanctum, Jito, Marinade Finance, and SolBlaze.
- Risks and Considerations: Understanding potential risks associated with liquid staking.
If you're already familiar with staking on Solana, liquid staking offers advanced DeFi practices to maximize rewards. Here, we’ll explain how liquid staking works, the mechanics behind LSTs, and the top protocols and providers in the Solana ecosystem.
Staking on Solana
Solana, like many blockchains, uses a Proof-of-Stake (PoS) consensus mechanism to secure its network. This system allows SOL holders to delegate tokens to network validators, helping maintain the network while earning SOL rewards.
Staking is a core component of Web3. For a refresher, our guide on staking SOL covers the basics.
Traditional staking, or "native staking," is useful for passive rewards but requires locking assets, limiting their use in DeFi.
Liquid Staking: Maximizing Rewards with DeFi
Liquid staking offers the best of both worlds—earning staking rewards while keeping assets liquid.
How it works:
- Deposit SOL into an LST provider’s pool.
- Receive Liquid Staking Tokens (LSTs) in return.
- Use LSTs for trading, DeFi apps, or transfers while earning staking rewards.
Liquid staking often provides slightly higher yields than native staking.
👉 Discover top Solana liquid staking providers
Top Solana Liquid Staking Providers
When you deposit SOL into a liquid staking platform, they enter a staking pool, and you receive LSTs in return.
Top providers on Solana:
- Sanctum: Offers 50+ LST options, including stepSOL.
- Jito: Enhances yields via JitoSOL.
- Marinade Finance: Non-custodial platform offering mSOL.
- SolBlaze: Features bSOL.
How to Stake via Sanctum and Step Finance
Liquid staking is straightforward. Here’s how to stake with Sanctum:
- Visit Sanctum.so and connect your wallet.
- Select Step Finance’s stepSOL.
- Enter the SOL amount you wish to stake.
- Confirm the transaction in your wallet.
- Receive StepSOL tokens; staked SOL is auto-delegated.
StepSOL can be used across DeFi protocols and may qualify for additional rewards.
Uses for LSTs
Each LST has unique advantages. Common uses include:
- Providing liquidity for LST/SOL pairs on DEXs.
- Collateral for loans on lending platforms.
- Yield farming for extra rewards.
- Governance participation in some protocols.
To unstake, exchange LSTs back to SOL instantly or use the protocol’s native unstaking option (takes a few days).
Risks of Liquid Staking
Potential risks include:
- LST devaluation: If the LST loses value, redemption yields fewer SOL.
- Market volatility: Can cause LSTs to decouple from SOL’s 1:1 peg.
👉 Learn advanced DeFi strategies
FAQ Section
Q: Is liquid staking safer than native staking?
A: It offers more flexibility but introduces smart contract and market risks.
Q: How do I choose an LST provider?
A: Research fees, yields, and reputation. Sanctum and Jito are popular choices.
Q: Can I unstake anytime?
A: Yes, but native unstaking takes ~2 days, while swapping LSTs is instant.
Q: Do LSTs earn rewards?
A: Yes, they accrue staking rewards while remaining liquid.
This guide ensures you’re equipped to leverage Solana’s liquid staking ecosystem effectively. Stay informed and maximize your DeFi potential!