Research · 9 Minute Read · Written by Brandon Tucker
Solana's popularity is underscored by its robust staking system, with liquid staking introduced in August 2021, offering more flexibility and DeFi integration than traditional staking.
Liquid staking tokens (LSTs) in Solana increase in value over time compared to SOL, making them attractive for collateral in DeFi transactions. They also feature a "delayed unstake" function for converting back to SOL.
Solana's staking ecosystem has improved liquidity for LSTs, with platforms like Marinade and Jupiter enhancing market liquidity, allowing for larger swaps with minimal price impact.
Staking returns vary, with Solana's inflation at 5.90% as of August 2023, but high-performance stake pools can offer around 7% APY. Different pools offer unique benefits, including potential governance tokens and varying validator sets.
Despite the inherent risks of smart contracts and potential market volatility, the outlook for Solana's liquid staking remains positive, with ongoing developments expected to drive growth and DeFi integration.