Oct 12, 2023
A Guide to Solana Liquid Staking
Research · 9 Minute Read · Written by Brandon Tucker
TL;DR:
- 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.