Solana is often called the Ethereum Killer, because of its super fast speed when it comes to transactions, and the absence of the ridiculous fees you’d otherwise find with Ethereum.
I’ve personally been looking to acquire more and more Solana as I can, because I feel it deep in my bones that it’s going to hit at least $1k per coin, and I don’t want to be grumpy I didn’t buy more “back in 2021”.
But while holding crypto is great, it’s also nice to earn some money on top of just HODLing your coins. And that’s where staking comes into play.
What is Staking? And What Kind of Rewards Can You Expect?
Staking crypto is like putting your money into an interest-bearing savings account or money market account – you can pull it out, but you earn more interest by leaving it in there until you really need the money.
When you stake your Solana coins, you’re able to earn additional coins, or partial coins as “rewards” for doing so. It’s a way to help provide the community with liquidity by essentially saying that you’re going to leave them there for at least 2-3 days.
Currently, the reward for staking Solana is around 6.4%, after taking into account the validator fees.
When compared to other crypto projects offering up APY’s 100x that amount or more, (think Olympus DAO or TIME Wonderland), why should you even bother staking?
Well, if you believe in the project you’re going to buy Solana tokens. Generally, you’d just hold them in a wallet and forget about them for a while.
But with staking you are earning extra Solana on top of what you’ve already purchased. So no, it’s not going to make you rich, but why wouldn’t you earn more SOL if it’s going to sit there anyway?
There are two kinds of participants when it comes to staking, validators and delegators.
A validator is essentially someone with a really fancy computer that helps verify and “validate” the network transactions.
Here’s what Solana says:
“By processing transactions and participating in consensus, each validator helps make Solana the most censorship resistant and highest-performance blockchain network in the world.”Solana.com
When I said a really fancy computer, I wasn’t kidding. Here are the technical requirements to become a validator on Solana:
I took the liberty of checking out some costs just to see what a rig like this might run you:
For a whopping total of $1,314
While that might not seem terrible, you’ll need to build a powerful computer like this yourself, so don’t forget to include a motherboard, PC tower, fans, case, monitor, and all kinds of other things.
And because that wasn’t enough, you’ll actually want a few higher specs
That changes the total to $2,120 before all of that other stuff.
If that doesn’t sound like fun to build and/or put that kind of money out up front, then being a delegator might be more your style.
Being a delegator is a much more “hands off” approach, but can still earn you a majority of those rewards/commissions we were talking about before.
As a delegator, you’re staking your Solana tokens with a validator of your choosing, and simply paying them a commission to let you stake your SOL with them.
The fees generally run between 7-10%. While that might seem like a lot, that’s a percentage of the rewards you get, NOT your initial SOL tokens.
There is no minimum amount of Solana you need to stake in order to be eligible.
So if you purchased some Solana and plan on holding it for more than a week, I’d definitely recommend looking into staking.
It’s like earning interest on your Solana by just holding it in your wallet.
How to Stake Solana with a Phantom Wallet
There are a variety of different ways to stake your Solana tokens.
But using Phantom wallet is by far the easiest to do in my opinion.
The Phantom wallet is essentially Metamask but for the Solana ecosystem. You can store NFTs with it, and trade Solana based coins as well.
And of course, you can stake your Solana with it.
Staking with the Phantom wallet is pretty simple.
1. Download the Phantom Chrome extension (this works for the Brave browser as well)
2. Create a new wallet if you don’t have one yet
Start a new wallet and take note of your seed phrase. Do not screenshot or save this to any electronic app or device that has access to the internet. People are crazy. Write it down, photocopy it and put it in multiple places. If you start getting a significant amount of money in there, you can use something like a steel wallet to save that phrase or get a cold wallet like a Ledger.
3. Send your Solana to the Phantom wallet. You can find your address by clicking on the “Wallet” label at the top of the dropdown. It will automatically copy the wallet ID to your clipboard.
Once you have the money in your Phantom wallet, you can start staking.
4. Click on the main Solana block within your wallet. If you have other coins, you’ll see those in the list too. Click on “Solana”
Once you click on that wallet, you’ll be taken to that section, and you’ll see an option for “Start earning SOL” next to a gold star.
5. Click on “Start earning SOL”, and you’ll be taken to another page that shows how you can start staking with Phantom.
6. Choose your validator. A list of validators will appear, with the name, how much is staked with them and their commission/fee rate. This is the place where I think people get stuck, so let’s walk through it a bit.
How to Choose a Validator
You always want to do your own research with financial products and services, but here is what I’ve found so far.
- Fees – each validator charges between 6-10% in fees. Fees aren’t necessarily bad, as you want to make sure the person hosting your node is getting paid enough to want to pay attention to it.
- Uptime – that brings us to uptime. If the node isn’t “up” and running, you aren’t getting paid, so choosing a validator with a decent fee structure will give them incentive to keep it running. Most are up around 90-95% of the time.
- Reputation – you can click on each validator to do more research and check to make sure they’re reputable. Check to make sure they have a good amount of funds underneath them.
7. Choose the validator you’ve decided on, and then enter the amount of SOL you want to stake with them. Make sure NOT to choose “Max” amount, as you always want to save a little SOL for fees to stake and unstake when the time comes.
You’ll see a quick breakdown of the validators fee, total stake, and # of delegators using them (i.e. people like you who are using them to stake their SOL).
8. Click “Stake”
You’ll get a notification that your SOL is being staked. This took around 40 seconds to complete the process when I did it.
From there, now when you go into your Phantom wallet, you can see your staked amount, and after 2-3 days (the initial reward period), you can unstake your SOL.
That’s all there is to staking your Solana with Phantom.
Staking is a great way to earn more SOL while you HODL your tokens.
Here are some other options for staking your Solana as well:
- Staking Solana with Lido
- Staking Solana with Marinade Finance
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