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One way to earn passive income with Solana is by staking SOL in a non-custodial wallet like NuFi.


Staking SOL is a low-risk, low-effort way to earn SOL rewards while you sleep, while also helping the blockchain to remain decentralized and secure. But what exactly does that mean, and how does it work?


In this article:

What Is Solana Staking?


Staking means using your SOL's intrinsic voting power to support the security and operations of Solana blockchain. In a nutshell, it's how Solana remains decentralized.


While staked, the SOL in your wallet can be used by the blockchain to 'vote' when the blockchain needs to make a decision, for example when verifying new transactions and deciding if they should be included in the next block. By voting, staked SOL helps the Solana blockchain to reach a consensus without giving authority to a single entity.


As a thank you for staking (and helping the blockchain run in a secure and decentralized way), you earn rewards in the form of additional SOL tokens paid directly into your stake account by the blockchain itself.



Good to know:

  • This type of consensus mechanism is called Proof-of-Stake, and Staking is the action that Solana users do in order to make their SOL available to the blockchain to use.
  • The more SOL that's staked, the broader or more independent the consensus is, and the more resilient to attacks the blockchain is.


How Does Solana Staking Work?


When you stake SOL, you delegate your tokens to a validator who uses your SOL's voting power on your behalf. This is a one-click process that you do inside your wallet and it's the only action you need to do to begin staking.


What does a validator do?


A validator is responsible for processing transactions. The blockchain selects a validator to mint (or forge) each new block, and then rewards the validator for doing so. The validator shares these SOL rewards with the people who delegated to them.


Certain factors increase a validator's chances of being selected, including a higher amount of SOL delegated to it, high performance and availability, and a good track record.



Good to know:

  • When you stake, you don’t transfer ownership of your SOL to the validator: staked SOL never leaves your wallet. Instead, you temporarily lock the SOL up in a stake account.
  • The SOL staking rewards you receive are automatically staked.
  • You can have multiple stake accounts at once.
  • There's no minimum staking period (i.e. no commitment).


Solana Staking Schedule & SOL Staking Rewards


Epochs: Solana staking operates in cycles called “epochs,” which last approximately 2 days.


At the end of each epoch, the blockchain processes requests to start staking, stop staking, etc, which is why it can take several days for actions to be completed.


Warm-Up Period: When you first stake your SOL, there is a brief warm-up period before your SOL starts to earn rewards. You'll see a countdown timer next to the stake account that's warming up.


If you start staking near the end of an epoch, your stake account may become active within hours, else if you start staking just after an epoch starts, you may need to wait 2 days before your stake account is active.


Rewards Schedule: it can take 2 days for your stake account to become active (= warm-up period), and then another 2 days to receive your first staking rewards. From then on, you'll receive staking rewards every epoch (2 days), paid directly into your stake account.


Important: The SOL staking rewards you receive are automatically staked.


Rewards Amount: How many SOL staking rewards you receive depends on how much SOL you stake, the validator’s performance, and any commission fees they charge. Typical APR for Solana staking is around 8%.


Depending on the validator you stake to, you can also earn extra rewards called MEV rewards, which are paid directly into your stake account (FYI: NuFi's validator pays MEV rewards to its delegators).


Cool-Down Period: If you decide to unstake some or all of your delegated SOL, you must wait through a cool-down period, which can take up to 2 days.


Important: after the cool-down period, your unstaked SOL will become inactive but it isn't automatically withdrawn back into your Solana account's available balance; you need to manually withdraw the inactive SOL yourself by clicking 'Withdraw' on the stake account. Guide here.


FAQs


Q: Is staking safe?

A: Yes, staking is relatively safe. Staked SOL never leaves your wallet and you don't ever transfer control. Choosing a reliable validator is important to avoid high fees or potential slashing (penalties for validators behaving dishonestly).


2. Can I still use my SOL while staked?

No, staked SOL is locked, but you can unstake it whenever needed. Keep in mind the cool-down period.


3. How much can I earn from staking?

The annual yield varies but is typically around 8% per year minus validator fees, if any.


4. How do I start staking? You can stake SOL inside your NuFi wallet from the Staking dashboard.