In this guide, we're going to explore Solana liquid staking and highlight all the protocols you need to know so that you can get the best yield and rewards for your SOL.
Staking on Solana
Blockchains such as Solana use a “consensus mechanism” called Proof of Stake (PoS) which is run by validators and ensures that all transactions are verified and secured.
As such, Solana allows individuals or entities—known as “stakers”—to lock up a certain amount of SOL directly with validators as collateral to support its consensus mechanism.
This process is referred to as “staking."
In return for their participation, stakers can earn yield on their staked SOL, in addition to staking rewards.
Staking rewards are typically distributed in the form of additional tokens. The amount of rewards you earn may depend on factors such as the duration of your staking and the amount of SOL you've staked.
This economic incentive is pivotal, as it enables more high-quality validators to be set up, which in turn can enhance the network’s security and efficiency.
Solana liquid staking
Liquid staking is a concept that combines the benefits of staking with liquidity.
As mentioned above, traditional staking requires stakers to lock up their SOL directly with a validator. This means that their staked tokens are not readily available for trading, spending, or transferring.
Liquid staking aims to address this liquidity issue by allowing staked assets to be used in various ways while still participating in the staking process.
When participating in liquid staking, holders stake their SOL to a smart contract or staking pool—instead of directly to a validator.
In return for staking their tokens, participants receive a different type of token that represents their staked SOL. This new token—referred to as Liquid Staking Token (LST)—can be traded, used in DeFi applications, or transferred while still earning staking rewards.
All this provides flexibility and liquidity for token holders.
Having said that, liquid staking comes with some risks as well:
- Smart contract vulnerabilities: LSTs leverage smart contracts which can be exploited by malicious parties if they have bugs or errors in the code. If this happens, your funds could be at risk.
- De-pegging: LSTs hold their peg through arbitrage mechanisms on DEXs. Although rare, if the LST liquidity on a DEX drops dramatically or runs dry, it could alter the arbitrage incentives and spiral into a situation where the LST doesn’t hold its peg.
Unstaking: redeem your SOL
Unstaking, the process of redeeming your locked SOL, might take some time. If you’re in a hurry and don’t want to wait, Solana offers multiple solutions that allow you to swap LSTs for USDC or other tokens instantly.
Further down in this guide, we’ll give you a step-by-step guide on how to do just that with the help of Phantom.
Solana liquid staking providers
Different blockchain networks and DeFi protocols may offer liquid staking solutions with varying features and functionalities.
So, let’s have a look at some notable liquid staking options on Solana: Jito, Marinade, Blaze, and MarginFi.
Jito
Before we dive into Jito, it’s important to cover maximal extractable value (MEV).
MEV refers to the maximum amount of value a validator can make by including, excluding, or changing the order of transactions during the block production process. As such, MEV encompasses both the rewards a validator can earn through transaction fees and any additional profit they can gain through their control over the transaction order.
So, how does Jito fit in?
The JitoSOL stake pool exclusively delegates to validators operating the Jito-Solana validator client, which helps minimize the negative effects of MEV—e.g. spam trades and failed transactions—while maximizing its benefits—e.g. network efficiency and additional profits.
Consequently, by staking with Jito, you receive the yield-bearing JitoSOL LST, which accumulates both staking and MEV rewards over time. A portion of the MEV captured by Jito validators from searchers is directly redistributed to stakers, creating a positive flywheel effect that benefits the entire Solana ecosystem.
Marinade
Founded in March 2021, Marinade was Solana’s first-ever native liquid staking solution. Generally, Marinade offers two staking options: liquid staking and native staking.
- Liquid staking: On Marinade, you allocate your SOL to a stake pool and receive mSOL. While your staked SOL earns rewards (MNDE tokens) and yield — which is distributed directly into the price of mSOL — you can deploy your mSOL as collateral in various DeFi protocols such as Solend, marginfi, or Mango.
- Native staking: Marinade Native is an alternative to liquid staking that allows users to benefit from an automated delegation strategy without using any smart contract. For more on how Marinade Native differs from liquid staking, read Marinade's guide.
Blaze
At its core, the Blaze stake pool works the same as the ones from Marinade and Jito mentioned above.
With that said, there are some differences:
- Blaze has the largest validator set of any Solana stake pool (200+ validators).
- Blaze leverages the official stake pool smart contracts from Solana Labs, which is heavily audited.
- Blaze pioneered the Custom Liquid Staking protocol, which allows you to liquid stake to specific validators or groups of validators.
When staking with Blaze, you don't receive mSOL or JitoSOL, but yield-bearing bSOL and the corresponding rewards.
Marginfi
The last protocol in our list, marginfi, offers multiple services—the most significant of which are borrow/lend and its liquid staking token, aptly named “LST.”
By means of marginfi Stake, you can either deposit SOL or convert your staked SOL in order to receive marginfi’s LST.
By doing so, you can take advantage of the following benefits:
- No fees
- 0% commission
- A higher yield (at times)
How to liquid stake with Phantom
We’ve partnered with Jito to make liquid staking easier than ever! In just a few clicks you can start liquid staking your SOL in Phantom.
You can also instantly convert your native staked SOL to JitoSOL within your wallet—no need to use additional platforms. Here's how:
For more details, make sure to read our announcement here.
Trade liquid staking tokens (LSTs) with Phantom
Notice: You need to hold LSTs such as mSOL, JitoSOL, or bSOL in Phantom to complete this process.
As mentioned before, unstaking your SOL might take some time. Luckily, Solana provides multiple solutions to trade and swap LSTs.
The easiest way to do so is through your Phantom browser extension or mobile app.
- Log in to your Phantom browser extension or mobile app
- Select an address that holds LSTs
- Click on the arrow icon at the bottom
- In the swap widget, select the LST you’d like to trade and the cryptocurrency you like to trade it for
- Review the order, then submit!
That's it.
If you have any questions about staking, be sure to reach out.
Disclaimer: This guide is strictly for educational purposes only and doesn’t constitute financial or legal advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
