Solana Stacking: Additional Income and Support for Network Stability

An overview of one of the most promising projects in the cryptoindustry and the function of passive earnings by storing tokens Most crypto investors know Solana as a project that has shown phenomenal growth (more …

An overview of one of the most promising projects in the cryptoindustry and the function of passive earnings by storing tokens

Most crypto investors know Solana as a project that has shown phenomenal growth (more than 9000% in 2021), a network with a bandwidth of 40 thousand transactions per second, which allows interacting with smart contracts with minimal commissions of less than a cent.

In addition to technical indicators, Solana has established itself as partners with such industry giants as the FTX exchange. Due to the above and other factors, the asset is in the portfolios of many investors. The price of the coin shows parabolic growth throughout the year with extremely short corrections. The latter, however, may cause concern due to the lack of reliable and understandable support levels that can stop the price in the event of a fall.

From the point of view of fundamental analysis, SOL is often accused of excessive concentration of coins (up to 48%) in the hands of the developers themselves and the closed circle of the first venture capital investors. Also Solana is a relatively young and little time-tested project, as a result of which the network can be prone to failures. The last such failure occurred in September 2021, when the network overloaded with transactions had to be restarted.

As a blockchain of the groundbreaking Proof of History algorithm (based on the Proof of Stake algorithm), Solana presents holders with the opportunity to generate additional profit by staking the coin. Network fees for sending from the exchange and, if necessary, back to the exchange will cost a few cents, as well as fees for turning the staking feature on and off. Coin staking rewards will start accruing after approximately 4 days and will continue to accrue approximately every 2 days. If the user wants to stop staking, then his funds will be available again for sending from the wallet in about 2 days.

The sooner the more

The percentage received for staking a coin is not constant and depends on several variables: the total number of coins participating in the staking process in the entire network and the operating time of the validator server to which the user has entrusted the coins. During our study of multiple validators in October 2021, the percentage ranged from 6.8% to 7.5% per annum.

With a small number of coins participating in staking, the percentage can increase up to 13%, but every year in any case it will gradually fall – so in the fifth year of the network's operation, the annual percentage will be from 4% to 6%, and after 8 years of operation the network will continue to smoothly fall from 3% to 2%, which will become the final percentage of rewards for the already "adult" network.

Each validator also sets its own commission on user rewards, which usually ranges from 0% to 10%. Validators can use the funds received for technical support and modernization of their servers and equipment.

Lower commission percentage and validator value are not the most important indicators

Going to the list of more than a thousand available validators, users are tempted to quickly select the largest validator with a well-known name and the lowest percentage of commissions and enable staking for all their coins in one click, but there are several reasons not to do this.

  • By choosing a medium-sized validator, users increase the security of the network, and by distributing their funds among several validators they get the opportunity to compare their activities and income statistics;
  • The greatest contribution to decentralization, stability and security of the network is made by users who distribute their SOL between 5-8 different validators located in the most different geographic locations;
  • Solana places extremely high demands on the hardware of the validators, which can lead to the shutdown of some nodes over time due to the unprofitable process of maintaining the network. The likelihood of shutting down some nodes due to unprofitability is especially high during bearish market phases;

However, such phenomena do not pose any danger to users' funds, so you can safely choose absolutely any validator without fear for the safety of your coins in case of termination of the validator's activity.

Validators with character

You can learn more about each validator using various services that collect network statistics. You can get started with and . In addition to such technical indicators as server uptime, validator commission percentage and approximate annual percentage, you can also get acquainted with links to validator sites on the services.

All validators can be divided into three conditional categories:

The first is industry professionals with large data centers staking many different blockchains.

The second is the enthusiasts of the Solana community and developers of projects directly on this blockchain, for whom the fact of having their own node is a kind of sign of quality and commitment to the development of a common ecosystem.

The third is validators representing crypto exchanges and wallets.

By delegating the votes of their coins to the validators of the second category, users by their choice indirectly support their projects, the success of which, in turn, may affect the popularity of the entire Solana blockchain in the future and, as a result, have a positive effect on the coin rate. Validators also stand apart, promising to use part of their rewards for charities and environmental initiatives. Verifying the reality of such claims, however, appears to be a daunting task.

Where is the best place to enable staking?

Coin staking can be enabled from most popular crypto wallets (for example: Exodus, Atomic), straight from some exchanges (for example: Binance, FTX) or from specialized Solana wallets and extensions listed on the official website of the project . The greatest functionality and flexibility of the process of users awaits when using the latter.

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