Solana Staking Economics Primer

Felix Lutsch
Feb 11 · 5 min read

On February 10 the Solana community passed a vote to enable inflation on mainnet. SOL holders delegating their tokens to validators on the network will now start to earn staking rewards.

Solana is a composable, unsharded blockchain focused on maximizing transaction throughput through various hard- and software optimizations. Like most smart contract platforms, the Solana network is secured through Proof-of-Stake.

This post is an overview of the staking economics on Solana going into the factors that influence rewards, as well as the risks and restrictions associated with staking SOL tokens.

A Word on Epochs

Staking-related updates in Solana happen at epoch boundaries. An epoch is the length of a certain amount of blocks (in Solana: “slots”) in which the validator schedule of Solana’s consensus algorithm is defined. To stakers this means that beginning and stopping to stake, as well as reward distribution, always happen when epochs switch over. An epoch is 432,000 slots, each of which should at a minimum take 400ms. Since block times are variable this means epochs effectively last somewhere between 2–3 days.

Staking Lifecycle

A visual representation of the Solana staking lifecycle.

The SOL staking lifecycle is divided into three phases:

Rewards

Staking rewards on Solana are determined by a variety of factors, some of which are related to the chosen validator, while others depend on the global network state. Rewards are automatically added to the active stake to compound, which means withdrawing earned rewards also requires the cooldown phase to pass.

Network

Validator-Specific

Penalties

To ensure that validator nodes act according to the rules, penalties may be enforced by Solana’s protocol in the event of provable misbehavior. In Solana, this relates to voting on conflicting forks in the consensus process. Slashing in Solana would be applicable to both delegators and validators. In the early phases of the network, slashing is not activated yet. The Solana team is exploring models in which the slashed amount would adjust based on correlated faults, as well as based on the duration since the last vote (to discourage validators waiting to vote to avoid getting slashed).

Switching Validators

Changing the validator node you are delegated to or staking with multiple validator nodes on Solana is easily possible through splitting and merging stake accounts. Read the documentation below to learn more.

How to Stake and Further Resources

You can stake your SOL tokens on Solana mainnet and earn staking rewards with validators by following the official staking delegation guide. Currently, staking is supported e.g. through the SolFlare wallet built by Dokia Capital.

Chorus One operates a highly available Solana validator and is among the top contributors to the protocol, e.g. as part of the Tour de SOL competition, where we uncovered multiple vulnerabilities in preparation for getting Solana mainnet ready. By delegating to our node you are supporting our work and involvement in Solana.

To observe the current blockchain state and validator nodes, visit the Solana Beach block explorer by Staking Facilities. To learn more about Solana, visit the official website.

In case you have questions, feel free to reach out to reach out to us on Telegram, Email (support[at]chorus.one) or through our live chat feature on our website.

This post was created based on Solana’s official documentation and this post on the Solana forum. Thanks to Dave from my team and Eric from Solana for clarifying details and answering my questions.

Originally published at https://blog.chorus.one on February 11, 2021.

Chorus One

We offer staking solutions and build interoperability protocols for decentralized networks.

Felix Lutsch

Written by

Business Development @ChorusOne. Editor @StakingEconomy. @FelixLts on Twitter.

Chorus One

Chorus One is a leading staking provider securing over $1bn of assets and facilitating interoperability between decentralized networks.

Felix Lutsch

Written by

Business Development @ChorusOne. Editor @StakingEconomy. @FelixLts on Twitter.

Chorus One

Chorus One is a leading staking provider securing over $1bn of assets and facilitating interoperability between decentralized networks.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store