What is the Best SOL Liquid Staking Token?

Introduction

SOL is on an absolute tear right now. So if you have any SOL or looking to get some, there is an easy way to earn extra yield just for holding. One way is to stake SOL directly with validators to get ~7.5% APY or you can stake it in a liquid staking token (LST) to boost those yields. The problem is that there are quite a few options out there. So which one is the best?

Understanding Liquid Staking

Liquid staking combines the benefits of staking, such as earning rewards for securing the network, with the flexibility of maintaining liquidity in your assets. Traditional staking involves locking up your cryptocurrency for a specific period, which means you cannot trade, sell, or use those assets in decentralized finance (DeFi) applications. Traditional staking, like running your own Ethereum validator or staking SOL directly on Phantom Wallet, lock your tokens from being able to do anything else.

Liquid staking tokens offer a solution to this problem. Users can stake their Solana (SOL) to secure the Solana network while receiving liquid tokens that can be freely traded and used in DeFi protocols. Let’s look at the top five LSTs on the market for SOL.

Best Liquid Staking Tokens

Jito (JitoSOL)

We have to talk about the one that everyone is talking about first, JitoSOL. Jito Labs just airdropped their governance token a few weeks ago, giving the crypto community massive FOMO. For the lucky few who received the airdrop, congrats (for those not tracking, the minimum airdropped was worth ~$20k). JitoSOL is actually different from all other LSTs on Solana and Ethereum. They combine traditional staking with maximum extractable value (MEV). MEV optimizes how transactions are ordered in a block which results in a processing fee. The MEV fees and staking rewards are added up to give you JitoSOL. You can learn more here.

1. Yield: 6.81%¹ APY — Second Highest
2. Market Share: 37.6% — Second Highest
3. Risk: Low — Jito Labs has actually been around since 2021 and had a LST for over a year without any hiccups. You can argue whether added complexity with MEV adds risk or diversifies the value accrual.
4. Liquidity: High — There are 6,486,652 SOL ($609M) staked using Jito. JitoSol can be staked on lending protocols (Solend, Kamino, Marginfi) or put into liquidity pools (Solend).

Marinade (mSOL)

Marinade is a stake automation platform that stakes SOL with the best-performing Solana validators. Most LST protocols spin up their own protocols to reap additional rewards. Instead, Marinade mass spreads the deposited SOL to 100+ validators to ensure maximum up time and minimal risk.

1. Yield: 6.5%¹ APY — In the Middle
2. Market Share: 40.1% — Highest
3. Risk: Low— Since Marinade distributes the risk across 100+ validators (currently at 225 validators¹), the risk of losing enough SOL that wouldn’t be reimbursed, is minimal.
4. Liquidity: Very High — There are 6,893,103 SOL ($648M) staked using Marinade. mSOL can be used on the same major lending protocols and liquidity pools as JitoSOL.

Bonus: Staking your mSOL on Solend gives you an extra 1.36%APY in MNDE tokens

Lido (stSOL)

Lido Finance is a leading player in the world of liquid staking. Lido has been around the longest of the major LSTs. Unfortunately, the Lido DAO has discontinued staking for SOL. stSOL holders can only unstake as of Oct 2023 and will lose front-end access to unstake on February 4th 2023. Lido is on our list because even though Lido stopped staking in Oct 2023, stSOL has the 4th largest TVL at ~$83M.

Warning: If you own stSOL, unstake it immediately before you lose front-end access (can still unstake after February but you need to know how to code for that)!

Blaze (bSOL)

BlazeStake is a fully non-custodial Solana stake pool protocol. Similar to Marinade, bSOL is staked across 201 validators to minimize risk.¹

1. Yield: 5.91%¹ APY — Lowest
2. Market Share: 11.1% — In the middle
3. Risk: Low-Medium — Even though BlazeStake offers similar risk mitigation as Marinade, their lower total value locked (TVL) increases the risk a little compared to Marinade
4. Liquidity: Medium-High — There are 1,932,962 SOL ($182M) staked using BlazeStake. Similar to JitoSOL and mSOL, bSOL can be used in most lending protocols and liquidity pools.

Bonus: Blaze is offering rewards for using their LST throughout DeFi. See below for more info!

Marginfi (LST)

One of the newer LSTs on the market, Marginfi, is a decentralized lending protocol on Solana. The protocol is fully permissionless by relying on smart contracts for functionality.

The reason for bringing this one up, is that they are currently running a reward program which will potentially turn into a token airdrop. Always smart to throw a little in, never know how much you will get!

1. Yield: 7.1% APY — Highest
2. Market Share: 1.9% — Lowest
3. Risk: Medium — Being the new kid on the block with a low TVL, gives this protocol a medium risk.
4. Liquidity: Low — There are 333,273 SOL ($33M) staked using Marginfi. Not as many lending protocols or liquidity providers offer LST yet on their platform.

Who’s the Best?

If yield is your primary incentive and you don’t want to boost it with liquidity pools or lending protocols, then staking directly with validators is the best option at around 7.5%APY. Phantom wallet makes this super easy. If you want to go the extra mile then there are some additional factors you should consider:

Extra Yield Based off Lending Protocols

You can get an extra .5–2.5%APY by staking your LST in a lending protocol like Kamino, Solend, or Marginfi. Just shop around depending on what LST you have to see which one is offering the best yield.

Looping yield

You can get an extra ~5%APY by looping your LSTs. This is done by depositing your LST on a lending protocol and then borrowing SOL, restaking it into an LST, and then depositing back into the lending protocol. You can do this as much as you want and feel comfortable with. Just make sure the borrow rate for SOL is less than the yield rate you’d be receiving.

Liquidity pools

Lastly, you can boost your yields by depositing your LSTs into a liquidity pool (you can learn more about LPs here). Solend is offering ~4.5%APY and Marinade supposedly is offering 97%APY. I can’t verify this and seems a little off to me so I’d be a little skeptical for now. If this is right, then this is by far the best option.

Marinade LP

Overall, the best option depends on your risk tolerance and how much extra work you would like to do to get the extra yield. Easiest option is to stake directly with validators. The more complex option may be to loop your LSTs to try and farm some extra rewards/airdrops where possible.

-Just Another Crypto Analyst

Doing this for fun but if you want to leave a tip: 0xa33aE4207466cD866D13fA587067B1F824C06d4A

Sources:

[1] Solana Compass. 2023. “Solana Stake Pools.” https://solanacompass.com/stake-pools