Value Locked in Solana’s Liquid Staking Protocols Surged by 91% in the First Half of the Year

Andrew Throuvalas
Last updated: | 1 min read
Source: Adobe / Dennis

As the crypto market returns to form this year, so too has demand for liquid staking – especially in the Solana ecosystem. 

Liquid staking protocols on the so-called “Ethereum Killer” have surged 91% in terms of total value locked (TVL) since the start of 2023, according to The Block Research. Specifically, protocols including Marinade Finance, Lido, Jito, JPool, and Socean cumulatively held $187 million in staked SOL tokens by the end of June, compared to just $98 million worth at the start of the year. 

This would comprise most of the $270 million currently locked in Solana’s DeFi ecosystem, according to DefiLlama. Nevertheless, Ethereum remains the overwhelming king of DeFi, boasting $26 billion out of $44 billion locked across the whole industry. 

Staking is when lock up their crypto to provide security for a proof of stake blockchain, such as Ethereum, Solana, Cardano, and others. Stakers are rewarded for their lockup with more crypto overtime, paid out as either newly minted coins or network fees. 

While anyone can technically access staking on a public blockchain, many prefer to use Liquid Staking Services to remove the technical headache of having to run a personal node. Ethereum co-founder Vitalik Buterin has himself admitted to refraining from staking most of his Ether (ETH) due to technical risks and complications. 

Liquid staking also provides users with tokens that are redeemable 1:1 with the tokens being staked (ex. SOL for stSOL, with LIDO). This way, stakers effectively get to keep the liquidity of their staked assets while also benefiting from yield. 

Solana VS Ethereum Staking

Analysts suggest that the rise in staking activity on Solana is visible across crypto as a whole. “Overall, LSDs have grown as a category across crypto in 2023 in large part due to the new dynamics around staking on Ethereum, though demand for these products has trickled into the Solana ecosystem as well,” wrote The Block’s Kevin Peng.

Ethereum introduced staking in September 2022, and has quickly become the most popular staking network by a wide margin. Over 20% of the network’s supply of Ether has already been staked. 

Data from Staking Rewards shows that staking yields on Solana roughly come out to 6.89% APY right now, outstripping Ethereum’s 5.09% yield.