TL;DR
- Solana staking has reached record levels, significantly reducing the free supply of SOL.
- Whales have withdrawn large amounts of SOL from exchanges for staking.
- Liquid staking on Solana has surpassed $4.1 billion in value locked.
Recently, Solana (SOL) staking has reached near-record levels, driven by whale activity and the growing popularity of both liquid staking and native staking.
This increase in staking has resulted in a significant decrease in the free supply of SOL on the market, which has contributed to the long-term appreciation of the cryptocurrency’s value.
In the past 2 days, 2 whales withdrew 238,893 $SOL ($41.4M) from #Binance and staked it!https://t.co/A6AKhPZvZnhttps://t.co/e0ysroHG1x pic.twitter.com/vurGILr9EU
— Lookonchain (@lookonchain) July 24, 2024
Since May, liquid staking on Solana has accelerated its growth, with an increasing number of validators offering this service. JitoSOL remains the leading protocol for liquid staking, although JupSOL from DEX aggregator Jupiter is quickly catching up. This surge in liquid staking has led to the value locked in these protocols surpassing $4.1 billion, accounting for the majority of the value locked on the Solana network.
Recent whale activity has been a key driver of this growth. New whale wallets have been withdrawing SOL from exchanges like Binance to add it to staking pools, both native and liquid. This movement has helped to control the supply of SOL, despite the cryptocurrency’s built-in inflation, which is currently being released at a rate of over $5 million daily.
The increase in staking also coincides with a planned decrease in SOL inflation to less than 5%, which has reduced supply in recent months. Additionally, since May, staking is also possible through platforms such as Robinhood, and is available to eligible holders in the EU.
Solana is looking to replicate Ethereum’s success with its own liquid staking ecosystem. In addition to rewards for staked SOL, users receive liquid staking tokens, which can make them eligible for additional rewards or airdrops in the future. This growth in liquid staking has been a major factor in SOL’s recent price rally, which surpassed $180 before correcting to $170.03. The hype around SOL remains cautiously optimistic, with some influencers predicting a surge as high as $250.
Liquid staking growth on Solana
Liquid staking on Solana now has over $4.31 billion in value locked, dominating DeFi protocols on the network. Solana as a whole has $5.15 billion in value locked, including DEX and lending protocols. This rapid growth has made liquid staking the fastest-growing sector on Solana since late June.
Liquid staking is building an ecosystem similar to Ethereum, where in addition to rewards for staked SOL, users receive liquid staking tokens. These tokens not only allow users to participate in additional rewards, but also create new sources of risk exposure.
Despite rapid growth, liquid staking remains smaller compared to native staking, accounting for around 6.71% of the supply. This small proportion compared to Ethereum is seen as a sign of potential growth, as validators are now in more intense competition.
Recently, inflows into JitoSOL coincided with significant outflows from the INF validator. At the same time, Galaxy and Helius rose in the validator rankings after adding liquid staking services in recent months. The most dramatic growth has been seen in JupSOL, which is now the third-largest liquid staking provider, with over 9% of tokens staked.
Liquid staking is very popular but carries higher risks compared to native staking due to exposure to smart contracts. However, the current bullish expectation for SOL is driving both liquid staking and the DeFi market in general.
