This guide underlines the step by step approach of how to stake Solana on Phantom. By staking your Solana to the Solana network you can earn up to 7% APY as staking rewards. One of the modes of staking Solana is on the Phantom wallet. Phantom is a software wallet.
- You need to have SOL. If not you need to purchase SOL via an exchange like Binance or Coinbase.
- Internet Connection
- Laptop or Mobile phone.
Let us start.
Table of Contents
What is Solana and SOL?
Solana is a high performance blockchain platform. It is way faster than other blockchain platforms including Ethereum and Bitcoin in processing transactions. It can process up to 65000 transactions per second (TPS).
SOL is the native utility token of the Solana blockchain.
The Solana blockchain platform was launched on 16th March 2020. Solana was founded by Anatoly Yakovenko and Greg Fitzgerald.
What is Solana Staking?
Staking refers to the mechanism of locking your cryptocurrencies (Solana in this case) to the Smart Contract of a blockchain platform, in order to secure the blockchain network and in the process earn rewards. It is a type of consensus mechanism (Proof of Stake) in which the node which adds the next block of transactions in the ledger (of the blockchain), is decided on the basis of the number of native cryptocurrencies being staked or locked by the node. The more a node stakes the more is the chances of it getting to add the next block of transaction.
Staking is somewhat analogous to a bank savings account. You lock your funds (for a time period) in the bank savings account and in return the bank pays you interest on your savings. Similarly, in staking you lock your cryptocurrencies in the blockchain (smart contract) to secure it and get rewarded in return.
To better understand ‘Solana Staking’, we first need to understand the concepts of validators and delegators in Solana or blockchain in general.
Validators and Delegators
Validators are the full nodes in Solana (or blockchains which follow Proof of Stake consensus mechanism), who can participate in the Proof of Stake consensus mechanism and hence verify and add the next block of transactions in the Solana blockchain. Hence, validators help to maintain the speed, security and censorship resistance of the Solana network. Running a validator node is quite costly and cumbersome. It requires high throughput computer systems. Not everyone specially someone who is just starting in Solana staking would prefer investing this much time and effort to become a validator to stake Solana. You can check the complete specifications here.
If this is the case, then how do you stake Solana? The answer is by becoming a delegator.
A delegator is any other node in the Solana network (like you and me), which delegates their Solana tokens to a validator to further stake them, earn rewards and pay a percentage of the reward back. The delegator helps one or more validator nodes to compete against other similar validator nodes. As you might be knowing, Solana is a Proof of Stake consensus blockchain platform. The probability of verifying and adding the next block in Solana is dependent on the amount of SOL staked by the validator node. Hence, delegators stake SOL tokens with validators who then compete with other validators to add the next block in the blockchain.
Note: Technically delegators do not give access and control to their SOL balance to the validators. Delegators just give their voting rights to the validators, while the access and control to the SOL balance remails with the delegator.
What is Solana Staking?
Staking in Solana refers to the phenomena in which delegator nodes stake SOL (native token of Solana) at the validator nodes to help them compete against other similar validator nodes for adding the next block in the Solana blockchain. The validator earns rewards in SOL if it wins the chance to add the next block in the Solana blockchain. A percentage of this reward is returned to the delegator.
How to stake Solana on Phantom?
Now let us go step by step on how to stake Solana on Phantom (SOL token).
Step 1: Buy some SOL
In case you already own SOL in some other wallet (like Solflare) or a crypto exchange, then you will need to transfer that to the Solflare wallet as will be shown in the next steps of this guide “How to Stake Solana on Phantom”.
Step 2: Download a Solana compatible wallet
The next step is to download a Solana compatible wallet to transfer SOL from the exchange to to this Solana compatible wallet.
Some of the most popular Solana compatible wallets are Phantom, Sollet, Solflare, Solong, Atomic Wallet, Exodus Wallet, Math Wallet and Ledger Wallet.
For the purpose of this guide, we are looking at how to stake Solana on Phantom.
So download the Phantom wallet.
When you click on the ‘Download’ option, as shown in the figure above, you will be given different options to download the Phantom wallet for your desktop or mobile. See the figure below.
For the purpose of this guide, we are downloading the chrome extension of the Phantom wallet
Click on ‘Add to Chrome‘.
Now click on ‘Create a New Wallet’ as shown in the figure below. (In case you already have had owned a Phantom wallet earlier, you can click on “I already have a wallet”. It will ask for your recovery phrase and will sign you in to your wallet.)
After you click on ” Create a new wallet”, create a password and recovery phrase. Always keep your Password and Recovery Phrase secured. The Recovery Phrase is the only way in case you are trying to log in from a different computer system or if you have lost your password.
Please note that, the Recovery Phrase is imperative to keep your cryptos secure. In cases where your wallet is lost, stolen or damaged, you can recreate your wallet using your Recovery Phrase. Anyone who has got access to your Recovery Phrase can recreate your wallet and steal your funds. One of the safest ways to store your Recovery Phrase is to write it in a piece of paper and store it in a locker. I suggest keeping multiple copies of the same, so that if one of the lockers is burnt, then you do have the backup. Another method is to store it in password protected applications like Notes for iOS, Samsung Notes for Android or OneNote in your desktop or laptop.Securely Store your Recovery Phrase
Step 3: Transfer SOL from the exchange to the Phantom wallet
Now once you have downloaded the Phantom wallet, the next step is to transfer SOL from the exchange to the wallet. To transfer SOL to the Phantom wallet, click on “Solana” and then “Deposit”. See the figure below.
Now click on “Deposit”.
You can now copy the Wallet Address as shown in the figure below.
Now simply go to the exchange wallet from where you purchased SOL. Paste this address as the recipient address to transfer SOL.
Or simply connect your Phantom wallet to the exchange to transfer SOL.
The next step is to choose a validator with whom you will stake your Solana (SOL).
Step 4: Choose a Validator Node
Choosing the Solana validator is imperative for optimized earnings from Solana staking. Phantom has made selecting a validator easier. Once you click on the Solana balance in your Phantom wallet, you will be able to see a list of validators available. Some of the prime factors to consider while choosing a validator are APY rewards performance, how decentralized they are (or aren’t!), whether they form part of the supermajority and how long they have been validating on Solana. You can check this guide for a further detailed analysis.
Step 5: Stake SOL using your Phantom wallet to the Validator node you selected in Step 4
Once you have decided the validator and SOL in your Phantom wallet, you are all ready to stake SOL. Simply click on your Solana balance. See the figure below.
Click on “Start earning SOL” as shown in the figure below.
This will take you to the list of all the Validators. Now select the one you chose in Step 4.
Once you choose the Validator of your choice, it will navigate you to the Staking page. Enter the amount of Solana you want to stake and click “Stake” (as shown in the figure below).
Important disclaimer: Do not stake all your SOL to the validator. This is because you will need some SOL in transaction fees, when you will transfer SOL from the your staked account to your main wallet account. (although very less compared to Ether or other PoS staking). I will advise to keep at least 0.50-1 SOL in your main wallet.
It will now stake your SOL.
Once staked you will be able to see the amount of SOL staked in your wallet.
Can you unstake your SOL after staking on Phantom wallet?
Yes. Simply click on “Your Stake” then click on your chosen Validator.
It will take you to something like below. Now click “Unstake”.
Risks in staking Solana
- Validator is slashed: The primary risk in staking Solana is not choosing the right validator. If the validator perpetrates a wrongful or malicious act, it might loose a part or all of its delegated SOL. This act is known as slashing of the validator. In the process you also loose the SOL staked with such a malicious and slashed validator.
- Funds stolen: One of the general risks in crypto investments and staking is when hackers steal the funds. I always advise to keep your cryptocurrencies in a hardware wallet like Ledger Nano or Trezor. But when you are staking SOL on the Phantom wallet, it comes with the risk of being hacked. A better way of staking SOL is on the Ledger Nano S, which is a hardware wallet. The hardware wallet is an offline cold storage of your cryptocurrencies, which keeps them away from hackers and malicious online practices. I will share a guide on “How to stake SOL on Ledger” soon.
Staking SOL through the Phantom wallet is an easy process. But certainly you need to conduct proper due diligence in selecting the Validator. One of the biggest risks in staking SOL is when a Validator is slashed. Slashing refers to the loss of a Validator’s all or part of delegated stake due to some intentional malicious practices such as creating invalid transactions or censoring certain types of transactions or network participants.
Solana is one of the most prominent blockchain platforms which is highly regarded by developers and other probable users. It is witnessing an upward trend in being widely accepted for Smart Contracts, NFTs, Metaverses and other probable blockchain use cases. Hence the utility of SOL is increasing day by day.
Hence, buying and staking SOL might be a good long term approach to reap in profits. But please conduct proper comprehensive research before making any investments.
Also, it is all right to start staking SOL on the Phantom wallet. Although in the longer term, to avoid any malicious online attacks, switch to Ledger Nano S (hardware wallet) for staking SOL.
This guide is not an investment advice. It is my personal opinion. Please undergo proper research before investing in cryptocurrencies.Disclaimer
If you are sincerely looking forward to invest in cryptocurrency space and hold the investments for long, use a hardware wallet like Ledger or Trezor. These wallets store your cryptocurrencies (keys to cryptocurrencies) in an offline environment which is therefore cannot be the victim of an online hack or malware practice. Storing your digital assets in an Exchange or software wallet often attract online attacks and malwares.Word of Advice