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As an L1 blockchain network, using Solana can vary in difficulty depending on what you need. For instance, those wishing to become validators will need to acquire the knowledge base of advanced computing. This includes setting up an advanced CPU or GPU and installing the necessary software to run the Solana blockchain.
For the majority of interested parties and investors, simply acquiring SOL is the overarching goal. This is extremely easy now as any user would only have to set up an account on one of the supported crypto exchanges and purchase SOL.
Staking
For anyone wishing to stake their SOL, but not become a validator, this process only requires a few extra steps that anyone can do. Anyone purchasing SOL on either Binance or FTX can actually stake their SOL directly on those exchanges. The downside to that is the staker can’t choose their own validator; it’s assigned.
Otherwise, SOL can be purchased and sent to a supported staking wallet. Listed wallets that support SOL staking are:
Staking rewards are based on the amount of SOL staked during an epoch (~2.5 days). You can’t withdraw in the middle of an epoch. This means, as an example:
- When you first delegate, you have to wait for that epoch to finish in order for your funds to become active and begin earning rewards.
- To withdraw, you must first undelegate it and wait for the epoch to end. Again, this could take up to ~2.5 days.
- Once undelegated and the epoch has ended, you can withdraw the SOL back to your wallet.
- Reminder, SOL cannot be used as collateral in DeFi if staked
Source: Delphi Digital
Among the notable providers in the SOL staking space are Marinade, Jito, SolBlaze, and Lido. Each of these platforms offers unique features that can enhance your staking experience. For instance, JitoSOL (Jito) is an innovative liquid staking SOL that rewards stakers with emissions and MEV rewards generated by Jito validators. This dual reward system offers a higher yield than traditional staking solutions, making it an attractive option for investors seeking to maximize their returns.
Marinade, on the other hand, has established itself as the largest staking solution, with its "Directed Stake" feature, allowing users to select the validators they want to delegate their SOL. This level of control can be appealing to investors who prefer to have a hands-on approach to their investments.
Another platform worth considering is SolBlaze. Similar to Marinade, SolBlaze automatically stakes your SOL across many validators according to their delegation strategy. This approach helps further decentralize Solana, contributing to the overall health and security of the network.
Wallets
Solana has managed to build a large and fast-growing community of users. The most popular Solana wallet, Phantom, has seen Monthly Active Users (MAUs) grow from 200,000 in August 2021 to 2+ million in Q2 2022. Of those 2M, 1.6M own at least one NFT. The wallet itself operates as both a browser plugin and a mobile application, enabling staking SOL directly to validators and displaying a user’s NFTs on separate tabs within the wallet.
Comparing Phantom to the most popular Ethereum wallet, Metamask, Solana user growth is roughly where Ethereum was in October 2020.
Solana’s Phantom wallet growth versus Ethereum Metamask wallet growth.
Source: Grayscale.
While any SOL stored on exchanges could be subject to theft, moving SOL into a wallet in which the private keys are held by the user increases security substantially. For beginners, managing the keys for the wallet will be the biggest learning curve. In March 2022, Coinbase Wallet announced its browser extension wallet will support sending, receiving, and storing Solana and SPL tokens. This will give Phantom wallet a rival while also introducing Coinbase’s millions of users to an easy Solana onboarding experience.
Before the Coinbase Wallet integration, most SOL users came into the ecosystem from an exchange or a bridge from Ethereum. Bridges are blockchain infrastructures that allow you to send funds between previously disparate and siloed L1 chains like Ethereum to Solana. One of the most popular is Certus One’s Wormhole (discussed earlier), a bi-directional ERC-20 and SPL Token bridge between Ethereum and Solana. The process for sending ETH to the Solana blockchain is as follows:
- “Guardians” certify token lockups and burn the asset on one chain to mint them on the other (burn ETH and mint SOL). Wormhole is a Proof-of-Authority (PoA) network in which the guardians are selected by Solana.
- All guardians have equal weight since it’s a PoA network.
- The project uses a multi-sig scheme to secure funds, making it susceptible to loss of funds if a majority of Guardians decide to collude and/or are compromised.
- Consensus is established through a gossip network in which, once two-thirds of Guardians observed a transaction, it’s automatically considered valid.
