Solana Launching Stake Pools – This Is How SOL Staking Rewards Will Work
The Solana Foundation will introduce Stake Pools to increase the network’s security, promote censorship resistance, and rewards SOL holders in the process, according to an official announcement on Twitter.
According to Solana Foundation, the Stake Pool program was enabled via an on-chain governance process. Any SOL holder can participate in the process via SolFlare, a non-custodial wallet that allows users to connect with this network.
“SOL token holders can earn rewards and help secure the network by staking tokens to one or more validators. Rewards for staked tokens are based on the current inflation rate, total number of SOL staked on the network, and an individual validator’s uptime and commission (fee).“
The purpose of the program to increase the network ability to withstand disruption or attacks, said the Solana Foundation. This capacity is partially measured by looking at the “superminority”, the smallest number of validators capable of launching a successful attack.
Stake Pools operate as incentives for the users to place their SOL funds between independent validators, the announcement clarified. As the stake distribution increase, network’s security increases too.
“Solana is already one of the most censorship resistant networks (our superminority group is currently 16), but the Solana Foundation can do even more to increase stake distribution.”
How The Staking Rewards Work?
When a user stakes their SOL token, these are distributed across “a larger number of validators”. Then, users earn tokens for delegators represented by the amount deposited, as stated above, plus rewards for staking.
The rewards can be use in other decentralized finance (DeFi) apps, the Solana Foundation said. For example, in the automated market maker Raydium or the decentralized exchange (DEX) Serum.
The stake pool system consists of 3 main actors: the manager, capable of earn and update the fess, the staker, capable of adding and removing validators to a pool and rebalancing stake, and the users, those that provide the SOL for an existing stake pool.
The Solana Foundation said:
“(…) the stake pool only processes totally active stakes. Deposits must come from fully active stakes, and withdrawals return a fully active stake account. This means that stake pool managers, stakers, and users must be comfortable with creating and delegating stakes, which are more advanced operations than sending and receiving SPL tokens and SOL.”
Stake pool participants will be able to profit from additional incentives if they meet any of 3 criteria, the Foundation said.
If you launch a stake pool by August 30, 2021 that promotes your definition of censorship resistance (you tell us what your definition of censorship resistance is and how you think your stake pool accomplishes this), whose deposits reach at least 10,000 SOL, and lists at least 20 distinct validators, you may be eligible for a grant of 100 locked SOL
If in addition to meeting the criteria in [1], your stake pool deposits reach 100,000 SOL, you will be eligible for an additional grant of 200 locked SOL
If in addition to meeting the criteria in [1], your stake pool deposits reach 1,000,000 SOL, you will be eligible for an additional grant of 1,000 locked SOL
