State of Solana Staking: Network Revenue Booms While LST Adoption Plateaus

Solana’s vast staking ecosystem continues to offer a generous bounty of rewards and utilities. The network’s burgeoning DeFi activity has amplified blockchain revenue, flipping Ethereum in yet another key metric.

Meanwhile, the consistent growth of Solana LSTs (Liquid Staking Token) appears to be plateauing, with net LST flows turning negative on weekly and monthly timeframes.

Solana Flips Ethereum on Revenue Generation

Off the back of a massive month of DeFi trading activity, Solana’s network revenue has surpassed Ethereum’s on a daily timeframe. 

According to Artemis data, Solana has slowly closed the gap on Ethereum in terms of revenue generation before finally surging past its biggest rival. On July 28th, the Solana network generated over $1.2M in revenue, lending credibility to the network’s economic model.

This is good news for Solana validator operators and stakers. Not only does surging revenue translate to greater earnings for stakers, Solana’s increasing transaction counts also burn SOL tokens. Burning 50% of every transaction fee, this mechanism helps to counter SOL issuance and inflation, building a more sustainable token economy.

Based on the last seven days of Dune Analytics data, the Solana token burn mechanism has burnt 38,145 SOL, currently valued at over $6.92M. Despite burning over 5,000 SOL per day, the Solana network still issues just over 160,000 SOL through validator rewards.

Liquid Staking Flounders

Solana’s thriving liquid staking economy has enjoyed immense growth throughout the year. However, the TVL (Total Value Locked) of liquid-staked SOL has dropped over the last 30 days, signaling that interest in LST assets has plateaued.

According to Dune Analytics data, the total number of SOL staked through LSTs reduced by over 128k in the last 30 days, with 42.41% (45,411 SOL) of that figure being withdrawn in the last 7 days.

This decrease is likely due to the withdrawal of capital from Sanctum’s popular LST ecosystem, which attracted over $1B in TVL from depositors in anticipation of Sanctum’s initial CLOUD airdrop.

In a bid to attract more liquid stakers to their validator, Jupiter implemented a dramatic change in their fee structure. On July 22nd, Jupiter announced that 80% of block rewards would go to jupSOL, increased from 50%.

Meanwhile, Step Finance launched another addition to its growing ecosystem. In collaboration with Sanctum, Step Finance unveiled its proprietary LST, stepSOL, which provides holders with STEP reward options on top of all the existing benefits of liquid-staked assets.

Disclaimer: SolanaFloor is owned and operated by Step Finance

The Return of Native Staking?

With attention shifting away from LSTs, this may be an excellent opportunity for the Solana community to explore native staking. While not offering the flexibility of liquid staking, native staking provides greater security and peace of mind for SOL stakers.

One of the longest-serving DeFi protocols in the ecosystem, Marinade Finance offers one of Solana’s most powerful staking services. Optimized to provide stakers with the best possible staking rewards across an aggregated pool of leading validators, Marinade offers Solana’s only automated non-custodial staking tool.

What’s more, novel features like Marinade’s Stake Auction Marketplace and Protected Staking Rewards ensure users maximum rewards, while benefitting from the inherent security of native staking.

At press time, Marinade Finance is Solana’s most popular staking provider, attracting over 147k unique accounts. Offering comprehensive support for Solana staking, Marinade has attracted over $1.4B in TVL, with 32.15% of this figure directed to native staking according to Dune Analytics.

Between Solana’s explosive revenue generation and the vast range of staking products available in the ecosystem through projects like Marinade, there’s never been a better time to stake SOL.

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