In this article, we will take a closer look at the yield-enhancing options available within the Solana Ecosystem.
If you have a Phantom wallet, you will find two SOL staking options:
- Native Staking which provides ~6.73% est. APY
- Liquid Staking via Jito with ~11.79% est. APY (in this case, you will get liquid staking token jitoSOL which serves as a claim on your staked SOL and its accrued rewards)
*The actual APY rates may fluctuate over time due to network activity, validator performance etc.
Source: Phantom
1) Community-driven High Yield Liquid Staking Tokens (LST)
Besides jitoSOL, Sanctum (Token CLOUD) allows any validator community on Solana network to launch its new LST, opening up opportunities for validator communities to deepen their connections with their community members by providing fee sharing and airdrops rewards. So far there have been 55 different LSTs launched via its platform.
Source: Sanctum
For example, nordSOL (chart below), a LST launched by Nordic staking validator community offers an estimated APY of 18.56% to its token holders. By converting your SOL into nordSOL, you are delegating your SOL tokens to Nordic staking validator. In return, the validator shares block rewards and MEV* profits as well as the future airdrop of its native NORD tokens with nordSOL holders.
*MEV (Maximal Extrable Value) - refers to the additional value that blockchain validators ( those creating new blocks on the network) can acquire by manipulating the order of transactions within the blocks they create. This manipulation, often referred to as "front-running," can provide validators with an extra source of profit beyond the standard block rewards and gas fees they collect for their work. Often validators are reordering the transactions on behalf of a third party and are typically "bribed" with a large amount of the revenue for doing so.
Source: Sanctum
2) Leveraging on yield differentials
With the LST tokens you received from the liquid staking option, you can go to Kamino Finance (Token KMNO) to explore additional yield-enhancing opportunities.
Take jitoSOL as an example, in its Multiply feature, users can open a leveraged position to increase exposure to jitoSOL by borrowing SOL against jitoSOL holdings. Since jitoSOL is pegged to SOL, while its yield is typically higher than the SOL borrowing rate, users can potentially get a positive net APY over time, and the position can be looped up to 2~5x leverage, depending on users' risk appetite.
Historically the return generated from this jitoSOL/SOL product has ranged from 2~15% at 2x leverage. Currently it offers a net APY of 8.5% at 2x leverage, which means users get a total of ~20% APY (8.5%+11.79%) on its SOL holdings.
Source: Kamino Finance
Besides jitoSOL, there are many other LSTs that you can take leveraged position on Kamino Finance. The highest-yielding one is JUPSOL, issued by Jupiter, the leading DEX aggregator on Solana. It currently offers 19.78% APY at 5x leverage, which means SOL holders can get a max APY of 29% (9.33%+19.78%) if convert their holdings to JUPSOL and leverage the Multiply product on Kamino Finance.
*Please be noted that leveraged positions carry liquidation risk if yield differential reverts.
Source: Kamino Finance, Sanctum
Above are the two popular ways that you can utilize to enhance the yield for your SOL holdings.