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Breaking News: XRP Price Predictions: AI Forecasts $4.40 By March 2026, Analysts Target Up To $6

Solana to Launch Stake Pools, This Is How It Will Enable Rewards For SOL Holders

Reynaldo Marquez
Reynaldo Marquez
Last Updated: July 23, 2021 10:00 pm
2 mins read
Solana SOL SOLUSDT

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The Solana Foundation has announced Stake Pools to increase the network’s security, promote censorship resistance, and rewards SOL holders in the process. The announcement was made via their official Twitter handle.

The Stake Pool program was enabled via an on-chain governance process, as the Solana Foundation said. 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 program was launched to increase the network ability to withstand disruption or attacks, the Solana Foundation said. This capacity is partially measured by looking at the “superminority”, the smallest number of validators capable of launching a successful attack.

Thus, the Stake Pools operate as incentives for the users to place their SOL funds between independent validators, the announcement clarified. As the stake distribution increase, so does the network’s security.

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 To Earn Rewards While Securing Solana

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 is comprised 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 participates will be able to profit from additional incentives if they meet any of 3 criteria, the Foundation said. First, if they launch a stake pool by August 30, 2021, promoting a definition of censorship resistance. These managers will be eligible for a 100 SOL reward.

If they also reached 100,000 SOL deposit to their pool, they wil receive a 200 SOL grant or a 1,000 SOL grant if they reached 1,000,000 SOL staked.

At the time of writing, SOL trades at $27,01 with a 2.9% loss in the daily chart.

Solana SOL SOLUSDT
SOL with small losses in the daily chart. Source: SOLUSDT Tradingview
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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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