Want to stake your $SOL tokens

Staking tokens is how transactions are validated on a proof-of-stake network like Solana. But, staking your precious SOL tokens means that they are locked away from the market, and you miss out on potential DeFi opportunities with your tokens. The solution? Liquidity staking! Solana has a whole wave of liquidity staking options today, including Marinade, Lido, Parrot and Socean. Let’s find out how they work, and how to get your staked SOL tokens to work even harder for you! Firstly, what is staking and liquidity staking? Staking is the act of delegating your assets to a blockchain validator, to help secure the network and its functions. Stakers are incentivized with a yield, like interest in a bank account. However, when you stake your assets, they are removed from the market, leading to potential low liquidity conditions where assets are not as easily exchanged for one another. Locked tokens can put a strain on the market by causing wide swings in asset prices when large orders are placed, making it unattractive for large investors. Furthermore, a blockchain like Solana has an epoch of around 2 days. This means that staking or unstaking your tokens can require a waiting period of up to 3 or 4 days. What makes liquidity staking so attractive is that it helps increase liquidity in the market, without the need for additional capital. Through the creation of derivative tokens, the staked funds are able to stay where they are, while the derivative token can be used in the markets. Token holders also usually have a dilemma between protect or play. On one hand, they wish to preserve their assets but they may also wish to participate in DeFi opportunities. Liquidity staking makes both possible. On Solana, you have a whole sea of liquid staking options. One of them is Marinade Finance, the first non-custodial liquid staking options for Solana. Stake your SOL on Marinade Finance, and you’ll receive mSOL in return. The price of mSOL tracks SOL, and you can unstake immediately at any time for a small fee. But what can you actually do with these mSOL tokens? You can deploy them in other DeFi protocols as collateral to lend and borrow, or put them to play in automated options strategies. mSOL is non-custodial too, which means your tokens stay under your control. No matter what you do with your mSOL tokens, you will still continue to earn yield on your underlying SOL as an incentive to help decentralize and secure the Solana blockchain. Another protocol well-known in the Ethereum community is Lido, which also provides liquid staking for Ethereum in the form of stETH tokens. Lido offers liquid staking for Solana in the form of stSOL. The stSOL that you receive can again be deployed and put to work in various DeFi farms and other yield strategies in protocols such as Raydium and Orca. Parrot and Socean are other liquid staking options available, offering prtSOL and scnSOL in return. Parrot is also known for their stablecoin PAI, while Socean has managed to raise some $5.75M in seed funding with notable VCs taking interest.