State of Solana Staking: Staked $SOL Goes Institutional While Paladin TVL Grows

Enjoying over 3x more DEX trading volume than any other blockchain in January 2025, Solana is undoubtedly the home of DeFi this cycle. 

Stakers are reaping the benefits of Solana’s explosive onchain activity, with staking yield surging to unprecedented levels. Solana’s eye-watered staking APY has caught institutional attention, with TradFi exploring how to make the most of its $SOL holdings.

What are the biggest trends in Solana staking, and where could momentum shift next?

Marinade Leads Native Staking APY Amidst DeFi Frenzy

Earlier this month, Solana witnessed the single largest DeFi onboarding event in crypto history. President Donald Trump’s memecoin launch kicked onchain activity into overdrive, rewarding stakers and validators with significantly boosted earnings due to heightened transaction fees.

Marinade Finance’s Stake Auction Marketplace (SAM) proved its effectiveness throughout the excitement, with bidders eagerly trying to secure network stake and driving APYs to new highs. 

Buoyed by the SAM, Marinade continues to provide Solana’s highest native staking yield, currently offering 12.65% APY on staked $SOL. However, this may only be the beginning of where staking yield might go.

According to Marinade data, auction-winning APY in the SAM has surged as high as 18.76%, meaning that stakers could witness even higher yields in the weeks to come.

Solana staking yield now dramatically exceeds $SOL inflation rate, which currently sits at roughly 4.75% p.a. Fearful of missing out on staking rewards, institutional players are exploring how they can offer staking exposure to their clients.

Bitwise EU has been among the first to break ground, announcing the launch of its staked SOL ETP ($BSOL) in collaboration with Marinade Finance in December 2024. By establishing the necessary infrastructure for staking ETPs in Europe, Bitwise is arguably getting a headstart on the institutional staking landscape in the U.S., which still faces regulatory hurdles left over from the Biden Administration.

Stakers Move to Liquid Positions

Amidst volatile market conditions and surging DeFi activity, $SOL stakers are moving away from native positions into Liquid Staking Tokens (LSTs). LSTs ensure that holders still reap the benefits of staking rewards, without being subject to the lengthy unstaking periods that restrict access to assets.

According to Dune Analytics data collected over the last 30 days, native staking deposits have decreased by 4.2M $SOL. Meanwhile, over 1.8M $SOL has been staked to LST providers, suggesting stakers prefer more accessible positions at this stage of the bull run. LST market share currently sits at new all-time highs, with 9.4% of network stake held in LSTs.

Since stepping into the LST arena, Binance has taken Solana’s staking landscape by storm. Binance now commands 4.1% of all network stake. Its native Liquid Staking Token (LST), $bnSOL is now Solana’s second-largest LST behind market leader $jitoSOL.

Paladin Amasses 10% of Network Stake

It’s no secret that malicious MEV is one of the biggest challenges facing Solana DeFi. Paladin, a jito-client patch, aims to democratize MEV rewards and distribute them as widely as possible among network participants.

Since its beta launch in Q4 2024, Paladin has steadily converted validators to its cause. Over 130 validator operators have now made the switch, with over 10% of network stake now running Paladin.

On January 11, Paladin open-sourced its codebase, which estimates a 12.5% increase in staking rewards, while automatically dropping 95% of malicious sandwich attacks.

2025 has begun with euphoric highs and debilitating lows. Supposedly triumphant events like the $TRUMP memecoin launch have been quickly followed by devastating sell-offs, and market participants are unsure of what the future holds.

Despite the uncertainty, Solana’s staking landscape continues to push forward. Staking yield is hitting all-time highs, LSTs and institutional adoption are making staking more accessible and flexible, and emerging protocols like Paladin are addressing some of the network’s biggest concerns.

Markets may be foggy, but the future of staking on Solana continues to move forward with wider expansion, improved rewards, and greater security.

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