- Binance users can now stake the cryptocurrency Solana (SOL).
- They can earn up to 43% a year based on certain conditions.
Solana is a high-speed blockchain that touts speeds of up to 65,000 transactions per second and works on a proof-of-stake consensus design. Validators help to keep the network running and are rewarded in SOL tokens for their efforts. In this case, Binance will run a validator on behalf of its users and distribute the rewards.
Binance's Solana offering is available on a first come, first served basis, and all stakes remain “locked” for the length of the predetermined lock up time. This ranges from 15 days to 90 days.
Binance touts a “high-yield, safe earn” of 43.7% annualized—as long as the maximum staked amount is just 20 SOL ($325). This means users can earn a maximum of $142, should they keep the SOL locked up for the entire year.
The returns are much lower (in percentage terms) for those with larger funds. Users depositing 10,000 SOL for 30 days get a return of 14.49% APY and those depositing 5,000 SOL for 60 days get a return of 16.70% APY.
Meanwhile, despite the allure, all proof-of-stake systems do come with some risks attached. They are designed with a process called “slashing,” where the network can stop (or “slash”) transactions from a malicious validator. This may result in the permanent loss of funds for stakers should this happen. But, as long as Binance keeps its validators online and performing honestly, this shouldn't impact it.