Solana staking reaches $53B as debate grows over network health

Solana (CRYPTO:SOL) briefly surpassed Ethereum (CRYPTO:ETH) in total staked token value on April 20, reaching over $53.9 billion staked across 505,938 wallets, according to blockchain data.

At the same time, Ethereum’s staked value stood at $53.93 billion, secured by 34.7 million staked ETH tokens, based on Beaconcha.in data.

Solana’s staking return currently offers an annualised yield of 8.31%, significantly higher than Ethereum’s 2.98%, which some analysts say may be drawing users away from decentralised finance (DeFi) activities on Solana.

“Solana having 65% of its marketcap staked means there’s no other use of its token, it’s actually bearish,” commented Builda Protocol developer “JC” on X.

Data from DefiLlama shows that Ethereum holds $21.5 billion in liquid staked ETH tokens, compared to Solana’s $7.22 billion in liquid staked SOL.

Ethereum also leads in total value locked (TVL) in DeFi with $50.4 billion, while Solana’s DeFi TVL is $8.85 billion.

“It doesn’t make sense for you to provide liquidity on a SOL/USDC AMM when that might earn you 5% but staking earns you 7%,” noted Tushar Jain of Multicoin Capital, highlighting how Solana’s high staking yield disincentivises liquidity provision in DeFi.

Another point of contention involves Solana’s staking security.

Ethereum researcher Dankrad Feist argued on X that Solana staking lacks economic security due to the absence of automatic slashing penalties for malicious validators.

“It’s very ironic to call it ‘staking’ when there is no slashing. What’s at stake? Solana has close to zero economic security at the moment,” he wrote.

Solana Labs responded that slashing is possible but requires a network restart, and the team plans to implement a more comprehensive slashing mechanism later this year.

Solana Labs CEO Anatoly Yakovenko is advocating for a “correlated slashing” system, where penalties would scale with the validator’s faulty stake relative to the median.

Meanwhile, Ethereum faces its own staking challenges, with many users turning to liquid staking protocols due to the high 32 ETH minimum to run a validator.

This has led to Lido controlling 88% of Ethereum’s liquid staking market, raising concerns about centralisation.

At the time of reporting, the Solana (SOL) price was $141.18.