Key Insights
Liquid staking is becoming a more popular form of crypto investment.
It offers users liquidity tokens in exchange for locking up their tokens.
Binance’s version of Solana liquid staking offers a special token called $BNSOL as a liquidity token.
This token can be traded, held or transferred like regular $SOL coins.
Aside from some minor pitfalls, Solana staking with BNSOL is a major alternative for users looking for ROI and flexibility.
Crypto staking is becoming a popular way of investing in the crypto market, more and more.
Solana, on the other hand, is an investor favorite when it comes to staking.
Because of this massive market for Solana staking solutions, Binance has introduced an efficient way for investors to get things done:
$BNSOL.
The best thing about staking is that it provides a way for investors to earn staking rewards by locking their tokens.
However, with liquid staking, these investors can do the same without their crypto becoming unusable.
This is exactly what BNSOL was created for—a liquid staking token, designed specifically for Solana.
Let’s go over what BNSOL is, how it works and how to stake $SOL through Binance’s liquid staking service.
What Is BNSOL?
BNSOL in simple terms, is Binance's liquid staking token for Solana.
This means that when a user stakes their $SOL on the platform, they receive this special token in return.
Another major detail is that the amount of $BNSOL an investor gets is equivalent to the $SOL staked.
This means that $BNSOL represents the original tokens.
They can be traded, transferred or used in any other defi application without having to wait for the usual timeframe in regular staking.
The best part of $BNSOL is that users can also continue earning staking rewards while maintaining liquidity.
This tokenized form of staking allows users to enjoy the benefits of staking, without its handicaps.
$BNSOL can be moved as freely as its parent token while being used to earn rewards.
Key Features of BNSOL
There’s more to this cryptocurrency than meets the eye. Here are some of the major ones to keep in mind:
Liquidity with Staking Rewards
For starters, it makes sure that users don’t have to choose between liquidity and staking rewards. By opting for liquid staking, users can enjoy the best of both worlds.
Pegged to SOL
Another major win for BNSOL holders is that the cryptocurrency’s value is pegged to the underlying SOL tokens.
Sometimes its price might fluctuate slightly based on market conditions and demand. However, in the general sense, BNSOL mostly reflects the value of $SOL itself (plus the rewards accumulated of course).
Instant Access
Users can also access their staked funds right off the bat, without having to wait for the unstaking period.
This is especially useful for users who want a lot more flexibility than $BNSOL already provides.
How Does Liquid Staking Work on Binance?
This method of earning passive rewards is relatively easy to do. Users have to stake their tokens through Binance.
However, instead of locking up the tokens and having them gone from sight, they receive this tokenized representation of their assets.
Here’s how to get it done:
1. Log In to Your Binance Account
This is the first step.
Make sure you have a verified Binance account. If you do not have one, you first need to create and verify one with the necessary KYC.
Binance’s homepage
Source: Binance
2. Deposit or Purchase Solana (SOL)
If you don't have Solana tokens already, you'll need to buy some. Navigate to the spot trading section and buy tokens using USDT, BNB or any other asset.
Deposit or swap crypto for SOL
Source: Binance
If you had SOL to begin with, you can deposit it into your wallet.
3. Access the Staking Page
Once your SOL is ready, you can head over to the Binance staking platform.
To get there, go from the homepage to the ‘Earn’ section. Then choose ‘Staking’ from the dropdown menu.
Navigating to the earn page
Source: Binance
4. Select Solana (SOL) for Liquid Staking
Under the staking options, find Solana and choose the liquid staking option.
Binance Solana staking
Source: Binance
Here, how the entire process works is highlighted. You’ll see details about staking rewards, BNSOL conversion rates and other relevant information.
5. Stake SOL and Receive BNSOL
Select the amount of tokens you wish to stake and confirm the transaction. Once they have been staked, Binance will offer BNSOL in return.
Amount to be staked
Source: Binance
These will appear in your wallet and represent the initially locked tokens. They can now be traded or held while earning staking rewards.
6. Redeeming Your Staked SOL
If at any point you decide to stop staking and want to convert back into SOL:
Binance allows easy redemption. Simply navigate to the staking page, select BNSOL (beside “stake SOL”) and redeem.
Binance Solana staking
Source: Binance
It might take some time for the tokens to reappear in your wallet depending on the network.
Why Should You Use Liquid Staking For Solana?
There are several reasons why investors choose liquid staking instead of the regular kind for their Solana.
The first and most obvious of these is for the rewards.
Another is the flexibility it offers. Users can trade or use their tokens in DeFi applications while still earning rewards.
This allows for greater flexibility unlike traditional staking where investors need to wait for an unstaking period.
Liquid staking offers instant access, at any time.
Are There Any Risks?
This form of staking offers major advantages. But what about the disadvantages
Some major risks with liquid staking include things like Peg Fluctuations.
BNSOL is pegged to SOL. However, its value can also fluctuate slightly due to market conditions. Depending on the size of the staked tokens, these fluctuations might result in heavy losses.
Another is Platform Dependency, where an investor relies completely on the platform’s security.
If said platform goes down, so do their assets.
Overall, aside from the minor pitfalls, BNSOL is perfect for users looking for returns, flexibility and access to defi with their SOL.
