Yield farming has emerged as one of the most favored methods of securely and consistently earning blockchain-based passive income. Although the concepts of staking and yield farming originate with Ethereum, nowadays DeFi enthusiasts can relish yield farming on various other blockchains as well – many of them, like Solana, are much more efficient than Ethereum.
Is Yield Farming On Solana Lucrative?
Yield farming on Solana continues to gain more and more popularity because of the high efficiency of the SOL network. Low fees of the SOL blockchain mean that you won’t encounter any issues with cashing out your passive income gains whenever you desire, and you won’t have to spend much on transaction fees while transferring your staking rewards to an exchange.
The simplest way to earn passive yield on Solana is by staking the SOL coin itself, which can grant you a 7.39% APY (Annual Percentage Yield). Of course, this percentage is not strictly set and changes over time depending on various factors such as network traffic. While in the past, Solana APY often surpassed 10%, nowadays it usually stays within the 7-8% range.
An important thing to note is that staking SOL will allow you to receive rewards with a frequency of 2.5 days. In other words, you will gain staking rewards 2-3 times a week. You don’t have to do anything to claim the rewards – your new assets will be distributed to you automatically.
Yield Farming Protocols on Solana
Certainly, staking SOL is not the only method to earn passive yield with Solana. Specialized DeFi protocols built on the Solana network allow you to gain a much higher APY. The most prevalent yield farming platforms on Solana are currently Raydium, Orca, and Saber.
Although all these protocols provide a similar level of security and reliability, the yield farming vaults of Raydium have the highest APY. Depending on the digital asset being used, Raydium yield farming vaults can return a yearly APY from around 20% to over 700% in the case of the most profitable vaults.
Orca and Saber are slightly less impressive. Generally, the yield farming vaults provided by these DeFi protocols rarely exceed 100% annual APY. It’s worth noting that you don’t have to trouble yourself keeping up to date with the profitability of particular DeFi protocols and manually transferring assets between them. Solana yield farming aggregators like Tulip Protocol (formerly SolFarm) allow you to easily keep yield farming on the Solana network in the most profitable way or increase your yield even further by using leverage.
Is SOL Farming Secure?
Yield farming is so secure because staking your assets on DeFi protocols does not mandate you to transfer your funds anywhere, and you retain control over your coins and tokens at all times. The assets are merely being temporarily delegated to a certain staking pool or, in the case of Solana, to a specific validator node. In other words, you don’t actually transfer your funds anywhere – you only delegate staking rights. This means that yield farming on Solana allows you to have the same level of control over your funds as holding the coins in your wallet without staking since your assets or private keys are being relocated at no point.
How to Begin Farming on the Solana Network?
The most beginner-friendly and straightforward way of earning passive yield with Solana is by staking SOL with the Solflare wallet, which is a dedicated SOL-specific non-custodial wallet. Solflare is a web wallet that can be added to your browser as an extension or that you can simply access on a website. While other wallets might support staking SOL, using the Solflare wallet is the only method recommended by the Solana team. Earning passive income with Solana is straightforward, and you will be able to commence gaining SOL rewards in just a few simple steps:
- Establish a Staking Account
- Delegate Your Assets to a Validator Node
- Add More Funds or Withdraw Your Assets
Conclusion
Earning yield on the Solana network is highly lucrative and efficient due to the high transaction speeds and small fees of the SOL blockchain. It’s also simple and secure, making it a beneficial way to commence earning blockchain-based passive income even for crypto beginners.
