How to earn staking rewards from your SOL on Robinhood

Robinhood centralized exchange just announced SOL trading. Here is how easy it is to start earning staking rewards on your tokens.

Robinhood, one of the largest centralized exchanges for stocks and cryptocurrency, just announced they have added Solana (SOL) as one of four new tokens available to trade.

If you’re a Robinhood trader, you may not know that it is possible to earn staking rewards on your crypto positions. In fact, Solana is one of the top layer-1 blockchains for earning staking rewards. Its low gas fees (just fractions of a penny) and growing number of user-friendly dApps and wallets, not to mention the rapidly growing NFT space, make it a welcoming place for newcomers to explore the possibilities of Web 3 and DeFi and grow their positions doing so.

Because Robinhood also launched crypto wallets to its users in early 2022, it’s now simple to deploy your SOL tokens to the blockchain to take full advantage of the opportunities across Solana.

When you purchase crypto assets such as SOL on a centralized exchange like Robinhood, it is held in their custody. You do not have custody of these tokens even though it is reflected on your account balance. For many users new to cryptocurrencies, this is acceptable because it alleviates the need to manage a wallet and protect a seed phrase. If you forget your Robinhood password, it is easy to reset it and gain access to your funds.

But there are a lot of reasons why you should move your SOL tokens from a CEX like Robinhood and onto a self-custody solution.

The first is that you can begin earning a competitive staking rewards on your SOL tokens. Earning interest on SOL holdings is not currently available on Robinhood.

But what is staking and why do it? Staking your SOL tokens helps strengthen the censorship resistance of Solana, which is a Proof-of-History blockchain that relies on a global network of validators to confirm transactions. Staking tokens to a validator or a validator stake pool enables the blockchain to function and is one of the core value propositions of decentralized blockchains like Solana.

If you are committed to Solana in the long-term, staking your tokens is a fundamental and profitable way of supporting it. (Read more about Marinade’s delegation strategy and how it decentralizes Solana.)

So with that said, here is how easy it is to move your SOL onto the chain from Robinhood:

NOTE: This is not financial advice and intended for educational uses only. Marinade is not a financial advisor.

How to earn staking rewards with your Robinhood SOL tokens

The best way to take advantage of staking rewards and Solana is by moving SOL off Robinhood to a crypto wallet to exchange for mSOL, a fully liquid collateralized version of SOL that acts as a receipt for your staked SOL.

Don’t have a Solana-compatible Crypto wallet yet? It takes just a few minutes to set up, but be focused when you do it because you will need to record and store your seed phrase. Marinade connects to the following SPL-compatible wallets: Solflare, Phantom, Slope, MathWallet, Coin98, Sollet and Glow. Two of these have integrated Marinade liquid staking right into their UI’s. (Read more about getting started with wallets in the Marinade docs).

Once you have your wallet ready, here’s what you do:

4. Enter the amount of SOL you want to send and enter the wallet address. IMPORTANT, ENTER A SOLANA/SPL-COMPATIBLE WALLET ADDRESS. CONSIDER SENDING A SMALL ‘TEST’ TRANSACTION FIRST TO MAKE SURE IT ARRIVES.
5. You are ready to send the SOL to the blockchain, but you will also have to approve the transaction through Two-factor Authentication. (In previous experiences, moving funds from Robinhood to a crypto wallet can take an hour or two to settle).

You have now sent your SOL to your crypto wallet! From here, there are two simple ways to liquid stake it for staking rewards:

Solana crypto wallets that integrated mSOL liquid staking

The first wallet that lets you liquid stake right from the wallet is Solflare. Once your SOL has arrived in the wallet, you can stake right from their web extension.

4. Click on the “Staking” tab
5. Click on “Liquid Staking”
6. Enter the amount of SOL you would like to stake
7. Click “Stake” — Head to your wallet and you will see mSOL tokens. You are now free to use mSOL anyway you would like in Solana DeFi. (read more about the Solflare and Marinade partnership)

The latest Marinade wallet integration is Slope. With Slope you can liquid stake your SOL tokens for mSOL. Check out how easy it is, even from mobile, in this new video:

Using Marinade Finance to Liquid Stake SOL

You can also go directly to Marinade.Finance to stake your SOL tokens, which integrates with a number of Solana wallets.

4. Visit Marinade.Finance
5. Click on “Go-to-app”
6. Click on ‘Stake’
7. “Connect wallet”
8. Enter the amount of SOL to stake (if you click “Max,” Marinade will still leave a little SOL left in your wallet so you don’t run out of gas).
9. Click on “Stake SOL” and approve the transaction in your wallet.
10. Head to your wallet and you will see a new mSOL position.

So how does the liquid staking work? You will not see the amount of mSOL tokens grow in your wallet. Instead, the price of it gradually rises against the price of SOL at about 6.1% APY. So that means if you convert 1 SOL to mSOL and hold that position for one year, the mSOL will be worth about 1.06 SOL if you choose to swap it back.

How mSOL grows over time vs. SOL.

Turn 6% staking rewards into 10, 20, or 30%+

Here’s the real appeal of liquid staking with Marinade: Once you have swapped your SOL for mSOL tokens, your SOL is actively earning staking rewards, but you can use the mSOL to generate additional yield in a variety of ways throughout Solana DeFi. Supply mSOL to lending platforms or use it to provide liquidity (either single-sided or in liquidity pairs with stablecoins or other tokens). You can even borrow against it to buy more mSOL or other tokens.

Visit the Marinade DeFi page to view a running list of pools and mines that feature mSOL. Many of these options are “liquidity pairs” meaning you will need an equal amount in USD of the other token. ($100 worth of mSOL and $100 of BTC, for example).

You can also trade mSOL for other Solana ecosystem tokens for very low fees on decentralized exchanges like Orca or Raydium (or use Jupiter aggregator). Many of these tokens are not yet offered on many centralized exchanges.

Keep in mind that if you trade your mSOL, you are trading away the right to your staked SOL tokens.

Risks staking vs. hodling in a CEX like Robinhood

Keeping funds on-chain in a hot crypto wallet or a DeFi protocol is susceptible to more risk points than keeping them in a centralized exchange. Understand what could go wrong before you decide on self-custody and venture into DeFi.

4. Don’t send funds to the wrong wallet address, or send SOL tokens to a non-compatible wallet. This is irreversible and funds will be lost.
5. Keep your wallet’s seed phrase secure, offline and do not share it.
6. Keep your centralized exchanges bookmarked in your web browser. Scammers create fake sites that look like known marketplaces or exchanges (they will even buy Google Ads to trick you) and if you connect your wallet and approve a transaction on them, they may have full access to withdraw your funds.
7. Using your tokens on DeFi protocols comes with smart contract risk. Read more about the Marinade security standards and audits.

These staking steps for Robinhood aren’t all that different from Coinbase, FTX or other leading crypto centralized exchanges. In just a matter of clicks you can begin earning staking rewards and participate in the emerging Solana DeFi ecosystem with your SOL tokens. Give it a shot, and if you need assistance, you can visit Discord and chat with the support team or connect with other Marinators and discuss Solana DeFi strategies with mSOL.