What is OKSOL: Solana exposure with a liquid staking edge

Solana rallied over 170% in 2024. Contrary to popular belief, memecoins are not the sole reason fueling Solana's performance.

Source: OKX

Thanks to platforms like Sanctum, Jito and Marinade Finance, liquid staking on Solana has become increasingly popular. As a result of the increased demand for liquid staking services, OKX has launched a liquid staking token (LST).Enter OKSOL: an in-platform LST issued by OKX. It allows users to enjoy native onchain staking rewards and MEV benefits without bearing the disadvantage of locked liquidity. If you want to learn more about OKSOL and liquid staking, this OKSOL guide has everything you need to know to get the most from your Solana holdings.

TL;DR

• Unlike traditional Solana staking, OKSOL lets you earn staking rewards and use your staked SOL as collateral for loans and margin.

• By combining staking rewards with OKX Earn opportunities, OKSOL can offer potential for greater overall gains compared to simply staking SOL directly.

What is liquid staking?

Liquid staking is a process allows users to stake their crypto and earn rewards while maintaining liquidity. By depositing these tokens into a liquid staking protocol, users receive LSTs like OKSOL. This can then be used as collateral for loans and margin, while their original SOL tokens are locked in the staking contract. As an advanced form of staking that marries the best of both worlds, liquid staking offers a compelling solution for those seeking to maximize their crypto gains while enjoying the flexibility of excess liquidity.

What is OKSOL?

OKSOL is an LST that represents staked Solana on OKX. When you stake SOL on OKX, you receive OKSOL as a 1:1 derivative token. Thanks to OKSOL, users get to enjoy capital efficiency since they can now use OKSOL as collateral for loan and margin while continuing to accrue SOL staking rewards.This two-pronged benefit makes OKSOL an attractive LST to anyone keen on gaining Solana exposure and maintaining their liquid flexibility.

OKSOL utility: what can OKSOL be used for?

Staking SOL on OKX offers rewards with MEV-boost increasing chances of earning more rewards. Unlike staking on SOL within DeFi, staking SOL on OKX offers flexible redemption options. With OKSOL, you can trade OKSOL/SOL and OKSOL/USDT pairs, or redeem OKSOL for SOL 1:1 with a short redemption period of five days.Lastly you can collateralise OKSOL to borrow, or margin trading via OKX Loan as users can unlock liquidity while continuing to earn staking rewards. This approach preserves the potential appreciation of your SOL and avoids the risks associated with excessive leverage.

Understanding the risks of LSTs

Like all staking, there are inherent risks, including, but not limited to:

Smart contract risks

Typical LSTs rely on smart contracts to manage staked assets and mint derivative tokens. Smart contract vulnerabilities like coding errors, exploits, or failures, could result in a loss of funds or interruptions in service. Regular security audits and adherence to best practices are essential to mitigate this risk.

Market volatility

LSTs are derivatives and might not always maintain a 1:1 value peg with their underlying crypto asset. In times of extreme market stress or liquidity crunches, the value of these LSTs may deviate and depeg, potentially causing losses for users.

Liquidity risks

While LSTs enable liquidity, there may be scenarios where sufficient liquidity is unavailable in their ecosystem or secondary markets. This could limit a user's ability to trade or use these LSTs for other purposes, especially during high-demand periods or market downturns.

Regulatory and compliance risks

Regulatory uncertainties around staking and derivatives could impact the usage and legality of LSTs in specific jurisdictions. That's why users must stay informed about the legal landscape in their region and potential restrictions on staking-related activities.

Custodial risks

LSTs depends on the provider’s staking infrastructure. Centralized custody introduces additional risks like mismanagement of funds, operational failures, or even insolvency. Trust in the platform's security measures and insurance policies is thus considered essential.

Opportunity cost

By staking an asset and receiving an LST, users may lock themselves out of other potentially more lucrative or alternative trading opportunities. Additionally, rewards or benefits from holding native assets directly in certain ecosystems may not transfer to LST holders. This can include inclusion in airdrops and governance participation.

How OKSOL overcomes these LST challenges

OKSOL is designed to address the inherent challenges of LSTs through proactive strategies and user-centric measures. Here’s how OKSOL minimizes risks and enhances user confidence.

1. Maintaining robust liquidity pools

OKSOL ensures smooth trading with managed liquidity pools, tighter spreads from market makers, and adaptive scaling to handle market demands and high activity efficiently.

2. Transparency in custodial processes and staking operations

Through the OKX platform, users can easily track their OKSOL holdings, staking rewards, and the underlying SOL backing the derivative. This overall transparency ultimately reinforces trust in the liquid staking process.These risk mitigation measures collectively make OKSOL a standout LST, combining the benefits of staked SOL with the flexibility of a liquid token.

SOL vs OKSOL: a look at both assets

When considering staking Solana directly versus utilizing OKSOL, it's important to weigh the differences in rewards, liquidity, and financial flexibility. Both options offer the opportunity to earn staking rewards but which comes out on top? Our deep dive considers the staking of both assets to see which can enhance your overall gains when combined with ecosystem utility.

Direct SOL staking

• Rewards: Staking SOL natively through direct traditional mechanisms provides stable staking rewards, typically ranging between 5% to 8% annual earning rate. This nominal amount also depends on the staking provider and is automatically accrued over time.

• Liquidity: While staking SOL locks your tokens, they remain illiquid for the duration of the staking period. Early withdrawals can result in penalties or waiting periods, reducing overall capital efficiency and flexibility.

• Opportunities: Once staked, SOL cannot be leveraged further without unstaking. This limits the ability of users to explore additional options to potentially double-dip and earn even more gains.

• Risks: SOL is locked during the staking period, raising liquidity risks and preventing access to other earning opportunities. Users also face custodial risks, reward variability, and potential regulatory restrictions.

OKSOL staking

• Rewards: OKSOL provides the same base staking rewards of 5% to 8% through staking SOL directly, ensuring no loss in staking gains. Users continue to earn SOL staking rewards even while holding OKSOL as a liquid token.

• Liquidity: Unlike directly staked SOL, OKSOL allows users to retain full liquidity. This means you can freely trade, lend, or trade with your OKSOL without waiting for an unstaking period.

• Opportunities: OKSOL holders can multiply their gains by participating in additional trading strategies made possible by taking a loan with OKSOL as collateral.

• Risks: OKSOL carries no smart contract risks thanks to its focus on asset security. Rather, potential risks may come from value peg deviations in volatile markets.

Key takeaways

• Higher total gains: While both options provide staking rewards, OKSOL unlocks additional earning potential by leveraging OKX’s robust ecosystem, increasing overall returns.

• Greater liquidity: With the 1:1 SOL to OKSOL staking ratio, OKSOL's liquidity ensures you can adapt to market opportunities without sacrificing staking rewards.

• Flexibility and security: OKSOL seamlessly combines the security of staking with the flexibility to trade, making it a superior choice for anyone familiar with DeFi strategies to maximize gains.

By choosing OKSOL, you can potentially amplify your potential for gains rather than just settle for single-layer rewards from native staking.

Staking comparison: JitoSOL vs OKSOL

In the example above that compares staking 10 SOL on Jito vs OKX, OKSOL pays 2% more compared to JitoSOL. Additionally, the lack of network fees and ease of swapping for OKSOL makes staking SOL on OKX convenient and rewarding.

Final words and next steps

As DeFi matures and users increasingly seek sophisticated strategies to optimize yield and capital efficiency, liquid staking has emerged as a fundamental building block within the ecosystem. While typically used for securing networks and generating rewards, traditional staking often locks up capital, preventing users from participating in other opportunities. Liquid staking solves this inherent trade-off by tokenizing staked assets, allowing users to access the liquidity of their staked capital while simultaneously earning staking rewards.OKSOL exemplifies this shift by providing users with a seamless way to combine staking rewards with the flexibility of liquid assets. By staking SOL through OKX, users receive OKSOL, which can then be utilized across the broader OKX Earn landscape, unlocking a range of possibilities that enhance capital efficiency and allows users to compound their gains beyond basic native staking rewards. As DeFi continues to evolve, liquid staking solutions like OKSOL are expected to play an increasingly important role in shaping the future of crypto.

Explore OKSOL on OKX today and unlock the full potential of your Solana holdings. Check out our step-by-step guide to staking and redeeming OKSOL to learn how to get started.