Can someone explain in layman terms how yield is produced when staking on coinbase?
Are they gambling with my Solana?
Is my solana at risk?
Where does the extra Solana come from that they are paying me every few days?
You must log in or register to comment.
Pretty sure they’re just staking it… you can stake it too.
Solana creates tokens to pay people who stake to incentivize running validators and securing the network.
Also mev gets paid out depending on the validator.
You can make more staking yourself but I’d recommend using a hw wallet
No you’re safe to stake on coinbase wallet
You are not staking with Coinbase, Coinbase is staking with your money.
If you are referring to Staking and holding crypto on Coinbase exchange, then it is seriously not recommended.
Firstly it’s custodial. The exchange holds your private keys and therefore the assets you hold/stake on there are in the exchanges complete control. Exchanges are known to suspend/pause withdrawals during high volatility events leaving you without access.
Secondly it harms decentralization of the network - Coinbase has a very high concentration of stake already, in fact they are the largest node by stake weight (in the superminority).
Much better to use a non-custodial wallet such as Phantom/Solflare and stake to validator/s of your own choice.
Would recommend to give u/Cogent_Crypto staking guide a read https://medium.com/@Cogent_Crypto/solana-staking-guide-part-1-6a6a85f07b56
StakeWiz is a great tool to checkout metrics of validators and avoid staking with anyone on this list https://stakeview.app/poor.html
Ty
Solana has a reward structure, lets say every year you make 10% on a crypto. Coinbase will keep 5% and give you 5% when you stake on their platform. If you stake outside of their platform, you might be able to get more or less of that 5% depending on what validator you stake on. The above numbers are just made up, I believe my staking account is getting about 7.3%
I am also clueless about this as well. Where do the rewards come from? Out of thin air it seems? How do they pay so much?
I’m looking into the liquid staking on the Jito network.
It’s all answered here:
That really helped. Thankyou. So if Solanas current inflation rate is 5.689% and Coinbase is giving me 5.1%, they(Coinbase) don’t seem to be charging much for the service. I wonder how other staking providers are managing higher. Even on this sub, some are quoting 6, 7, even 8% or more.
They take your solans, stake it on chain, take a portion for themselves and give you the rest
What happens to staking once all the Sol is in circulation?
It’s reduced compared to staking directly with a validator
How do you say this?
Personally Im staking my SOL through my ledger. Really nothing can go wrong. The point of failure is ledger live basically. But even if the validator goes offline you can redelegate or unbound. Very unlikely ledger live would vanish before I need my sol.
But with coinbase. Your point of failure is coinbase going bankrupt and cannot pay out after the 21 day unstaking period.
Then there are wallets and point of failure is wallet. Same as ledger in a way. I would rather either than coinbase. Probably you would be fine with coinbase since don’t see them bankrupt soon. But if I were staking millions would not give coinbase. Not sure but they likely stake it for you and forward the rewards while taking a percentage.
Staking on decentralised wallet instead of centralised exchange is far far better even with small APR.
Can someone explain in layman terms how yield is produced when staking on coinbase?
Should be the same way yield is produced for all staking, from protocol level emissions (inflation).
Are they gambling with my Solana?
Any custodial service could be doing that, but Coinbase is very reputable and it would be unlikely.
Is my solana at risk?
Yes, but risk will always be present and staking with Coinbase is a pretty low risk custodial option.
Where does the extra Solana come from that they are paying me every few days?
Same as my first answer.
I wouldn’t stake on Coinbase, leaving money on the table. They’re selling you short and collecting the extra for them
Soo what’s a good alternative
Move your SOL to a self custody wallet like Phantom or Solflare, and use Marinade to benefit from an automated strategy
What about bitpanda?
hilarious that no one can answer the question of where the yield comes from.