Liquid Staking vs. Native Staking on Solana

There are two ways to stake SOL and earn inflation rewards. With native staking you delegate directly and hold your own stake account. With liquid staking a protocol stakes for you and gives you a token you can trade in return. They solve different problems, and choosing between them is about more than which app you use.

Native staking: direct, illiquid, in your own custody

Native staking creates a stake account controlled by your wallet and delegated to a validator you pick. You are the stake authority and the withdraw authority, and no other program has any power over your SOL. The cost is liquidity. While it's staked, you can't use that SOL anywhere else. To spend it, trade it or use it as collateral, you deactivate first, wait for the next epoch boundary (up to about a day) and then withdraw.

Liquid staking: a receipt token you can still use

A liquid staking protocol pools SOL from many users, stakes it across a set of validators and gives each depositor a liquid staking token (LST) for their share of the pool. Rewards show up as the LST's value rising against SOL over time. The LST is an ordinary SPL token, so you can trade it, swap it or use it as DeFi collateral straight away without deactivating anything. You earn staking rewards and keep your liquidity.

What you trust in each

Native staking asks you to trust one validator's uptime and honesty with your delegation. It never asks anyone else to hold your SOL.

Liquid staking asks you to trust more. You trust the protocol's smart contracts: have they been audited, and have they been exploited before? You trust its choice of validators and whether your stake is spread across enough of them. And you trust that the LST's exchange rate with SOL holds up under stress. On other chains, and a few times on Solana, LSTs have lost their peg for a while during market stress.

When each one fits

Native staking fits SOL you won't need for a while, when you want to trust as few parties as possible and you're happy to pick or research a validator yourself. It has fewer moving parts and is easier to see through.

Liquid staking fits when you want rewards and still want to use the value elsewhere, as collateral for a loan, as liquidity in a DEX pool, or simply to sell quickly. You take on the protocol's smart-contract risk on top of the usual validator risk. The yield is broadly similar, because both come from the same protocol inflation. So the choice comes down to how much liquidity you need and how much you're willing to trust.

You can do both

Many holders split their SOL. Some is staked natively with a validator they've checked themselves, and some is held as an LST for DeFi. How you split it depends on how much of your stake you expect to need on short notice.

With native staking through your wallet or a staking dashboard, your wallet stays the stake and withdraw authority the whole time, and no other token or protocol is involved. How Solana staking works explains native staking and its rewards in detail.