All You Need to Know About hSOL
TL;DR — hSOL is a liquid staking token (LST) by Helius. An LST is a token representing your stake in liquid form so that you can participate in DeFi protocols while staking to a validator. This is in contrast to native staking where your stake is delegated to a validator and is unavailable for use until it is unstaked. The main benefits of hSOL are that it accrues MEV rewards automatically, has one of the best yields on Solana due to taking zero fees, and is supported by top Solana DeFi protocols such as Kamino and Mrgn Finance for additional yield opportunities.
What is staking?
In a Proof-of-Stake (PoS) blockchain like Solana, validators create blocks (a group of transactions), vote on their validity, and chain them together to form a decentralized public ledger. To ensure validators behave honestly, they are asked to put up something of value that can be taken away if they act maliciously. This is called “stake.” On Solana, it takes the form of the native SOL asset.
On Solana, validators can acquire stake in two ways:
- the validator itself puts up stake in the form of SOL
- the validator receives delegations from SOL holders
Why would a SOL holder stake with a validator?
There are two main reasons to stake SOL with a validator:
- to earn staking rewards
- to signal trust for the given validator, who then secures the network
Validator Staking Fees
Validators on Solana earn rewards in SOL for validating and producing blocks. Every 2 days (called an Epoch), these rewards are paid out to the validator and their stakers.
On Solana, the validator you stake with can set a commission/fee on staking rewards before passing it onto stakers. The fees validators set impact the yield for stakers.
Unlike other institutional validators like Coinbase and Binance, which both take 8% fees, our validator takes 0% fees on inflation rewards and 0% fees on MEV.
What is liquid staking?
When you stake your SOL with a validator, you effectively lock it up. On Solana, these lockups can last up to 2 days. While your SOL is locked, you cannot sell it, use it in DeFi, etc.
Helius provides liquid staking to get around this. Liquid staking gives stakers a liquid, tokenized representation of their stake on the Helius validator. This tokenized representation is called a Liquid Staking Token (LST) and for the Helius validator, it takes the form of the hSOL token.
With hSOL, stakers don’t have the limitation of lockups and can use their staked assets to participate in DeFi protocols or payments. MEV rewards also accrue automatically to the hSOL token without needing to manually harvest MEV rewards through Jito. Finally, users can instantly stake and unstake their SOL simply by swapping in or out of the hSOL token.
What are the benefits of hSOL?
The simplest benefit of staking to Helius with hSOL is that you can instantly stake or unstake from the Helius validator without waiting for the 2-day activation and deactivation period.
Additionally:
- hSOL takes 0% fees on MEV
- hSOL takes 0% fees on issuance and fully protects you from SOL inflation
- offers the highest staking yields on Solana (~9.35% over the last 10 epochs)
- hSOL accrues all MEV rewards automatically
- hSOL can be used to participate in restaking protocols
- hSOL can be used in DeFi protocols as collateral and to earn additional yield
- hSOL can be swapped for any asset on Solana from aggregators such as Jupiter
Staking with Helius also benefits the entire Solana ecosystem.
Stake delegated to Helius is used to enable faster processing for Solana developers through Solana’s staked-weighted quality-of-service (SWQoS) mechanism.
What are the tradeoffs of using hSOL?
While hSOL provides many benefits, it does require two main considerations:
Smart Contract Risk
Liquid staking requires an additional smart contract on top of the native staking smart contract. While Sanctum heavily audits and maintains this contract, it does include a non-zero risk.
Tax Considerations
Some users may not want to accrue rewards automatically for tax purposes. Additionally, swapping from one LST to another may invoke a taxable event.
If you want to earn yield on your SOL tokens while using your assets across DeFi protocols, hSOL is a more flexible option compared to natively staking SOL.
How do I get hSOL?
There are two main ways to get hSOL: swap into hSOL or convert a stake account.
Swap into hSOL with Jupiter
Jupiter allows you to swap from any token into hSOL including SOL, USDC, and other Liquid Staking Tokens. To swap into hSOL:
- Visit Jupiter’s website
- Connect your wallet
- Choose the token you’re selling and the amount
- Select hSOL as the token you’re buying
- Click “Swap”
Swap into hSOL with Sanctum
Sanctum’s swap interface only allows you to swap into hSOL from SOL and other Liquid Staking Tokens (e.g. mSOL). To swap into hSOL on Sanctum:
- Visit Sanctum’s website
- Connect your wallet
- Choose SOL or another LST token that you’re selling and the amount
- Search for and select hSOL as the token you’re buying
- Click “Buy hSOL”
Convert a Native Stake Account into hSOL
If you’ve already natively staked with Helius via a wallet, you can convert your staking account into hSOL using Sanctum’s stake account conversion tool.
- Visit https://app.sanctum.so/stake-accounts
- Connect your wallet which has your native staking account with Helius
- Sanctum will identify your active stake accounts and accounts that are deactivating ("activating” and “inactive” stake accounts will not appear)
- Select your Helius stake accounts and click “Convert to LST”
Note: You will not be able to convert a stake account to an LST if that particular validator does not have its own LST.
Congrats! Now, you are staking with Helius using the hSOL token.
