Impact of Non-Staking ETFs on Solana’s Staking Economy
- Over two-thirds of Solana’s circulating supply is delegated to validators, earning approximately 6% annually from inflation and fees.
- Hong Kong’s ChinaAMC Solana ETF, launched on October 27, explicitly does not stake its SOL holdings.
- Non-staking ETFs like ChinaAMC impose a fee drag, turning a potential 6% staking yield into a negative 2% tracking difference in year one due to ongoing charges of 1.99%.
- Stake-enabled products such as REX-Osprey’s SSK can pass through yields of about 4.8% to 5.1%, after accounting for fees.
- If $5 billion flows into non-staking ETFs, the on-chain APY could increase by up to 41 basis points.
The introduction of non-staking ETFs may lead to fewer stakers but could also raise the per-staker annual percentage yield (APY) due to reduced competition for rewards among stakers. This creates an incentive for capital to return on-chain until a new balance is reached.
Overall, while non-staking funds may increase yields for existing stakers, the concentration of delegations in stake-enabled products poses risks for decentralization within Solana’s validator economy. (Source)
