Solana Outpaces Ethereum in Staking, But Not Without Tradeoffs

While Solana’s rise is driven by strong price performance, critics still warn its staking dynamics may signal limited token utility. Meanwhile, Synthetix is tackling sUSD’s depegging by pressuring stakers to adopt a new mechanism, and Aptos is in the middle of a community debate after a proposal to slash staking rewards by almost 50% surfaced. Overall, changes to staking incentives are causing concerns about decentralization, validator health, and capital efficiency in the crypto economy.

Solana Briefly Flips Ethereum in Staked Value

The Solana network briefly overtook Ethereum in total staked value of their native tokens. This started a fresh debate in the crypto community over whether the milestone is actually bullish or bearish for Solana. 

On April 20, more than $53.9 billion worth of SOL was staked by over 505,000 unique wallet holders, offering an annualized return of 8.31%. This temporarily edged out Ethereum’s $53.93 billion in staked ETH value, though Ethereum continues to lead in DeFi and validator count.

Solana’s recent staking surge is largely attributed to its strong price performance relative to Ethereum, with the SOL/ETH ratio rising almost tenfold since June of 2023. However, the high staking yield may be inadvertently suppressing Solana’s decentralized finance ecosystem. Developers and analysts argue that users are disincentivized to participate in DeFi protocols when staking offers a better return with less risk. One developer pointed out that having 65% of SOL’s market cap staked could be a sign of a lack of broader utility for the token.

SOL / ETH ratio over the past year (Source: CoinGecko)

The difference in staking dynamics between the two networks also came under scrutiny. While Ethereum offers slashing penalties to deter malicious validator behavior, Solana’s slashing mechanism is not automatic and requires a network restart to implement. This attracted criticism from Ethereum researchers about Solana’s current economic security. Solana Labs is working on implementing a more robust slashing system, which could launch later this year.

Meanwhile, Ethereum faces its own challenges with staking centralization. The high 32 ETH threshold required to run an independent validator has driven many users toward liquid staking protocols like Lido, which now holds an 88% share of Ethereum’s liquid staking market. Although Ethereum still dominates in total DeFi value locked, both networks are working to navigate the complex trade-offs between staking incentives, decentralization, and broader network utility.

Synthetix Founder Pressures Stakers to Fix sUSD

Staking is also causing issues for other crypto projects. Synthetix founder Kain Warwick issued a firm warning to SNX stakers, and threatened to apply pressure if they do not embrace a new staking mechanism that is aimed at resolving the persistent depegging of the sUSD stablecoin. 

In an April 21 post on X, Warwick revealed that the protocol introduced a manual sUSD staking solution to combat the problem, with plans to launch a more user-friendly interface in the near future. The new initiative is known as the sUSD 420 Pool, and was rolled out on April 18. It offers stakers a share of 5 million SNX tokens over the course of a year if they lock up their sUSD for 12 months.

Despite acknowledging the difficulty of the current process, Warwick explained that SNX stakers hold the key to restoring sUSD’s peg and hinted that leniency may soon be replaced with stricter measures if adoption lags. He said initial incentives were only somewhat effective, and warned that those who ignore them should prepare for more aggressive tactics. According to Warwick, the Synthetix community possesses more than enough capital to solve the issue and that the focus now should be on aligning incentives to restore price stability.

sUSD performance over the past 3 months (Source: CoinGecko)

The sUSD stablecoin is collateralized by SNX tokens, and has seen multiple depegs throughout 2025. In fact, its value plummeted to $0.68 on April 18, which was a 31% drop from its intended $1 peg. It has since recovered slightly. A Synthetix representative attributed the recent volatility to “structural shifts” that were introduced by the SIP-420 proposal, which reassigns debt risk from individual stakers to the protocol itself.

Synthetix’s stablecoin challenges are very similar to previous incidents in the stablecoin market. USDC experienced a temporary depeg in March of 2023 after revelations of its exposure to the collapsed Silicon Valley Bank. Justin Sun-affiliated TrueUSD also dropped below its peg earlier this year due to large-scale redemptions. Despite these events, the stablecoin market still expanded quite a bit by surpassing a $200 billion market cap in early 2025. 

Aptos Proposal Seeks to Slash Staking Rewards

Meanwhile, a new proposal that was submitted on April 18 by an Aptos community member named MoonSheisty stirred debate by suggesting a nearly 50% cut to the network’s staking rewards. The proposed reduction will see staking yields drop from 7% to 3.79% over three months. 

This could be done to align Aptos with other major layer-1 blockchains and enhance capital efficiency across the ecosystem. While the proposal gained a lot of attention on X, early feedback on GitHub revealed some resistance from community members who are concerned about the long-term effects on validator diversity and network decentralization.

One concern came from a user known as ElagabalxNode, who argued that lowering rewards without introducing compensatory mechanisms, like a community-driven delegation program, might force smaller validators off the network. This could result in decreased decentralization and increased centralization among larger operators. The proposal does recognize this risk, and suggested that Aptos should consider introducing grants or delegation support for smaller validators who actively contribute to the ecosystem.

(Source: GitHub)

Aptos was founded in 2021 by former Meta engineers, and it currently holds a total value locked of around $1.04 billion. High staking rewards have helped attract participation, but critics argue they may also discourage more productive capital deployment in higher-risk areas like restaking, decentralized physical infrastructure networks (DePIN), MEV opportunities, and DeFi.

Aptos TVL (Source: DeFiLlama)

The debate around staking reward structures is not unique to Aptos. Across the crypto landscape, staking returns and structures vary a lot. CoinLedger reported that real staking returns on BNB Smart Chain are among the highest at 7.43%, while Cardano offers just 0.55%. Other blockchain communities recently proposed adjustments to their staking frameworks. For example, Polkadot proposed shortening the unstaking period in mid-2024, Starknet passed a new staking mechanism in September, and Ethereum’s Vitalik Buterin floated solutions to staking-related concerns.

While staking plays a vital role in securing networks and incentivizing user participation, reducing rewards can risk driving smaller participants out of the ecosystem. This could lead to more consolidation and a potential threat to blockchain decentralization.