The State of Returns on Solana: Solstice (Ben Nadareski)

Solana has quietly become the epicenter of real, verifiable economic returns in crypto—and the numbers are staggering. With over $4 billion in daily spot DEX volumes, $10.7 billion in liquid staking, and institutional-grade yield strategies delivering 12-20% APY, Solana's financial infrastructure is scaling at unprecedented speed.

Summary

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At Breakpoint 2025, Ben Nadareski, co-founder and CEO of Solstice—the largest Solana-native stablecoin—delivered a compelling case for why Solana has become the dominant chain for yield generation in crypto. His presentation traced Solana's three-stage evolution from a subsidy-driven ecosystem to what he describes as the foundation of "internet capital markets."

The transformation has been remarkable. Between 2020 and 2022, Solana users were primarily chasing token emissions rather than sustainable market structures. Returns were externally funded through incentives, creating shallow but hypermobile capital that responded instantly to APY differentials. This led to massive TVL spikes as users bridged assets from other Layer 1 chains to capture yields, demonstrating what Nadareski called "rotational opportunism rather than routine loyalty."

The period from 2022 to 2025 marked a fundamental shift. Solana "purged the free money psychology" and rebuilt around durability and real revenue. Liquid staking emerged as the first credible chain-wide passive yield source, offering 7-8% base yields plus MEV uplift. Protocols like Kamino pioneered risk-rated, disclosure-oriented vaults that brought transparency to leveraged strategies. Institutional capital began moving from observation to active allocation.

Now in 2025, Solana's yield infrastructure has matured into a comprehensive "superstructure" where institutional and retail capital can participate simultaneously. The ecosystem offers a layered approach to returns—from native staking and LSTs to perps funding, stablecoin strategies, and sophisticated composite portfolios that can deliver double-digit returns with volatility profiles comparable to traditional short-duration credit products.

Key Points

The Evolution of Solana's Yield Ecosystem

Solana's journey from a subsidy-dependent ecosystem to a sustainable yield powerhouse represents one of the most significant transformations in DeFi history. The early days (2020-2022) were characterized by what Nadareski describes as returns driven by "subsidies, not systems." Users weren't earning returns from genuine market activity—they were capturing token emissions and incentives that protocols used to bootstrap liquidity.

This approach created inherent instability. Capital would flood into Solana when incentives were high and flee when they diminished. The ecosystem lacked the fundamental infrastructure needed to generate sustainable, repeatable returns. However, this period also demonstrated Solana's technical capabilities and the potential for what would come next.

The transformation phase (2022-2025) saw capital rotate toward protocols with real revenue, audited risk frameworks, and transparency. This wasn't just about better technology—it was a cultural shift in how the ecosystem approached yield generation. Protocols began competing on the quality and sustainability of their returns rather than the size of their emission programs.

Liquid Staking: The Foundation of Solana Yields

Liquid staking has become the cornerstone of Solana's yield architecture, with over $10.7 billion currently staked across providers like Helius, Jito, Marinade, and Sanctum. This represents what Nadareski calls the "risk-free rate on Solana"—the baseline return that all other strategies build upon.

Native SOL staking yields range from 7.1% to 7.6% APY before MEV contributions. However, liquid staking tokens (LSTs) deliver enhanced returns of 8.5% to 10.2% APY by capturing MEV (Maximum Extractable Value) uplift. High-efficiency operators can add an additional 120 to 180 basis points annually on top of staking rewards through optimized MEV extraction.

The beauty of this system is its composability. LSTs don't just sit idle earning staking returns—they can be deployed throughout DeFi as collateral for lending, liquidity provision, and more sophisticated strategies. This creates a yield multiplication effect where a single underlying stake can generate returns across multiple layers of the ecosystem.

The Perps and Derivatives Yield Layer

Perpetual futures and funding markets have emerged as core yield engines on Solana, with over $1.7 billion in open interest across platforms like Drift, Zeta, and Cypher. These instruments enable sophisticated strategies that were previously only available to institutional traders.

Average funding rates on SOL perpetuals oscillate between positive 8% and negative 6% annualized, creating real carry opportunities on both sides of trades. Delta-neutral SOL basis trades—where traders capture the spread between spot and futures prices—can annualize returns of 10% to 18% during stable funding periods with low volatility.

Cross-venue arbitrage between centralized exchanges and Solana DEXs historically yields 8% to 15% annualized returns. Market makers capturing spreads plus rebates can earn 20 to 120 basis points per day on high-volume pairs. These opportunities exist because Solana's low fees and high throughput make execution efficient enough that strategies remain profitable after costs.

Stablecoin Yields and Structured Products

The stablecoin layer on Solana has evolved far beyond simple lending. Structured stable products now combine funding rates, LST backing, and perpetuals hedges to deliver target APYs with reduced volatility. Stablecoin yield carry strategies offer 7% to 12% APY when hedged with perps shorts.

Unlevered stable vaults deliver 5% to 7% APYs driven by LST backing and liquidity fees. USDC lending rates on Solana platforms like Solend and Kamino range from 3% to 6% APY due to reduced borrow friction compared to other chains. Importantly, the lower volatility of stablecoin pools creates more predictable return profiles.

Solstice itself has demonstrated the power of this approach, growing to over $330 million in TVL since October 30th while offering one-click access to 15% yields over the previous 12 months. This represents a new class of composable yield-bearing assets that integrate across the entire DeFi stack.

Institutional-Grade Composite Strategies

At the top of Solana's yield pyramid sit risk-managed institutional strategies that combine multiple return sources into coherent portfolios. Institutional LST plus hedge strategies produce 8% to 14% APYs with volatility profiles comparable to traditional short-duration credit instruments.

The composite Solana return stack portfolio—combining LST, MEV, stable carry, and perps hedges—has historically offered 12% to 20% APY with low volatility and returns uncorrelated to SOL price movements. This is significant because it means institutional allocators can gain exposure to crypto yields without taking directional bets on token prices.

Perhaps most importantly, Solana's block space cost stability means these strategies scale effectively. With greater than 95% of strategy gross yields preserved after fees, Solana avoids the gas erosion problem that plagues EVM chains where transaction costs can materially impact returns on smaller positions.

The Cost Advantage: Why Solana Wins

A critical but often overlooked factor in Solana's yield dominance is its fee structure. Near-zero transaction fees mean that virtually all strategy returns flow to users rather than being consumed by network costs. This creates a structural advantage that compounds over time.

Jupiter's routing efficiencies alone improve liquidity provider realized APY by 150 to 300 basis points annually through reduced slippage and optimized pathways. Atomic arbitrage opportunities deliver 5 to 20 basis points per trade, compounding for bots and vaults into double-digit APYs. Liquidity providers on concentrated AMMs typically earn 12% to 30% APY on SOL pairs depending on volatility.

These efficiencies matter because they determine whether sophisticated strategies remain viable at scale. On higher-fee chains, many of these opportunities would be arbitraged away by transaction costs. On Solana, they persist and compound.

Facts + Figures

• Over $4 billion in daily spot DEX volumes on Solana with $320 billion in Q3 2025 alone

• Solana's liquid staking layers have surpassed $10.7 billion in TVL across providers including Helius, Jito, Marinade, and Sanctum

• More than $1.7 billion in perpetuals open interest across Solana protocols

• Native SOL staking yields range from 7.1% to 7.6% APY before MEV contributions

• Liquid staking token yields deliver 8.5% to 10.2% APY including MEV uplift

• MEV contributes 120 to 180 basis points annually on top of staking rewards for high-efficiency operators

• Delta-neutral SOL basis trades annualize returns of 10% to 18% during stable funding periods

• Average funding rates on SOL perps oscillate between +8% and -6% annualized

• Cross-venue arbitrage between CEX and Solana yields 8% to 15% annualized historically

• Market maker spreads plus rebates offer 20 to 120 basis points per day on high-volume pairs

• Stablecoin yield carry strategies deliver 7% to 12% APY when hedged with perps

• Solstice has grown to over $330 million in TVL since October 30th

• Solstice offers one-click access to 15% yields over the past 12 months

• Composite Solana return stack portfolios have historically offered 12% to 20% APY

• Greater than 95% of strategy gross yields are preserved on Solana due to minimal fees

• Jupiter routing efficiencies improve LP returns by 150 to 300 basis points annually

• Concentrated AMM liquidity providers earn 12% to 30% APY on SOL pairs

Top Quotes

• "Once in a generation, the center of gravity in financial markets moves. Quietly, almost without anyone noticing, it moved to Solana."

• "In financial markets, returns are the truth. And the truth is that Solana is now producing more real, verifiable economic returns than any other chain in crypto."

• "From 2020 to 2022, returns on Solana were driven by subsidies, not systems. Users were chasing token emissions, not market structure."

• "From 2022 to 2025, Solana purged the free money psychology and re-centered on durability."

• "Yield became programmable, audited, repeatable."

• "Solana's block space cost stability offers near-zero fee pressure with greater than 95% of strategy gross yields preserved unlike EVM chains where gas erodes returns materially."

• "Revolutionary teams here today have collectively created the Solana yield superstructure such that institutional capital and retail capital can participate simultaneously."

• "The composite Solana return stack portfolio has historically offered 12% to 20% APY with low vol uncorrelated to SOL price."

• "The most exciting evolution in finance is not happening on Wall Street. It's happening right here on Solana."

Questions Answered

What yields can I earn from staking SOL?

Native SOL staking offers baseline yields of 7.1% to 7.6% APY before accounting for MEV contributions. However, using liquid staking tokens (LSTs) through providers like Jito, Marinade, or Sanctum can increase these returns to 8.5% to 10.2% APY because they capture MEV uplift on top of standard staking rewards. High-efficiency operators can earn an additional 120 to 180 basis points annually through optimized MEV extraction, making liquid staking one of the most efficient passive yield sources in all of DeFi.

How did Solana's yield ecosystem evolve from its early days?

Solana's yield ecosystem went through three distinct phases. From 2020 to 2022, returns were primarily driven by token emission subsidies rather than real economic activity—users chased incentives across protocols, creating unstable capital flows. The 2022-2025 period saw a fundamental transformation where capital rotated toward protocols with real revenue, audited risk frameworks, and transparency. Liquid staking became the first credible passive yield source. Now in 2025, Solana offers a complete institutional-grade yield infrastructure with multiple interconnected return layers.

What are delta-neutral basis trades and how much can they earn?

Delta-neutral basis trades are strategies that capture the spread between spot prices and futures prices without taking directional exposure to an asset's price movement. On Solana, these trades can annualize returns of 10% to 18% during stable funding periods with low volatility. The strategy works by holding spot exposure while simultaneously shorting perpetual futures—when funding rates are positive, traders earn carry payments while remaining market neutral. This makes it attractive to institutional investors seeking yield without price risk.

Why does Solana have an advantage over other chains for yield strategies?

Solana's near-zero transaction fees create a fundamental structural advantage. With greater than 95% of strategy gross yields preserved after fees, strategies that would be unviable on high-fee EVM chains remain profitable on Solana. Additionally, Jupiter's routing efficiencies improve liquidity provider returns by 150 to 300 basis points annually through optimized trade execution. This cost efficiency allows more strategies to scale effectively and ensures that yields actually reach users rather than being consumed by network costs.

What returns can institutional investors expect from Solana DeFi?

Institutional-grade strategies on Solana deliver risk-adjusted returns comparable to or exceeding traditional finance alternatives. Risk-managed yield strategies combining LSTs and hedges produce 8% to 14% APYs with volatility comparable to traditional short-duration credit. The composite Solana return stack—combining LST yields, MEV, stable carry, and perps hedges—has historically delivered 12% to 20% APY with low volatility and returns uncorrelated to SOL price movements. This allows institutions to capture crypto yields without directional token exposure.

What is Solstice and what yields does it offer?

Solstice is the largest Solana-native stablecoin, offering one-click access to institutional-grade yields. Since launching on October 30th, the protocol has grown to over $330 million in TVL and has delivered 15% yields over the previous 12 months. As a composable yield-bearing asset, Solstice integrates across the DeFi stack, partnering with various protocols to enable what the company calls a "full DeFi unlock" of returns. It represents a new class of structured stablecoin products that simplify access to complex yield strategies.

How much can liquidity providers earn on Solana DEXs?

Liquidity providers on concentrated automated market makers typically earn 12% to 30% APY on SOL pairs, depending on market volatility and the specific pool. These returns are enhanced by Solana's efficient routing through Jupiter, which reduces slippage and improves realized yields by 150 to 300 basis points annually. Atomic arbitrage opportunities add 5 to 20 basis points per trade for sophisticated operators, compounding into double-digit APYs for bots and automated vaults. Market makers capturing spreads plus rebates can earn 20 to 120 basis points per day on high-volume pairs.

What makes Solana's liquid staking different from other chains?

Solana's liquid staking ecosystem has surpassed $10.7 billion in TVL across providers including Helius, Jito, Marinade, and Sanctum. What distinguishes it is the combination of competitive base yields (7-8%) plus meaningful MEV capture that boosts returns to 8.5-10.2% APY. The liquid staking tokens are also highly composable—they can be used as collateral throughout DeFi, enabling yield stacking where users earn staking returns while simultaneously deploying their capital in other strategies. This has established LST yields as the "risk-free rate" that other Solana strategies build upon.