How CEX Giants Are Profiting from PoS Networks Like Solana
With Solana’s staking market booming, centralized exchanges like Binance and Coinbase are reaping the rewards, leveraging their position to maximize staking and trading revenues.
Solana’s staking market capitalization has grown by 73% over the last three months and reached over $100 billion, making it the second largest asset after $ETH. The daily transactions hit an ATH of 54 million. As Solana rapidly develops, not only are the stakers capitalizing on its success, but the exchanges are too.
Coinbase and Binance are currently the third- and fourth-largest validators of the Solana network. Currently, 24.8% of Coinbase Cloud’s assets under management are in Solana. The share of Solana in Binance Staking’s total staked AuM equals 41.1%. Their shares of the total $SOL staked equals 3.2% and 2.7%, respectively. For both exchanges, $SOL is second only to $ETH in their staking portfolios.
CEXs leverage their vast user bases and perceived reliability to attract significant funds for staking and charge a high commission. Both companies deduct a 25% to 35% fee from earned staking rewards, usually reflected in the estimated rewards rate, making exchanges’ huge earnings invisible.
The current nominal reward rate for Solana is 6.91%. With the total amount staked with Coinbase equal to $SOL 12.4 million and assuming a 35% commission on rewards, the exchange might receive around $SOL 299,500 ($USD 78 million) annually. If the current market conditions stay the same, Binance might make $55.5 million.
Other major validators charge smaller commissions. Helius, the Solana development platform, runs the top validator. It is one of a few providers that charge zero commission. The top five also include Galaxy, a digital asset and blockchain company, staking company Figment, and Ledger by Figment, which together account for 4.7% of the total amount of staked SOL. The list of validators includes some other CEXs, too: Kraken’s stake is 1.1% of the total amount staked, and Upbit has 0.73%.
The increasing control of validators by major CEXs raises centralization concerns, but so far, even their cumulative share is too small to have a major impact on the network.
The companies’ shares change dynamically, indicating that the community, in general, is actively exploring earning options while delegators are chasing lower fees and better services.
This trend isn’t isolated to Solana. Binance is Tron’s largest validator, while Coinbase dominates Polygon’s staking ecosystem. In Ethereum staking, centralized exchanges also dominate, illustrating a trend across multiple networks.
Validating is not the only way the CEXs are cashing in on Solana’s good performance. The dual role of CEXs as validators and trading platforms ensures a steady income. Both exchanges charge users trading $SOL, which is quite profitable as Solana keeps showing strong price growth.
According to the exchange’s most recent financial disclosures, Solana accounted for 11% of Coinbase’s transaction revenue in Q3 2024 and brought the exchange almost $63 million. Even with the Coinbase revenue steadily decreasing this year, the exchange might get as much as $200 million from $SOL trading this year unless the token falls.
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