Leveraged Staking SOL: Your Complete Guide & FAQs

What is Leveraged Staking SOL?

Leveraged staking SOL is an innovative product designed to maximize SOL yields through strategic borrowing. Users stake their SOL holdings while selecting a leverage multiplier—the system automatically borrows additional SOL to amplify staking amounts. This automated process handles all lending/staking operations seamlessly, delivering optimized returns.

How Does Leveraged Staking SOL Work?

Platforms distribute staked SOL (including user funds + borrowed amounts) across multiple validator nodes to enhance network security and decentralization:

• Acquiring bbSOL: After staking, users receive bbSOL tokens representing their staked assets, which can be held as positions on Bybit.
• Yield Calculation: Sanctum's smart contracts allocate staked SOL across nodes to optimize rewards. bbSOL appreciates continuously, ensuring compounded returns.

👉 Discover how bbSOL outperforms traditional staking

Example Workflow:

1. User A stakes 100 SOL with 2x leverage → System borrows 200 SOL.
2. Total staked: 300 SOL (minus negligible fees in this example).
3. User receives bbSOL equivalent to the total staked amount.

Key Features Explained

Associated Fees

• Borrowing Costs: Interest on loaned SOL.
• Transaction Fees: Network/gas fees for processing.

Understanding bbSOL

bbSOL is Bybit’s exchange-backed Liquid Staking Token (LST) for Solana. It functions as:

• A receipt token redeemable for SOL + accrued rewards.
• A value-appreciating asset reflecting staking yields per Solana Epoch (2-3 days).

Reward Distribution

Rewards aren’t directly distributed. Instead, bbSOL’s value increases relative to SOL, encompassing both principal and accumulated yields. Upon redemption, users receive their original SOL plus earnings.

Leveraged Staking SOL vs. Web3/On-Chain Earnings

👉 Compare yield strategies for SOL

Risk Management

Liquidation & Stop-Loss

• No forced liquidation—positions trigger stop-loss when reaching -90% loss (default; adjustable by user).
• Loss Calculation:
  Loss Ratio = [(Position Amount × Exchange Rate) - Staked Principal - Unpaid Loans - Unpaid Interest] / Staked Principal

Operational Details

Staking Limits

• Minimum: 0.5 SOL | Maximum: 28,000 SOL (borrowing cap).
• Multiple orders merge into one consolidated position.

Net APY Calculation

Net APY = [Staking APY + (Staking APY - Borrow Rate)] × Leverage

Interest Accrual

• Hourly compounding (rounded up).
• View rates in History or Staking Confirmation windows.

Redemption Options

1. Instant Redemption:

   • Immediate SOL receipt (no gas fees).
   • Rate set by third-party OTC providers (may be less favorable).
   • Daily limit: 400,000 SOL.

2. Delayed Redemption:

   • Better rates + chain gas fees.
   • Processing time: 1-4 days (interest accrues during delay).

FAQs

What happens if my yield declines continuously?

• Margin Call: Email alerts when profit ratios drop below warning thresholds.
• Auto-Redemption: Positions automatically close if losses hit stop-loss levels.
• Notifications via email/platform alerts (monitor positions actively).

Can I withdraw or use bbSOL elsewhere?

No—bbSOL remains locked in your staking position to generate yields.

Is manual repayment required?

No. Repayment occurs automatically during:

1. User-initiated redemptions.
2. Stop-loss triggers.

What’s the minimum/maximum redemption amount?

• Minimum: 0.01 SOL | No maximum (instant redemptions subject to daily limits).

Where are borrowed funds during redemption?

System repays loans + interest first. Remaining SOL deposits to your account.

Note: Risk alerts may experience delays—actively monitor positions to avoid involuntary closures.

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