If you have ever wondered why an LST’s APY looks unusually low, you are not alone. It is one of the most common questions we receive from users and our liquid staking partners.
At first glance, a sudden drop in APY might seem like a sign that something has gone wrong. In reality, it is a normal and predictable outcome of how stake pools function on Solana. When deposits flow into a liquid staking pool, they temporarily create what looks like underperformance, even though everything is working exactly as intended.
Understanding this mechanism is key to interpreting performance correctly. In most cases, low short-term APY is not a problem with the pool itself, and is instead actually a reflection of how quickly the pool is growing.
How Stake Pools Actually Work
When you deposit SOL into a liquid staking pool, that SOL does not begin earning yield right away. The SOL must wait through one full epoch, roughly two days, before it becomes active stake. During this activation period, those newly deposited tokens are idle and do not generate rewards.
Because stake pools calculate APY based on the total SOL under management, the presence of inactive stake temporarily lowers the displayed APY for everyone in the pool. The more deposits that arrive in a short period, the greater the short-term effect on APY.
This is what we refer to when we say that an LST is “suffering from success.” When an LST grows quickly, the inflow of new deposits drags the displayed APY down for one or two epochs, even though the pool is functioning normally.
Why Large Pools Seem Immune
This short-term APY dip can happen to every liquid staking pool on Solana, but the impact’s visibility is what matters to users. For larger LSTs with billions of dollars in total stake, the visibility is much smaller than a new LSTs, as fresh deposits make up only a small fraction of the overall pool. As a result, the temporary drag from inactive stake barely affects the displayed yield.
Smaller or newly launched pools experience the same process, but the effect is magnified. A few million SOL in new deposits can represent a large percentage of the total TVL, so the APY appears to fall sharply for one or two epochs. Holders often misinterpret this as a performance issue when it is simply a matter of scale, which is why we tend to get the most APY questions when an LST has recently launched.
In practice, once the new stake activates, yields normalize, and the APY stabilizes at levels consistent with the broader Solana staking rate.
Find The Best-Yielding LSTs
Sanctum’s explorer lets you track LST performance epoch by epoch, so you can see how yield has evolved instead of relying on a single APY snapshot, along with onchain activity and other key details.