Solana's validators are similar to baristas flipping through an iPad. It will be more accommodating if you include a tip. And as traders continue to pack into Solana's metaphorical coffee shop, the jar of validator chips appears to be stuffed with more and more money.
Validators are a group of 1,728 computers running software that generates blocks on the Solana blockchain. Coinbase Cloud is a prominent Solana validator, as is Google Cloud. One of the revenue streams that validators earn is called Maximum Extractable Value (MEV), which refers in part to the tip paid by searchers for inclusion in Solana blocks.
This MEV's revenue has been increasing rapidly since mid-March. Notably, Solana validators earn more revenue from MEV overall than Ethereum validators, according to Blockworks Research. Just a few months ago, his MEV earnings on Solana had a rounding error when compared to Ethereum.
read more: Research shows MEV doesn't have to be a zero-sum game
Broadly defined, MEV refers to the maximum amount of value that a validator can create by stuffing transactions into a blockchain block. Last week, the Solana validator raised just under $7 million from his MEV, according to Blockworks Research's dashboard.
At this point, Solana MEV is almost entirely a product of a protocol named Jito. Jito offers a fork of his Solana validator called Jito-Solana, and according to his website, his 78% of Solana validators use this client. The client has the searcher or trader arrange the trades in bundles. Searchers can include hints to get validators to send specific bundles to the blockchain.
Whether all of this is good for Solana is a matter of perspective. Some forms of MEV can be predatory. Jito has recently temporarily closed its mempool, a type of trading waiting area, due to a “sandwich attack” in which opportunists trade just before and after a trade to create MEV and manipulate prices to profit from traders. It stopped.
read more: Jito Labs ends mempool feature due to impact on Solana users
Jito says this protocol increases Solana's efficiency while minimizing negative forms of MEV, such as sandwich attacks. If that happens, Solana could benefit greatly.
Hayden Tsutsui, an analyst at Blockworks Research, said continued growth in Solana's MEV over time will likely mean less spam in blocks, increasing Solana's available block space. He said it would be. In the best-case scenario, more block space could free up room for more on-chain activity and bring in more liquidity, Tsutsui said.
However, it's worth mentioning that as it stands, Solana is still reeling under the spam pile. According to Blockworks Research, more than 60% of his non-vote transactions fail on Solana. This is largely due to bots flooding the network in an attempt to take advantage of Solana's low fees and complete successful transactions.
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