Revealed: Solana Validators Exploiting Network for Increased Rewards, According to Study
In a recent development, Solana's DeFi TVL (Total Value Locked) has reached a six-month high of $10B, indicating growth and increased adoption of the network's decentralized finance applications. However, a potential issue has emerged that could impact the network's decentralization and the rewards of ordinary users.
The issue at hand is the timing game played by Solana validators, which slows down block production to pack more transactions into each validator-assigned slot. This tactic allows validators to earn up to 3% higher rewards from transaction fees and MEV extraction. However, it can hurt users by disrupting inflation mechanics, thereby reducing rewards distributed to SOL stakers, and favoring large validators with powerful hardware, contributing to network centralization and disadvantaging smaller validators.
Validators delay block production slightly to include more transactions per block, extracting more fees per unit of compute, boosting their profits without increasing costs substantially. This delay affects inflation distribution, meaning less reward is available to ordinary SOL holders who stake but do not operate validators, effectively reducing their earnings. The practice benefits large, well-resourced validators disproportionately, which can lead to centralization risks for Solana’s network by reducing smaller validators' competitiveness.
Research teams recommend Solana update its validator client software (moving from Agave to Firedancer) to eliminate slot delays, removing this timing advantage and improving fairness. Firedancer, a competing client, is presented as a potential solution for eliminating the timing advantage in Solana's network.
In a related development, the Solana Foundation is reducing support for 'validators in name only', as part of a decentralization push. This move is aimed at encouraging a more decentralized network and reducing the influence of large validators.
To address the issue further, Chorus One has suggested that Solana update or replace its primary validator client, Agave. This recommendation aims to address the issue of network centralization caused by timing games and improve the fairness of rewards distribution for all Solana users.
For more information, you can read about the Solana validators' vote to cut Solana inflation by 2025 here. It's crucial for Solana to address these issues to maintain its decentralized nature and ensure fair rewards for all its users.
- The recent growth in Solana's DeFi TVL (Total Value Locked) to $10B indicates a surge in the network's decentralized finance applications, but a potential issue arising from Solana validators playing a timing game could impact its decentralization and the rewards of ordinary users.
- Solana validators are delaying block production slightly to earn higher rewards from transaction fees and MEV extraction, but this tactic hurts users by disrupting inflation mechanics, reducing rewards distributed to SOL stakers, and favoring large validators with powerful hardware.
- Research teams propose Solana update its validator client software from Agave to Firedancer to eliminate slot delays, which would remove the timing advantage and improve fairness for all Solana users.
- The Solana Foundation is reducing support for 'validators in name only' as part of a decentralization push, aiming to encourage a more decentralized network and lessen the influence of large validators.
- To address the network centralization caused by timing games, Chorus One suggests Solana update or replace its primary validator client, Agave, to improve the fairness of rewards distribution for all Solana users and further ensure the network's decentralized nature.
