Over the past year, the Memecoin craze has made Solana a gold rush for traders. Countless people chased the skyrocketing and plummeting Meme coins, trying to use Trading Bot to get ahead of the curve. But few people realize that the real profit-making business is not jumping on the candlestick chart, but hidden deep in the dark forest of the blockchain. This is MEV (maximum extractable value).
Compared with the publicly visible Bot income, the income of MEV is often hidden in the block construction and sorting mechanism, and it is often controlled by the "invisible hand" that controls the power and infrastructure on the chain. Many people don't know this because the operating threshold of this system is high, the information is extremely asymmetric, and the controllers are extremely concentrated.
While you use Bot to get ahead of the inner market and prevent being squeezed, MEV Catcher controls the transaction order behind the scenes and accurately captures the arbitrage space; while retail investors compete with each other in terms of speed and strategy, large institutions with pledge advantages and node permissions have firmly sat at the top of the profit pyramid with their structural advantages.
On Solana, MEV is not just a trading opportunity, it is also a power at the infrastructure level - it is controlled by a very small number of people, forming a set of high-threshold, high-monopoly, and high-profit capital game. Today we will reveal the big business of MEV on Solana.
1. First of all, what is MEV?
MEV stands for Miner Extractable Value, which means that miners can include, omit, and sort transactions when packing blocks to earn as much extra income as possible. Due to the craze of Memecoin and the active DeFi, MEV is huge.
From a business perspective, MEV usually includes: liquidation, arbitrage and sandwich attacks.
• Liquidation: Liquidate loan positions that are on the verge of default to receive rewards.
When borrowers fail to maintain the required collateralization ratio for their loans in the lending protocol, their positions become eligible for liquidation. MEV Seekers monitor these undercollateralized positions on the blockchain and execute liquidations by paying off some or all of the debt in exchange for a portion of the collateral as a reward.
• Arbitrage: Buy and sell on different DEXs at the same time and make a profit from the price difference.
The simplest arbitrage is when two DEXs have different prices for the same trading pair, and the arbitrageur earns the difference with one transaction.
• Sandwich attack: Buy ahead of the target trade and sell later for profit.
A sandwich attack is an arbitrage strategy in the DeFi market, in which the attacker realizes profits through three atomic bundled transactions: first, an unprofitable front-running transaction is used to push up the asset price to the highest level allowed by the victim's slippage, then the victim's transaction is executed at a high level, further pushing up the price, and finally the attacker sells the asset at an inflated price through a buyback transaction (post-transaction), offsetting the initial cost and obtaining a net profit.
The distinction between front-run and back-run is based on the behavior.
• Front-running: Front-running occurs when a MEV Seeker identifies another trader’s buy or sell order in the mempool and places the same order before that trader, profiting from the price impact on the other trade.
• Post-trading: Post-trading is the counterpart of front-running trading. It is a specific MEV strategy that takes advantage of a temporary price imbalance caused by another transaction, which is usually caused by improper routing. Once the user's transaction is executed, the reverse transaction searcher will balance the prices of various pools by trading the same asset and ensure profit.
Liquidations are all back-runs, arbitrage is mostly back-runs, and sandwich attacks are front-run + back-run. For specific MEV cases, you can refer to the Helius report, which has very detailed explanations and examples.
2. How big is MEV’s business?
According to some unverified statistics, trading robots made $1.1 billion last year, PUMP made $500 million, MEV made $1.5 billion, AMM made $1 billion, celebrity affiliates such as Trump made $500 million, and nearly $5 billion was taken away off the market.
On the Solana network, with the increase in network activity and the arrival of the Memecoin boom in 2024, the MEV earnings on Solana have also risen sharply. From the Helius report, Jito's arbitrage detection algorithm analyzes all Solana transactions, including those outside the Jito bundle, and the algorithm has identified 90,445,905 successful arbitrage transactions in the past year. The average profit per arbitrage is $1.58, and the most profitable single arbitrage income is $3.7 million. These arbitrages generated $142.8 million in profits, of which $126.7 million (88.7%) was denominated in SOL.
MEV is a big business!
3. MEV on Solana is particularly serious, and the MEV king is Jito
MEV on Solana is more drastic and centralized than MEV on ETH, which stems from the differences in their underlying chain designs.
Solana: High performance --> sacrifice some decentralization --> High centralization --> High concentration of power
Solana is known for its high performance, with a block time of only 400 milliseconds (Ethereum is 12 seconds), but its design sacrifices some decentralization, resulting in a high concentration of power.
Since Solana does not have a mempool, other nodes must connect to the validator node that currently generates the block to obtain block data and submit transactions. This design gives the validator node that generates the block great power and lacks checks and balances, resulting in a very serious MEV problem on Solana and a monopoly on high returns.
In contrast, Ethereum’s MEV market is more market-oriented. There is a high degree of competition between MEV searchers and block builders, which depresses the overall MEV revenue.
Jito is Solana's MEV overlord. In August 2022, Jito launched the Jito-Solana client. In the first nine months, due to low network activity, the adoption rate of the Jito-Solana client has been below 10%, and MEV rewards are limited. Starting from the end of 2023, the adoption rate has accelerated significantly, reaching 50% in January 2024. By the end of 2024, more than 94% of Solana validators (weighted by equity) use the Jito-Solana client, forming an absolute dominance.
How does Jito work?
The biggest difference between the Jito-Solana client and the official client is that it natively supports the MEV extraction mechanism, and its core function is to provide Bundles services. When a validator runs this client, it is equivalent to joining the Jito Alliance. The alliance provides a priority transaction execution channel to the outside world, and traders submit bundles by paying tips to gain transaction sorting advantages. Therefore, the Jito client significantly improves the profitability of nodes compared to the official client.
- 1. Jito Bundles
Jito Bundles allows traders to prioritize and execute key transactions by bundling transactions and paying tips. This is not only applicable to MEV opportunities, but is also often used for other purposes such as acceleration, batch trading, and transaction anti-squeeze. The core process is as follows:
1. Trade assembly: Traders discover arbitrage opportunities and quickly construct trades.
2. Bundle submission: The transaction is packaged into a bundle and sent to the Jito node, with a tip to increase the sorting priority. These bundles will be passed to the block leader by the Jito node.
3. Priority execution: If a Jito validator becomes the leader of the current slot, these transactions will be packaged into the block first and executed in the pre-order position. The income will be distributed to the validator and Jito protocol according to the mechanism.
- 2. Jito’s staking mechanism
We mentioned earlier that the more money staked on the Jito node, the more Tips and MEV income. Therefore, Jito nodes need to attract more SOL to stake on them. Therefore, the Jito protocol will allow users to stake and share a portion of the node's staking income and MEV income with these users.
In order to further expand its node pledge volume, Jito launched a pledge agreement that allows ordinary users to entrust SOL to Jito nodes and share block rewards and MEV income in proportion. Pledgers gain income, nodes increase the probability of block generation, and traders gain priority execution opportunities, forming a complete MEV closed loop of interests.
Three key characteristics of MEV: information advantage, monopoly effect, and capital barrier
1. MEV is an information war, winner takes all
The competition for MEV opportunities on Solana is about millisecond-level speed and on-chain information sensitivity. Whoever can find the arbitrage space the fastest and accurately enter the transaction into the same/next slot will get to take the profit. This depends on two points:
* Fast information synchronization capability, usually requires connecting to the RPC service of large Jito nodes;
* Fast transaction on-chain, prioritize submitting transactions through the Jito Bundles channel, and paying enough Tips.
2. Jito, a bundle service, is a monopoly service.
The key to MEV is "who is the block producer (Leader)". If Jito wants to provide traders with stable and reliable bundling services, it must cover as many Leader Slots as possible. This requires its clients to have a very high coverage rate in the network to ensure that most rounds are produced by Jito nodes.
Once a critical mass is reached, network effects become self-reinforcing: the more widespread adoption, the more stable the service becomes, and the harder it is for competitors to disrupt it. This is how Jito was able to quickly consolidate a 94% client share.
3. Solana’s MEV is a capital game
Solana is a PoS chain. The more you stake, the higher the probability of becoming a Leader. Leaders have the right to sort blocks, so they can naturally get the most MEV and Tips. This brings about a highly concentrated capital barrier:
* Large nodes have more stakes, higher block generation frequency, and faster information synchronization;
* The more sensitive the information, the stronger the arbitrage ability;
* The price of RPC services of large nodes (even services in the same computer room) has skyrocketed, becoming a scarce resource for information entry.
Those who can earn MEV can often only do so through the largest nodes with the most capital.
4. Where does the MEV revenue flow on Solana: Who makes the money?
As mentioned above, the MEV revenue on Solana is very considerable. So who does this revenue ultimately go to? It mainly belongs to three core stakeholders: the Jito protocol itself, large high-stakes nodes, and block space sales brokers.
• Jito Protocol: Tax Collector for Infrastructure
In the past year, Jito has processed more than 4.3 billion transaction bundles, generating a total of 5.51 million SOLs in user payment tips. Based on the SOL price of $140, this means that the additional on-chain transactions guided by Jito's infrastructure are worth about $7.7 billion. Jito and the validators share a 3-5% platform profit, so the actual revenue of Jito itself is about 200,000-270,000 SOLs, or about $35 million, in the past year.
• High-stake nodes: the privileged class on the chain
Since Solana is a PoS chain, nodes with higher stakes have a higher probability of producing blocks. These "head validators" can not only continue to receive basic block rewards and inflation benefits, but also get a lot of transaction tips from Jito Bundles. The normal node income is about 6%. When the network activity is high, the annualized income of some nodes can reach more than 20%, which is much higher than that of ordinary nodes. Its sources of income include: inflation rewards, block rewards, Jito Tips, and some income from selling SWQoS transaction chain permissions.
• Blockspace sales brokers: intermediaries for transactions on-chain
This type of broker plays the role of a secondary seller of block space. Its operating logic is as follows:
* They establish partnerships with high-stake nodes and purchase SWQoS transaction on-chain permissions at preferential market prices; (Stake-Weighted Quality of Service SWQoS allows leaders to identify and prioritize transactions from staked validators. In the event of network congestion, SWQoS ensures that transactions from high-stake validators are less likely to be delayed or discarded)
* Package multiple users' transactions into Jito Bundle to centrally improve Tips for higher priority;
* The tips paid by users are much higher than the fees paid by brokers to validators, and brokers earn the difference;
* At the same time, they also embed their own arbitrage transactions (such as Backrun) in the Bundle to further obtain MEV benefits.
For example, on DefiLlama, you can see some of bloXroute's revenue data (link), which shows that the tips it received are very considerable. However, it should be noted that this data does not cover all of its payment addresses, nor does it exclude the shares distributed to validators and order flow providers.
In general, Solana has a highly centralized power structure, and most of Jito’s MEV revenue is captured by the Jito protocol, large validator nodes, and block space sales brokers.
5. Solana’s Client Competition Landscape
Currently, there are more than 1,300 validator nodes on Solana, and more than 94% of them are Jito nodes. The main clients include the following categories:
• Solana Node
This is the most basic node client and does not contain any MEV optimization mechanism. Nodes running this client have almost been marginalized because the benefits are far lower than those of nodes running Jito.
• Jito Node
The Jito client is based on the official client, with the addition of the Jito protocol and Bundles support, enabling nodes to accept bundled transactions and collect Tips from them. If users want to achieve requirements such as preemption, anti-pinching, and fast chaining, they can submit transactions to validators through the Jito Bundle service and attach tips to increase execution priority. Since nodes running the Jito client can obtain additional Tips, more than 90% of the nodes on the current main network have been converted to Jito nodes, becoming the default choice.
• Paladin Node
Paladin is an improved version based on the Jito client, which aims to provide a fairer transaction priority mechanism, mainly to solve the "sandwich attack" problem in Jito's bundle sorting (that is, there are malicious validators who insert sandwich transactions but are not punished). According to community news, the current adoption rate of the Paladin client is about 15%, and because it is still recognized as a Jito client by the network, it is included in the total statistics of 94%.
• Firedancer node
Developed by Jump Crypto, Firedancer is an independently implemented high-performance Solana client. Its original intention was to improve network throughput and facilitate Jump's quantitative trading. The initial version did not support the Jito protocol, so it could not access Tips income, and the mainnet adoption rate was extremely low. However, as the new version began to be compatible with the Jito protocol, validators using Firedancer can also obtain Jito Tips income. Although there are currently few mainnet deployments, most nodes on the testnet have adopted Firedancer, indicating that it may gain a larger market share on the mainnet in the future. The Solana Foundation also supports it.
The competition logic of these node clients is:
• Jito VS Paladin: A battle of fairness
The Jito protocol has formed a de facto monopoly on MEV extraction due to its high concentration. However, the protocol currently lacks a penalty mechanism for malicious behavior (such as validator sandwich attacks), resulting in the possibility that even users using bundles may still be sandwiched. This gives clients like Paladin an opportunity, which provides a bidding process for a fairer transaction priority on the chain. However, Paladin was originally modified on Jito-solana. If Jito improves its mechanism in the future, it may suppress Paladin's living space.
• Firedancer VS other clients: performance changes
The biggest advantage of Firedancer is its performance. It claims that its TPS can reach 1 million (theoretically 1 million, but the actual effect is unknown). If the transaction volume of the Solana network continues to grow in the future, high-performance client nodes that can meet the performance requirements will gain an advantage and squeeze low-performance clients. Once high-performance nodes start to pack larger blocks, low-performance clients may not be able to keep up with the synchronization progress, affecting verification performance and eventually being marginalized. Therefore, when we have a higher demand for Solana's TPS, it will drive the entire Solana network to naturally migrate to high-performance clients.
In general: the vast majority of nodes on the Solana mainnet run the Jito-Solana client, and the Jito protocol has become part of the infrastructure. As the Firedancer client becomes compatible with the Jito protocol, the mainnet may see iterative upgrades in client performance in the future - from "running Jito can make more money" to "running high-performance Jito to avoid being eliminated."
6. How do large institutions gradually become profit manipulators on Solana?
Solana's architecture naturally tends to be centralized, which provides a favorable environment for large institutions to intervene and dominate the ecosystem. Solana Foundation, Jito, Multicoin, Jump, Helius, Coinbase, Binance, Jupiter, etc. all have great governance power on Solana. Many institutions are optimistic about Solana's future prospects and hope to become one of the profiteers on Solana. Taking Sol Strategies, which has been active recently, as an example, we can clearly see how large institutions are taking steps to infiltrate and become profiteers of Solana:
Step 1: Sol Stratagies expands its market share and ecosystem dominance by acquiring nodes, becoming one of the major players.
Solana's current staking rate is as high as 65.6% (about 380 million SOLs are staked). Controlling the validator nodes means mastering the network's consensus mechanism and voting rights. Sol Strategies has acquired a large number of head nodes and quickly entered the core of power:
• November 2024: Acquired Cogent Crypto, the verification node operator of Solana, Sui, Monad and ARCH networks, for US$18 million (cash + stock), focusing on the layout of the SOL network.
• March 2025: Acquired Solana’s top validator nodes Laine and Stakewiz.com for 35 million Canadian dollars (cash + equity), increased the number of staked SOL to 3.3 million (worth approximately US$388 million), and recruited Laine founder Michael Hubbard as chief strategy officer.
Step 2: Trying to push for inflation rate adjustment proposal SIMD-228 to further consolidate their power. (This proposal was not passed in the end)
SOL Strategies is pushing for the SIMD-228 proposal to adjust the inflation mechanism. This proposal aims to introduce a dynamic inflation mechanism to replace the current fixed deflation model. If the proposal is passed, Solana's annualized inflation rate will drop from a fixed rate of 4.68% to 1% or even 0%. Although the proposal was ultimately not passed, the strategic intention behind it is very clear:
• Stabilize the value of SOL: Reducing inflation can reduce the release of new SOL, ease token selling pressure, and increase the long-term returns of stakers;
• Suppress small nodes and consolidate the dominance of large nodes: Reduced inflation will compress the profits of all validators, but small nodes have weaker risk resistance and are easily eliminated, which is conducive to driving the network to concentrate on top validators.
Step 3: Profit trading on Solana. Promote the listing of Solana ETF, institutionalize Crypto assets, and become an ETF pledge provider.
Sol Strategies becomes the 3iQ Solana Staking ETF staking provider and promotes the listing of 3iQ Solana Staking ETF, attempting to further expand the staking volume and compete for the dominant position in blockchain governance.
Summarize:
1. MEV is a big business. Especially the MEV on Solana is very intense and profitable.
2. Jito, a MEV protocol, is a monopolistic protocol with a strong head effect.
3. Power on Solana is highly centralized, and MEV money is mainly captured by the Jito protocol, high-stakes nodes, and block space sales brokers.
4. There are now multiple clients on the Solana network. The Jito-Solana client currently dominates the main network, and the Firedancer client that supports the Jito protocol may become a high-performance upgrade version in the future.
5. Solana is very suitable for institutional leadership. SOL Strategies has demonstrated how an institution can penetrate Solana from all aspects, from technology, governance to the financial system, and compete for blockchain governance sovereignty through actions such as acquiring nodes, trying to promote governance proposals, and promoting ETF listings.
References:
https://www.helius.dev/blog/solana-staking-simplified-guide-to-sol-staking
https://medium.com/@lvxuan147/deep-dive-into-simd-0228-%E6%B7%B1%E5%BA%A6%E7%90%86% E8%A7%A3%E8%83%8C%E5%90%8E%E7%9A%84%E6%B7%B1%E5%B1%82%E5%8D%9A%E5%BC%88-a910a1f60cbf
