Original title: Unveiling the big business of MEV on Solana
Original author: Maggie (X: @0xmaggie5 )
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 get ahead of the game with Trading Bots. But few people realize that the truly profitable business that is sure to make money 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 earnings, MEV earnings are often hidden in the block construction and sorting mechanism, and they are often controlled by the invisible hand that controls the power and infrastructure on the chain.
Many people dont know this because the system has a high threshold for operation, extremely asymmetric information, and extremely concentrated controllers. When you use Bot to rush the internal market and prevent clamping, the MEV catcher controls the transaction order behind the scenes and accurately captures the arbitrage space; when retail investors compete with hand speed and strategy, large institutions with pledge advantages and node permissions have firmly sat at the top of the income pyramid with 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 games.
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, thereby earning 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 lending positions that are on the verge of default for rewards. When borrowers fail to maintain the collateralization ratio required for their loans in the lending protocol, their positions become eligible for liquidation. MEV Seekers monitor these undercollateralized positions on the blockchain and perform 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 use the price difference to make a profit. The simplest arbitrage is when two DEXs have different prices for the same trading pair, and the arbitrageur earns the price difference with one transaction.
Sandwich attack: Buy before the target transaction and sell for profit later. Sandwich attack is an arbitrage strategy in the DeFi market, where the attacker realizes profit through three atomic bundled transactions: first, an unprofitable front-running transaction pushes up the asset price to the maximum level allowed by the victims slippage, then the victims 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 preemptive 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 users transaction is executed, the reverse transaction searcher will balance the prices of various fund 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, last year trading robots made $1.1 billion, pump made $500 million, mev made $1.5 billion, amm made $1 billion, and celebrity affiliates such as trump made $500 million, and nearly $5 billion was taken away off-site. On the Solana network, with the increase in network activity and the arrival of the Memecoin craze in 2024, the MEV earnings on Solana have also risen sharply.
According to Helius report, Jitos arbitrage detection algorithm analyzes all Solana transactions, including those outside the Jito bundle, and has identified 90,445,905 successful arbitrage transactions in the past year. The average profit per arbitrage was $1.58, and the most profitable single arbitrage profit was $3.7 million. These arbitrages generated $142.8 million in profits, of which $126.7 million (88.7%) was denominated in SOL.
MEV is 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 power concentration Solana is known for its high performance, with a block time of only 400 milliseconds (12 seconds for Ethereum), but its design sacrifices some decentralization, resulting in a high concentration of power. Since there is no mempool on Solana, 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, with high monopoly and high returns.
In contrast, Ethereums 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 Solanas 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 at 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.
Jito Bundles: Jito Bundles allow 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 the Jito protocol according to the mechanism. Jitos staking mechanism As mentioned earlier, 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 allows users to stake and share a portion of the nodes staking income and MEV income with these users.
In order to further expand its node pledge volume, Jito launched a pledge agreement, allowing 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 interest closed loop. MEV has three key characteristics: information advantage, monopoly effect, and capital barrier.
MEV is an information war, and the 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 relies on two points: fast information synchronization capability, which usually requires connecting to the RPC service of a large Jito node; fast transaction on-chain, giving priority to submitting transactions through the Jito Bundles channel, and paying enough Tips. Jitos bundle service is a monopolistic 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 Jito nodes that produce blocks.
Once the critical point is reached, the network effect is self-reinforcing: the wider the adoption, the more stable the service, and the harder it is for competitors to shake it. This is why Jito was able to quickly consolidate 94% of the client share. Solanas 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, a high block generation frequency, and fast 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: Infrastructure Tax Collector In the past year, Jito processed more than 4.3 billion transaction bundles, generating a total of 5.51 million SOLs in user payment tips. At a SOL price of $140, this means that the additional on-chain transactions guided by Jito infrastructure are worth about $7.7 billion. Jito and validators share a 3-5% platform profit, so the actual revenue of Jito itself is about 20-27 W SOLs, or about $35 million in revenue, in the past year.
High-stake nodes: 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 obtain basic block rewards and inflation benefits, but also obtain a large number 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 transaction on-chain. These brokers act as secondary sellers of blockspace. Their operating logic is as follows: they establish cooperative relationships 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 case of network congestion, SWQoS ensures that transactions of high-stake validators are less likely to be delayed or discarded) Package multiple users transactions into Jito Bundles, and centrally increase Tips to obtain 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 income. For example, some of bloXroutes revenue data can be seen on DefiLlama, showing 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 Jitos 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 the nodes 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 running Jito nodes.
Jito Node Jito client is based on the official client, with the addition of 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 income, more than 90% of the nodes on the current main network have been converted to Jito nodes, becoming the default choice.
Paladin is an improved version of the Jito client, which aims to provide a fairer transaction priority mechanism, mainly to solve the sandwich attack problem in Jitos 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%.
The Firedancer node was developed by Jump Crypto. Firedancer is an independently implemented high-performance Solana client. Its original intention was to improve network throughput and facilitate Jumps 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: The 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 punishment 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. Paladin provides a bidding process for a fairer transaction priority on the chain. However, Paladin was originally modified on Jito-solana. If Jito improves the mechanism in the future, it may suppress Paladins living space.
Firedancer VS other clients: Performance replacement The biggest advantage of Firedancer is performance. It claims that TPS can reach 1 million (theoretically 1 million, 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 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 higher demands on Solanas TPS, it will drive the entire Solana network to migrate naturally 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?
Solanas 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 Solanas 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 Strategies expands its market share and ecological dominance by acquiring nodes, becoming one of the major players. Solanas current staking rate is as high as 65.6% (about 380 million SOLs are staked). Controlling the validator nodes means mastering the networks consensus mechanism and voting rights. Sol Strategies acquires head nodes on a large scale and quickly cuts into the core of power:
2024.11: Acquired Cogent Crypto, the verification node operator of Solana, Sui, Monad and ARCH networks, for US$18 million (cash + stock), focusing on the SOL network. 2025.03: Acquired Solanas head verification node 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: Try to promote the inflation rate adjustment proposal SIMD-228 to further consolidate their power. (This proposal was not passed in the end) SOL Strategies pushed 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, Solanas 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: Reducing inflation will compress the returns of all validators, but small nodes have weaker risk resistance and are easily eliminated, which is conducive to promoting the network to concentrate on the top validators.
Step 3: Profit manipulation on Solana. Promote the listing of Solana ETF, institutionalize Crypto assets, and become an ETF staking provider. Sol Strategies becomes the 3 iQ Solana Staking ETF staking provider and promotes the listing of 3 iQ Solana Staking ETF. Try to further expand the staking volume and compete for the dominant position in blockchain governance.
Summarize:
MEV is a big business. Especially on Solana, MEV is particularly intense and profitable. Jito, a MEV protocol, is a monopolistic protocol with a strong head effect. Power on Solana is highly centralized, and MEV money is mainly captured by the Jito protocol, high-stakes nodes, and block space sales brokers. 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 in the future. Solana is very suitable for institutional dominance. 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.
