Solana Dark Forest Rule: Unveiling How MEV Extractors Amassed $1.5 Billion Annually

Original Article Title: "Unveiling the MEV Game on Solana"

Original Article Author: Maggie

Over the past year, the Memecoin craze has turned Solana into a gold rush for traders. Countless individuals have chased meme coins' meteoric rises and falls, attempting to gain an edge using trading bots. However, few realize that the truly profitable business, where you can't lose, isn't flashing on the candlestick charts but is hidden deep in the blockchain's dark forest. This is MEV (Maximal Extractable Value). In contrast to the visible bot profits, MEV gains are often concealed within the blockchain's block construction and ordering mechanism, with those who control it typically holding the invisible hand of on-chain power and infrastructure.

Many are unaware because the system operates with high barriers to entry, extreme information asymmetry, and significant centralization among the controllers. While you may be using a bot to frontrun the mempool and sandwich trades, MEV extractors behind the scenes control transaction ordering to precisely capture arbitrage opportunities. As retail traders compete with speed and strategy, large institutions with staking advantages and node permissions have already secured the top of the revenue pyramid through structural advantages. On Solana, MEV is not just a trading opportunity; it represents infrastructure-level power—it is controlled by a select few, creating a high-barrier, high-monopoly, high-profit capital game.

Today, we will unveil the MEV game on Solana.

1. First, What Is MEV?

MEV stands for Miner Extractable Value, referring to the ability of miners to include, omit, and order transactions when packaging blocks to earn as much additional revenue as possible. Due to the Memecoin craze and DeFi activity, MEV has grown significantly. From a business perspective, MEV typically includes: liquidations, arbitrage, and sandwich attacks.

· Liquidations: Seizing rewards by liquidating undercollateralized loan positions. When borrowers fail to maintain the required collateralization ratio in their loan agreements, their positions become eligible for liquidation. MEV searchers monitor these undercollateralized positions on the blockchain and execute liquidations by repaying a portion or all of the debt in exchange for a portion of the collateral as a reward.

· Arbitrage: Simultaneously buying and selling on different DEXs to profit from price differences. The simplest form of arbitrage occurs when there are price variations for the same trading pair across two DEXs, allowing arbitrageurs to profit from the price differential with a single trade.

· Sandwich Attack: Buying before a target transaction and then selling to profit. A sandwich attack is an arbitrage strategy in the DeFi market, where the attacker achieves profit through three atomic bundled trades: first, conducting an unprofitable front-run transaction to drive up the asset's price to the highest level allowed by the victim's slippage tolerance, then the victim's trade is executed at the peak, further boosting the price, and finally, the attacker sells the asset at an inflated price through a back-run transaction, offsetting the initial cost and gaining net profit.

Behaviorally, it distinguishes between general front-running and back-running.

· Front-Running: Front-running refers to MEV searchers identifying another trader's buy or sell order in the mempool and placing the same order before that trader to profit from the price impact on the other trader's transaction.

· Back-Running: Back-running is the counterpart of front-running, a specific MEV strategy that exploits temporary price imbalances caused by another trade, usually due to improper routing. Once a user's trade is executed, the reverse trader balances the prices of different pools by trading the same asset to ensure profit.

Liquidations are all back-run, and most arbitrages are also back-run; the sandwich attack is front-run + back-run. For specific MEV cases, please refer to Helius' report, which provides detailed explanations and examples.

2. How Lucrative is MEV Business?

According to some unverified statistics, last year, trading bots made $1.1 billion, pump and dumps made $500 million, MEV made $1.5 billion, AMMs made $1 billion, celebrities and related parties made $500 million, with nearly $5 billion taken off-chain. On the Solana network, as the network's activity increased and the 2024 Memecoin craze arrived, MEV profits on Solana also surged.

As seen in Helius' report, Jito's arbitrage detection algorithm analyzed all Solana transactions, including trades outside of Jito's bundle. In the past year, the algorithm identified 90,445,905 successful arbitrage trades. The average profit per arbitrage was $1.58, with the highest single trade profit at $3.7 million. These arbitrages generated $142.8 million in profit, of which $126.7 million (88.7%) was denominated in SOL.

MEV is Big Business!

3. MEV on Solana is Particularly Severe, MEV King---Jito

MEV on Solana is more intense and centralized compared to ETH, stemming from the different design of their underlying chains.

Solana: High Performance--> Sacrifice Some Decentralization --> High Centralization--> High Centralization of Power Solana is known for its high performance, with a block time of only 400 milliseconds (compared to Ethereum's 12 seconds), but its design sacrifices some decentralization, leading to high centralization of power. As Solana does not have a mempool, other nodes must connect to the current block-producing validator nodes to fetch block data and submit transactions. This design gives the block-producing validator nodes significant power without a balancing mechanism, resulting in a severe MEV issue on Solana with monopolized and high profits.

In contrast, Ethereum's MEV market is more market-oriented. There is intense competition between MEV searchers and block builders, which lowers the overall MEV revenue. Jito is the MEV overlord of Solana. 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 remained below 10%, and MEV rewards were limited. Starting from the end of 2023, the adoption rate accelerated significantly, reaching 50% by January 2024. By the end of 2024, over 94% of Solana validators (by stake-weight) were using the Jito-Solana client, establishing absolute dominance.

How Does Jito Work?

The key difference between the Jito-Solana client and the official client is that it natively supports an MEV extraction mechanism, with its core function being to provide Bundles services. Validators running this client are essentially joining the Jito alliance. This alliance offers an external transaction priority execution channel, where traders submit bundles by paying tips to gain transaction sequencing advantages. Therefore, compared to the official client, the Jito client significantly improves the node's earning potential.

Jito Bundles allow traders to bundle transactions, pay fees, and prioritize the submission and execution of key transactions. This is not only applicable to MEV opportunities but is also commonly used for other purposes such as acceleration, batch transactions, and front-running prevention. The core process is as follows:

1. Transaction Assembly: Traders identify arbitrage opportunities and swiftly construct transactions.

2. Bundle Submission: Transactions are bundled and sent to Jito nodes with a fee to increase priority in sorting. These bundles are then relayed by Jito nodes to the block-producing Leader.

3. Priority Execution: If a Jito validator becomes the Leader for the current Slot, these transactions are prioritized for inclusion in a block and executed in a pre-order position. Rewards are distributed to the validator and Jito protocol according to the mechanism. As mentioned earlier, the more funds staked on a Jito node, the higher the Tips and MEV income. Therefore, Jito nodes need to attract more SOL to stake with them. The Jito protocol allows users to stake and share a portion of the node's staking rewards and MEV income with these users.

To further increase its staking volume, Jito has introduced a staking protocol that allows ordinary users to delegate SOL to Jito nodes and proportionally share block rewards and MEV income. Stakers receive rewards, nodes increase block production probability, traders gain priority execution opportunities, forming a complete MEV benefit loop. MEV's three key features are: information advantage, monopoly effect, and capital barrier.

MEV is an information warfare where the winner takes it all. On Solana, competing for MEV opportunities is about milliseconds-speed and sensitivity to on-chain information. The one who can swiftly identify arbitrage opportunities and accurately place transactions in the same/next Slot wins the earnings.

This relies on two factors: fast information synchronization, usually requiring connection to large Jito nodes' RPC services; fast on-chain transactions, prioritizing submission via Jito Bundles channel and paying sufficient Tips. Jito's bundle service is a monopolistic service. The key to MEV lies in "who is the block producer (Leader)." For Jito to provide a stable and reliable bundling service for traders, it must cover as many Leader Slots as possible. This requires its client's network coverage to be extremely high to ensure that most rounds are block-produced by Jito nodes.

Once a critical point is reached, the network effect self-reinforces: the more extensive the adoption, the more stable the service, and the harder it is for competitors to shake. This is also why Jito quickly consolidated 94% of the client share. Solana's MEV is a capital game as Solana is a PoS chain; the more staked, the higher the probability of becoming a Leader. Leaders have block sorting rights and naturally receive the most MEV and Tips.

This creates a highly concentrated capital barrier: large nodes stake more, have a higher block production frequency, and faster information synchronization. The more sensitive the information, the stronger the arbitrage ability. The RPC service of large nodes (even services in the same data center) experiences a surge in prices, becoming a scarce resource for information access.

Those who can earn MEV often can only do so through the most capital-rich large nodes.

4. Flow of MEV Revenue on Solana: Who Takes the Money?

As mentioned earlier, the MEV revenue on Solana is quite substantial. So, who ultimately benefits from this revenue? It mainly belongs to three core stakeholders: the Jito protocol itself, large high-stake nodes, and block space sales intermediaries.

· Jito Protocol: As the tax collector of the infrastructure, Jito has processed over 4.3 billion transaction bundles in the past year, generating a total of 5.51 million SOL in user-paid Tips. Calculated at a SOL price of $140, this means that about $7.7 billion in additional on-chain transaction value was guided by Jito infrastructure. The platform fee between Jito and validators is 3-5%, so the actual revenue of Jito itself in the past year is approximately 200K-270K SOL, equivalent to about $3.5M.

· High-Stake Nodes: As Solana is a PoS chain, the higher the staked amount, the higher the node's block production probability. These "top validators" not only continually receive base block rewards and inflation rewards but also get a significant amount of transaction Tips from Jito Bundles. The normal node's revenue is about 6%, and when the network activity is high, some node's annual returns can exceed 20%, significantly higher than regular nodes. Their income sources include: inflation rewards, block rewards, Jito Tips, and some revenue from selling SWQoS transaction on-chain permissions.

· Block Space Sales Intermediaries: Intermediaries facilitating on-chain transactions act as secondary block space sellers. Their operation logic is as follows: they establish partnerships with high-stake nodes to purchase SWQoS transaction on-chain permissions at a discounted market price; (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 from high-stakes validators are less likely to be delayed or dropped) they bundle multiple users' transactions into a Jito Bundle, significantly increase Tips, to gain higher priority; the Tips paid by users are much higher than the fees intermediaries pay to validators, allowing intermediaries to earn the difference; simultaneously, they embed their own arbitrage transactions (such as Backrun) in the Bundle to further capture MEV revenue. For example, on DefiLlama, you can see some revenue data from bloXroute, showing that the Tips received are substantial. However, it is important to note that this data does not cover all of its receipt addresses, nor does it exclude the shares distributed to validators and order flow providers.

Overall, Solana has experienced a high degree of power centralization, with Jito's MEV revenue mostly captured by the Jito protocol, major validator nodes, and block space sale intermediaries.

5. Solana Client Landscape

Currently, there are over 1300 validator nodes on Solana, with over 94% of nodes being Jito nodes. The main client types include:

· Solana Node: This is the most basic node client, without any MEV optimization mechanisms. Nodes running this client have been largely marginalized as their earnings are much lower than those running Jito nodes.

· Jito Node: The Jito client is based on the official client but includes the Jito protocol and Bundles support, allowing nodes to accept bundled transactions and collect tips from them. Users looking to front-run, prevent sandwich attacks, or achieve fast on-chain execution can use the Jito Bundle service to submit transactions to validators with a tip to increase execution priority. Since nodes running the Jito client can earn additional tips, over 90% of nodes on the mainnet have switched to Jito nodes, making it the default choice.

· Paladin Node: Paladin is an improved version based on the Jito client, aiming to provide a more equitable transaction prioritization mechanism to address the "sandwich attack" issue in Jito bundle sorting (where malicious validators insert sandwich transactions without being penalized). According to community reports, the current adoption rate of the Paladin client is around 15%, and because it is still recognized by the network as a Jito client, it is included in the total statistic of 94%.

· Firedancer Node: Developed by Jump Crypto, Firedancer is a high-performance Solana client with an independent implementation designed to enhance network throughput, facilitating Jump's quantitative trading. The initial version did not support the Jito protocol, so it could not access tip revenue, resulting in very low adoption on the mainnet. However, as new versions started to be compatible with the Jito protocol, validators using Firedancer could also receive Jito Tips income. Although there are currently few deployments on the mainnet, 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 has also supported it.

Competition Logic of These Node Clients:

Jito VS Paladin: Fairness Debate The Jito protocol has formed a de facto monopoly on MEV extraction due to its high centralization. However, the protocol currently lacks a mechanism to punish malicious behavior (such as validator sandwich attacks), leading to the possibility of users being sandwiched even when using a bundle. This has given an opportunity to clients like Paladin, which offers a more fair transaction priority on-chain through a bidding process. However, Paladin was originally a modification on top of Jito-solana, and if Jito enhances its mechanisms in the future, it may suppress Paladin's space for survival.

Firedancer VS Other Clients: Performance Succession Firedancer's major advantage is performance, claiming that TPS can reach 1 million (theoretically 1 million, actual performance is unknown). If the transaction volume on the Solana network continues to grow in the future, high-performance client nodes that can meet performance requirements will gain an advantage and squeeze out low-performance clients. Once high-performance nodes start packaging larger blocks, low-performance clients may fall behind in synchronization, affecting validation performance and ultimately being marginalized. Therefore, as the demand for TPS on Solana increases, the entire Solana network will naturally transition to high-performance clients.

Summary: In general, the vast majority

of nodes run the Jito-Solana client, and the Jito protocol has become part of the infrastructure. As the Firedancer client begins to be compatible with the Jito protocol, there may be an iterative upgrade of client performance on the mainnet in the future—from "running Jito to earn more money" to "running high-performance Jito to avoid elimination."

6. How Can Large Institutions Step by Step Become Power Players on Solana?

Solana's architecture inherently leans towards centralization of power, creating a favorable environment for large institutions to intervene and dominate the ecosystem. Entities such as Solana Foundation, Jito, Multicoin, Jump, Helius, Coinbase, Binance, Jupiter, among others, have significant governance rights on Solana. Many institutions are bullish on Solana's future prospects and aim to become one of the power players on Solana. Taking Sol Strategies, which has shown frequent recent developments, as an example, we can clearly see how large institutions are strategically infiltrating to become power players on Solana:

Step 1: Sol Strategies Expands Market Share and Ecosystem Dominance through Node Acquisitions, Emerging as a Key Player. Solana currently boasts a staking rate of up to 65.6% (with approximately 380 million SOL staked), controlling validator nodes, which means holding the network's consensus mechanism and voting power. Sol Strategies has aggressively acquired top nodes, swiftly entering the power core:

November 2024: Acquired Cogent Crypto, the operator of Solana, Sui, Monad, and ARCH network validator nodes, for $18 million (cash + stock), focusing on the SOL network. March 2025: Acquired leading Solana validator nodes Laine and Stakewiz.com for 35 million Canadian dollars (cash + equity), increasing staked SOL to 3.3 million tokens (worth approximately $3.88 billion) and appointing Laine's founder Michael Hubbard as Chief Strategy Officer.

Step 2: Attempt to Advance the Inflation Rate Adjustment Proposal SIMD-228 to Further Consolidate Their Power. (This proposal was ultimately not approved) SOL Strategies vigorously promoted the inflation mechanism adjustment proposal SIMD-228, which aimed to introduce a dynamic inflation mechanism to replace the current fixed deflationary model. If approved, Solana's annual inflation rate would have decreased from the fixed rate of 4.68% to 1% or even 0%. Although the proposal was not ultimately approved, the strategic intent behind it was very clear:

Stabilize SOL Value: Lowering inflation can reduce the issuance of new SOL, alleviate token dumping, and enhance long-term staker rewards; Suppress small nodes, consolidate the dominance of large nodes: Reduced inflation would compress the earnings of all validators, but smaller nodes have weaker risk resistance, making them easier to eliminate, thus promoting network concentration towards top validators.

Step 3: Interest Gaming on Solana. Advancing Solana ETF Listing, Crypto Asset Structuring, and Becoming an ETF Staking Provider. Sol Strategies became the staking provider for the 3iQ Solana Staking ETF and facilitated the listing of the 3iQ Solana Staking ETF. They aimed to further increase staking volume and compete for blockchain governance dominance.

Summary:

MEV is big business, especially on Solana. MEV on Solana is particularly intense and profitable. Protocols like Jito, with a strong winner-takes-all effect, dominate the MEV landscape. With high centralization of power on Solana, MEV gains are primarily captured by the Jito protocol, high-stake nodes, and block space sale brokers. There are now multiple clients on the Solana network, with the Jito-Solana client currently dominating the mainnet, and the Firedancer client, supporting the Jito protocol, potentially becoming a future high-performance upgrade. Solana is very conducive to institutional dominance. SOL Strategies, through node acquisitions, attempts to drive governance proposals, and promote ETF listings, have demonstrated how an institution can comprehensively penetrate Solana from technology and governance to the financial system, outlining a path to compete for blockchain governance sovereignty.

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