The Hidden Rules of the Dark Forest of Solana: Unveiling the Capital Power Games Behind MEV Windfalls

In the past year, the Memecoin craze has made Solana a popular choice for traders. Many have tried to get a head start using trading bots, but little is known that the truly stable and high profits do not come from the fluctuations on candlestick charts, but rather are hidden deep within the blockchain in MEV (Maximal Extractable Value).

Compared to publicly visible robot profits, MEV profits are often hidden within the block construction and sorting mechanisms, controlled by a minority group that holds on-chain power and infrastructure. This system has a high entry threshold, extreme information asymmetry, and a highly concentrated control, which is why many people know very little about it.

When ordinary users use bots to front-run the inner market and avoid being pinched, MEV catchers manipulate the transaction order behind the scenes to accurately seize arbitrage opportunities. While retail investors compete with speed and strategy, large institutions with staking advantages and node permissions have already secured their position at the top of the profit pyramid due to structural advantages.

In the Solana ecosystem, MEV is not only a trading opportunity but also a power on the infrastructure level. It is controlled by a very small number of people, creating a high barrier to entry, strong monopoly, and lucrative capital game. Let's delve into this massive MEV business on Solana.

1. Definition and Types of MEV

MEV stands for Miner Extractable Value, which is the ability of miners to gain additional profits by including, excluding, and reordering transactions. Due to the Memecoin craze and the activity in DeFi, the scale of MEV is quite substantial.

From a business perspective, MEV mainly includes liquidation, arbitrage, and sandwich attacks:

• Liquidation: When the borrower is unable to maintain the required collateral ratio, the liquidator repays part or all of the debt and receives a portion of the collateral as a reward.

• Arbitrage: Taking advantage of price differences between different DEXs to buy and sell, earning the price difference.

• Sandwich Attack: Inserting buy and sell operations before and after the target transaction to profit from price fluctuations.

From a behavioral perspective, MEV is usually divided into front-running( and back-running):

• Front-running: Identify orders in the mempool and execute the same operation before the original order.

• Backward trading: Arbitraging based on temporary price imbalances caused by other trades.

2. MEV Market Size

Some unconfirmed statistics show that trading bots made a profit of about $1.1 billion last year, speculative trading earned $500 million, MEV profits reached $1.5 billion, automated market makers made $1 billion, celebrity-related parties earned $500 million, and over-the-counter trading volume approached $5 billion.

As the activity on the Solana network rises and the 2024 Memecoin craze approaches, the MEV profits on Solana have surged dramatically. According to a report by Helius, Jito's arbitrage detection algorithm analyzed all Solana transactions, identifying 90,445,905 successful arbitrage trades over the past year. The average profit per arbitrage trade was $1.58, with the highest single arbitrage profit reaching $3.7 million. These arbitrages generated a total profit of $142.8 million, of which $126.7 million (88.7%) was denominated in SOL.

3. The Specificity of Solana MEV and the Dominance of Jito

The MEV on Solana is more intense and centralized than on Ethereum, which stems from the differences in their underlying designs.

Solana is known for its high performance, with a block time of only 400 milliseconds, but it sacrifices some decentralization in its design, leading to a high concentration of power. Since Solana does not have a memory pool, other nodes must connect to the current block-producing validator node to obtain block data and submit transactions. This design gives the block-producing validator nodes significant power and lacks a balancing mechanism, making the MEV issue on Solana particularly severe, with a high level of profit monopoly.

In contrast, the MEV market of Ethereum is more competitive. There is intense competition between MEV searchers and block builders, which drives down the overall MEV profits.

Jito is the MEV dominant player on Solana. After launching the Jito-Solana client in August 2022, the adoption rate was initially below 10% for the first nine months, with limited MEV rewards. Starting from the end of 2023, the adoption rate saw a significant increase, reaching 50% in January 2024. By the end of 2024, over 94% of Solana validators (weighted by stake) were using the Jito-Solana client, establishing an absolute dominant position.

The core function of the Jito-Solana client is to provide Bundles services. Validators running this client join the Jito Alliance, offering a channel for prioritized transaction execution. Traders submit bundles by paying a tip, gaining an advantage in transaction ordering. Therefore, the Jito client significantly enhances the revenue capability of the nodes.

Jito Bundles allow traders to prioritize the submission and execution of key trades by bundling trades and paying tips. Its core process includes:

1. Trade Assembly: Traders identify arbitrage opportunities and quickly construct trades.
2. Bundle Submission: Package the transaction into a bundle, send it to the Jito node, along with a tip to enhance sorting priority.
3. Priority Execution: If a Jito validator becomes the Leader of the current Slot, it will prioritize packaging these transactions and executing them in a preceding position.

To expand the node staking volume, Jito has launched a staking protocol that allows ordinary users to delegate SOL to Jito nodes and share block rewards and MEV profits proportionally. This forms a complete MEV profit loop: stakers earn profits, nodes increase block production probability, and traders gain priority execution opportunities.

4. Key Characteristics of MEV

1. Information advantage is crucial.

Competing for MEV opportunities on Solana hinges on millisecond-level speed and sensitivity to on-chain information. The one who can discover arbitrage opportunities the fastest and accurately submit transactions into the same or next Slot will reap the rewards. This relies on fast information synchronization capabilities (usually necessitating a connection to a large Jito node's RPC service) and rapid transaction on-chain (prioritizing transaction submission through Jito Bundles and paying sufficient tips).

2. The Bundle service is monopolistic.

The core of MEV lies in "who is the block producer." If Jito wants to provide traders with stable and reliable bundling services, it must cover as many Leader Slots as possible. This requires its client to have a very high coverage rate in the network to ensure that most rounds are produced by Jito nodes.

Once the tipping point is reached, network effects self-reinforce: the more widely adopted, the more stable the service, and the harder it is for competitors to shake it. This also explains how Jito has quickly consolidated 94% of the client share.

3. The MEV of Solana is a capital game

Solana adopts PoS consensus, with more staking increasing the probability of becoming a Leader. The Leader has the authority to order blocks, naturally allowing them to earn the most MEV and tips. This creates a highly concentrated capital barrier:

• Large node staking is high, block generation frequency is high, and information synchronization is fast;
• The more sensitive the information, the stronger the arbitrage ability;
• The prices of RPC services for large nodes (even for services in the same data center) have risen sharply, becoming a scarce resource for information access.

Therefore, those who can earn MEV often can only do so through the largest capital nodes.

5. MEV Revenue Flow on Solana

The MEV profits on Solana mainly flow to three core stakeholders: the Jito protocol itself, large high-staking nodes, and block space sales brokers.

1. Jito Protocol: Taxpayer of Infrastructure

In the past year, Jito has processed over 4.3 billion transaction bundles, generating a total user payment tip amount of 5.51 million SOL. At an SOL price of $140, the additional on-chain transaction value guided by Jito's infrastructure is approximately $7.7 billion. The platform revenue-sharing ratio between Jito and validators is 3-5%, therefore Jito's earnings in the past year are about 200,000 to 270,000 SOL, which is approximately $35 million.

2. High-Staking Nodes: On-Chain Privileged Class

Due to Solana's PoS mechanism, nodes with a higher staking amount have a higher block production probability. These "top validators" can not only continuously earn basic block rewards and inflation rewards but also gain significant transaction fees from Jito Bundles. The average yield for regular nodes is about 6%, while during times of high network activity, some nodes can achieve annualized yields of over 20%. Their income sources include: inflation rewards, block rewards, Jito tips, and the sale proceeds of certain SWQoS transaction on-chain permissions.

3. Block Space Sales Broker: Intermediary for On-Chain Transactions

These brokers act as secondary sellers of blockchain space. Their operating logic is as follows:

• Establish cooperation with high-staking nodes to purchase SWQoS transaction on-chain permissions at a favorable price;
• Package multiple users' transactions into a Jito Bundle to concentrate tips for higher priority;
• Earn the difference from the high tips paid by users;
• Embed your own arbitrage trades (such as Backrun) in the Bundle to further obtain MEV profits.

6. Competitive Landscape of Solana Clients

Currently, there are over 1,300 validator nodes on Solana, with over 94% running Jito nodes. The main clients include:

1. Solana node: Basic client, does not include MEV optimization mechanism, earnings are far lower than Jito node.

2. Jito Node: Added Jito protocol and Bundles support on the official client, allowing the acceptance of bundled transactions and the collection of tips. Currently, over 90% of nodes in the mainnet adopt it.

3. Paladin Node: An improved version of the Jito client, designed to provide a fairer transaction priority on-chain mechanism. Currently, the adoption rate is about 15%, recognized by the network as the Jito client.

4. Firedancer Node: A high-performance independent client developed by Jump Crypto, originally designed to enhance network throughput. The latest version is compatible with the Jito protocol, allowing for Jito tip income. Although there are fewer deployments on the mainnet, it is widely used on the testnet.

The competition among these clients is mainly reflected in the following aspects:

• Jito vs Paladin: The Battle for Fairness. Paladin attempts to address the "sandwich attack" issue present in Jito's bundle sorting.

• Firedancer vs Other Clients: Performance Competition. Firedancer claims a TPS of up to 1 million (theoretical value), and if Solana's transaction volume continues to grow in the future, high-performance clients may gain an advantage.

7. The Path for Large Institutions to Become Beneficial Players in Solana

Taking Sol Strategies as an example, we can see how large institutions gradually infiltrate to become the利益操盘者 of Solana:

Step 1: Expand market share and ecological dominance through node acquisition.

• November 2024: Acquired Cogent Crypto for $18 million, focusing on the SOL network.
• March 2025: Acquired the top Solana validator nodes Laine and Stakewiz.com for 35 million CAD, increasing the staked SOL amount to 3.3 million.

Step 2: Promote the inflation rate adjustment proposal SIMD-228, attempting to further consolidate power.

Step 3: Promote the listing of Solana ETF, become an ETF staking provider, expand the staking volume, and compete for the dominance of blockchain governance.

Summary:

1. MEV is a lucrative market, especially prominent on Solana.
2. Jito and other MEV protocols have strong monopoly and head effects.
3. The power on Solana is highly centralized, with MEV profits mainly captured by the Jito protocol, high-staking nodes, and block space sales brokers.
4. There are various clients on the Solana network, with the Jito-Solana client currently dominating, while the Firedancer client that supports the Jito protocol may become a high-performance upgrade in the future.
5. The Solana ecosystem is very suitable for institutional leadership, and large institutions can penetrate Solana in all aspects through various methods such as acquiring nodes, promoting governance proposals, and facilitating ETF listings, competing for blockchain governance sovereignty.