- Solana’s sales hit their lowest point in months.
- Small validators have a hard time competing.
- Solana has already been criticized for its centralization.
Solana often boasts low fees and scalability. Now, the risk of centralization may be greater than ever because of the validators who are a core part of the network. They are responsible for keeping the network running and maintaining a decentralized state.
As Solana’s fees drop to monthly lows, many validators are struggling to maintain the sophisticated and expensive equipment needed to run the Solana network.
Solana’s low fees risk centralizing the network.
Solana’s blockchain is under significant pressure from its validator ecosystem. Small validators who are essential to maintaining a decentralized network are struggling to survive as their revenue streams dwindle.
Solana validators earn revenue proportional to the amount of SOL they stake. At the same time, validator fees are largely fixed, as pointed out in a recent Helius report. These costs include the sophisticated equipment needed to run the network.
This means that smaller validators could go out of business due to the decrease in revenue. If the revenue is not enough to cover the expenses, they will have to close. In particular, about 72% of validators rely on special grants from the Solana Foundation, which aims to promote decentralization. However, this revenue source is also decreasing.
Solana Foundation Cuts Subsidies for Small Validators
The Solana Foundation’s Delegation Program (SFDP), a major grant that supports small validators, has seen a significant cut. The SFDP currently delegates 51 million SOL across the network, which is 13% of Solana’s total staked tokens, but this figure was previously 100 million.
In addition, the Solana Foundation has lowered the maximum fee that a validator can charge from 7% to 5% and introduced a 10% cap on Jito Maximal Extractable Value (MEV) fees. These fees are controversial but have helped support smaller validators. However, according to Dune, this amounts to only 5% of validator revenue.
Without the current subsidy, many validators would struggle to break even. Approximately 73% of validators who participated in the SFDP program raised less than 10,000 SOL, and 51% raised less than 1,000 SOL.
Helios estimates that 897 validators, or 57% of SFDP participants, will fail, which would be a huge blow to Solana’s validator count and decentralization.
Why Solana’s Revenues Are Declining
Solana’s recent revenue decline was driven primarily by a significant decline in network activity related to Mimecoin transactions. Last year, Solana became a hub for Mimecoin thanks to its low fees and easy-to-use Pump.fun platform.
As the Mimecoin market cooled, Solana’s total trading volume took a big hit. On September 5, Solana’s network fees dropped to 571K, the lowest since March 2024, showing how much Solana relies on Mimecoin activity.
On the other side
- Pump.fun is an easy way to launch Mimecoin. However, due to high fees and dismal success rate for Mimecoin, Object of criticism.
- Alternatives like Tron sun pump It is eating into Pump.fun’s market share, which is affecting Solana’s trading volume.
Why this matters
Solana’s decentralization will become increasingly risky as smaller validators are pushed out due to diminishing returns.
Learn more about Solana validator earnings:
Solana validators confirm record-breaking tips as secret fees plague network users
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