Solana Dark Forest: Exploring the Capital Power Games Behind MEV Monopoly Profits

In the past year, the Memecoin craze has made Solana a popular destination for traders. Countless people chase the volatile Meme coins, trying to gain an advantage through trading bots. However, the real stable profit-making business is not reflected in the candlestick charts, but is hidden deep within the blockchain. This is known as MEV(, or Maximum Extractable Value).

Compared to publicly visible robot profits, MEV profits are often hidden within the block construction and sorting mechanisms, controlled by the "invisible hand" that holds on-chain power and infrastructure. Many people are unaware of this, as the entry barrier for this system is high, information is extremely asymmetrical, and control is highly centralized.

When ordinary investors use bots to front-run on the internal market and prevent being squeezed, MEV catchers manipulate the order of transactions behind the scenes to accurately seize arbitrage opportunities. While retail investors compete in speed and strategy, large institutions with staking advantages and node permissions have already secured their position at the top of the profit pyramid through structural advantages.

In the Solana ecosystem, MEV is not only a trading opportunity but also a power at the infrastructure level. It is controlled by a very small number of people, forming a highly exclusive, monopolistic, and profitable capital game. This article will reveal the insider story of the big business of MEV on Solana.

1. MEV Concept Analysis

MEV, which stands for Miner Extractable Value, refers to the additional profits that miners can obtain by including, omitting, and reordering transactions when packaging blocks. Due to the Memecoin craze and the active DeFi sector, the scale of MEV is enormous.

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

• Liquidation: Liquidating lending positions close to default to earn rewards.

When borrowers fail to maintain the required collateral ratio, their positions can be liquidated. MEV searchers monitor these under-collateralized positions and execute liquidations by repaying part or all of the debt in exchange for a portion of the collateral as a reward.

• Arbitrage: Buying and selling simultaneously across different DEXs to profit from price discrepancies.

The most basic form of arbitrage occurs when two DEXs quote different prices for the same trading pair, allowing the arbitrageur to profit from the price difference through a single transaction.

• Sandwich Attack: Buy in before the target transaction and then sell for profit.

This is a DeFi market arbitrage strategy where the attacker realizes profit through three atomic bundled transactions: first, by executing a non-profitable front-running trade to drive up the asset price, then the victim's trade is executed at the high price, and finally, the attacker sells the asset at a high price through a buyback transaction, offsetting costs and obtaining net profit.

In terms of behavior, MEV is mainly divided into front-running ( and back-running ).

• Front-running: MEV searchers identify orders of other traders in the mempool and place the same orders ahead of them to profit from the price impact of the other trades.

• Backward Trading: Utilizing temporary price imbalances caused by another transaction, often due to improper routing. Once the user's trade is executed, the seeker trades the same asset to balance the prices of each liquidity pool and ensure profit.

Liquidation is all considered post-trade, arbitrage is mostly also post-trade, and sandwich attacks combine both front-running and post-trade.

2. The Huge Commercial Value of MEV

According to some unverified statistics, trading bots earned $1.1 billion last year, speculative profits were $500 million, MEV gains amounted to $1.5 billion, automated market makers made $1 billion in profits, certain celebrity-related parties earned $500 million, and about $5 billion flowed to over-the-counter.

As the activity on the Solana network increases and the Memecoin craze of 2024 approaches, MEV profits on Solana have sharply risen. A report from Helius shows that Jito's arbitrage detection algorithm analyzed all Solana transactions, including those outside of Jito bundles, identifying 90,445,905 successful arbitrage trades over the past year. The average profit per arbitrage trade was $1.58, with a maximum single trade profit of $3.7 million. These arbitrages generated a total profit of $142.8 million, of which $126.7 million (88.7%) was denominated in SOL.

MEV is undoubtedly a huge business opportunity.

3. The MEV Problem on Solana and Jito's Dominance

Compared to Ethereum, the MEV problem on Solana is more severe, and power is more centralized, which stems from differences in its underlying design.

Solana is known for its high performance, with a block time of only 400 milliseconds (, while Ethereum's is 12 seconds ). However, its design sacrifices some decentralization, leading to a high concentration of power.

Solana does not have a memory pool, and 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 immense power and lacks a balancing mechanism, making the MEV problem on Solana particularly severe, with a high degree of profit monopoly.

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

Jito is the MEV leader of Solana. After launching the Jito-Solana client in August 2022, the initial adoption rate was below 10% for the first 9 months, with limited MEV rewards. Starting at the end of 2023, the adoption rate significantly increased, reaching 50% in January 2024. By the end of 2024, over 94% of Solana validators ( used the Jito-Solana client weighted by stake ), forming an absolute dominant position.

Operation model of Jito:

The main difference between the Jito-Solana client and the official client is its native support for the MEV extraction mechanism, with the core function being the provision of Bundles services. Validators running this client join the Jito alliance, providing an external channel for prioritized transaction execution. Traders can gain transaction ordering advantages by submitting bundles with tips. Therefore, the Jito client significantly enhances the revenue-generating capacity of nodes.

• Jito Bundles (Jito Bundles )

Jito Bundles allow traders to prioritize and execute critical trades by bundling transactions and paying a fee. They are not only suitable for MEV opportunities but are also commonly used for purposes such as acceleration, batch trading, and preventing sandwich attacks. The core process is as follows:

1. Trade Assembly: Traders identify arbitrage opportunities and quickly construct trades.

2. Bundle Submission: Package transactions into a bundle, send them to the Jito node, along with a tip to enhance sorting priority. These bundles will be passed to the block Leader.

3. Priority Execution: If a Jito validator becomes the Leader of the current Slot, these transactions will be prioritized for packaging into blocks and executed in the front position. The revenue will be distributed to the validators and the Jito protocol according to the mechanism.

• Jito Staking Mechanism

The more SOL staked on Jito nodes, the higher the Tips and MEV income received. To attract more SOL staking, the Jito protocol allows users to stake and share part of the node staking rewards and MEV earnings.

To further expand the staking volume of nodes, Jito has launched a staking protocol that allows ordinary users to delegate SOL to Jito nodes, sharing block rewards and MEV profits proportionally. Stakers earn rewards, nodes increase their block production probability, and traders gain priority execution opportunities, forming a complete MEV profit loop.

The three key characteristics of MEV: information advantage, monopoly effect, capital barriers

1. MEV is an information war, the winner takes all.

Competing for MEV opportunities on Solana hinges on millisecond-level speed and sensitivity to on-chain information. Whoever can discover arbitrage opportunities the fastest and accurately place transactions into the same or next Slot will reap the rewards. This relies on:

• Fast information synchronization capability, usually requires connecting to the RPC service of large Jito nodes;

• Fast on-chain transactions, prioritize submitting transactions through Jito Bundles and pay a sufficient fee.

2. Jito's bundle service has a monopolistic nature.

The key to MEV is "who is the block proposer ( Leader )". Jito must provide stable and reliable bundling services for traders, and it is essential to 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 proposed by Jito nodes.

Once the critical point is reached, the network effect self-reinforces: the wider the adoption, the more stable the service, and the harder it is for competitors to shake it. This explains why Jito was able to quickly consolidate 94% of the client share.

3. The MEV of Solana is a capital game.

Solana uses a PoS mechanism, the more staked, the higher the probability of becoming a Leader. The Leader has the authority to order blocks, which naturally allows them to obtain the most MEV and Tips. This creates a highly concentrated capital barrier:

• Large node staking is high, block generation frequency is high, information synchronization is fast;

• The more sensitive the information, the stronger the arbitrage ability;

• The RPC services of large nodes ( and even the same data center services ) are becoming increasingly expensive, turning them into scarce resources for information access.

Only the strongest capital-backed major nodes can often earn MEV.

4. The Flow of MEV Profits on Solana

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

• Jito Protocol: Taxpayer of Infrastructure

In the past year, Jito processed over 4.3 billion transaction bundles (Bundle), generating a total of 5.51 million SOL in user-paid tips. Calculated at a SOL price of $140, the additional on-chain transaction value guided by Jito's infrastructure is approximately $7.7 billion. The revenue share between Jito and validators is 3-5%, so Jito itself earned about 200,000 to 270,000 SOL in the past year, which is equivalent to $35 million.

• High-staking nodes: On-chain privileged class

Solana uses a PoS mechanism, where nodes with higher staking amounts have a greater probability of block production. These "top validators" can not only continuously earn basic block rewards and inflation rewards, but also obtain a large amount of transaction tips from Jito Bundles. Ordinary nodes earn about 6%, while during periods of high network activity, some nodes can achieve annualized returns of over 20%, far exceeding ordinary nodes. Their income sources include: inflation rewards, block rewards, Jito Tips, and revenue from the sale of certain SWQoS transaction on-chain permission.

• Blockchain Space Sales Intermediary: Brokers for On-chain Transactions

These intermediaries act as secondary sellers of blockchain space. Their operational logic is as follows:

• Collaborate with high-staking nodes to purchase SWQoS transaction on-chain permissions at preferential prices;

• Bundle multiple user transactions into a Jito Bundle to concentrate Tips for higher priority;

• The tips paid by users are much higher than the fees paid by intermediaries to validators, and intermediaries profit from the difference.

• Embed your own arbitrage transaction ( in the Bundle, such as Backrun ), to further gain MEV profits.

Overall, Solana has experienced a phenomenon of high centralization of power, with the majority of Jito's MEV profits being captured by the Jito protocol, major validator nodes, and block space sales intermediaries.

5. Solana Client Competitive Landscape

Currently, the Solana network has over 1,300 validator nodes, with more than 94% running Jito nodes. The main clients include:

• Solana node

The most basic node client, which does not include MEV optimization mechanisms. Nodes running this client are almost marginalized, with earnings far below those of Jito nodes.

• Jito Node

The official client has added support for the Jito protocol and Bundles, allowing nodes to accept bundled transactions and receive tips. Users can submit transactions through the Jito Bundle service, adding tips to increase execution priority. Due to the additional tip revenue, over 90% of nodes have switched to Jito nodes.

• Paladin Node

The improved version of the Jito client aims to provide a fairer transaction priority on-chain mechanism, mainly addressing the "sandwich attack" problem in bundle sorting of Jito. The current adoption rate is about 15%, and it is still recognized by the network as the Jito client.

• Firedancer node

The high-performance Solana client developed by Jump Crypto aims to enhance network throughput. The initial version did not support the Jito protocol, resulting in a very low adoption rate on the mainnet. The new version has begun to be compatible with the Jito protocol, allowing validators using Firedancer to also earn Jito Tips income. Currently, there are few deployments on the mainnet, but most nodes on the testnet have adopted it, indicating a potential for a larger market share on the mainnet in the future.

Client competition logic:

• Jito VS Paladin: The Battle for Fairness

The Jito protocol is highly centralized, forming a de facto monopoly on MEV extraction. However, it lacks