Solana’s validaters are set to receive a significant income bump. However, the protocol does not allow for the validators to split the profits with their stakers.
In May, Solana validators passed a proposal to send 100% of priority fees — which are extra funds users can pay for a better chance of landing their transactions — to validators. It seems that the proposal will be implemented soon, although some people are asking Solana not to implement it until stakers can share in the additional fees.
Validators who create blocks on the Solana Blockchain and run Solana’s software receive 50% of the SOL-denominated prioritization fees. The other half, however, is effectively burned or removed from circulation. Some validators make side deals with their users because, in this case, a validator receiving 75% of a priority fee from a user outside the Solana Protocol would be beneficial to both parties.
SIMD 0096 is the name of the proposal in May that aims to stop these side agreements. But Solana lacks an in-protocol way for validators to share priority fees with stakers — who delegate their SOL to validators for a share of the validator rewards — so the increased SOL inflation would essentially benefit validators at the expense of everyone else.
Certains Solana Developers have suggested that SIMD 0096 could encourage priority fee spoofing or validators raising artificially priority fees so as to reap more rewards. The change has been implemented.
According to Blockworks Research, Solana’s priority fees amounted to $240 million during January. SIMD 0096, according to Blockworks Research’s blockchain value metric, would have increased Solana’s actual economic value by 22%.
SIMD-0123 is a newer proposal that would allow validators to share directly priority fees with stakeholders. Tim Garcia, Solana Foundation’s validator relations leader, said that this proposal is unlikely to be implemented before SIMD-0096 takes effect.
Some want to see the network approve both proposals simultaneously so stakers get a share of the bounty. Stakeholders who don’t listen to these requests will be forced to depend on validators giving out extra rewards before SIMD-0123 can be enabled.
“[V]alidators are only overcompensated if they do not share back the rewards ([H]elius will share back for example),” Mert Mumtaz is the CEO of Helius’ largest Solana Validator. He said this in a written statement.
Jito is a Solana-based infrastructure provider that also provides a method to distribute validator incentives via TipRouter.
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