Preface
Solana has been around for five years, and Jito (the leading MEV infrastructure on Solana) has developed in less than three years, rapidly increasing its market share from an initial 15% to the current 95%. It can be said that most meme trading on Solana goes through Jito!
No ads throughout, please readers take a seat, bookmark this, let Shijiu deeply explain the underlying principles and gradually reveal:
What is Jito-Solana? Why can it dominate the market in 2 years?
The core mechanism differences between Solana and Ethereum.
Why is your transaction always getting squeezed?
How will the MEV landscape on Solana develop in the future?
1. What is Jito-Solana?
Of course, Jito-Solana (the leading player with a 95% market share) is not the only MEV infrastructure on Solana; there are others like Paladin, Deeznode, BlockRazor, BloxRoute, Galaxy, Nozomi, etc., each with different entry points. This article will focus on the development history and technical principles of the core leader, and later comment on the strengths and weaknesses of these other players.
1.1. Jito's Development Timeline
First, let’s look at the remarkable speed of its market share development through a timeline, paying attention to the staking rate and related partners.
Established at the end of 2021
Launched on the Solana mainnet in June 2022, with 200 validators covering 15% of the staking volume by September of the same year.
From 2022 to 2023, through financing, iteration, and collaboration with the Solana Foundation, the Jito client was included in the official recommendations.
In 2023, TGE, staking Jito gained MEV yield boosts, forming a staking-restaking model.
In Q1 2024, due to strong community opposition, the channel for Jito-Solana to send transactions to Jito-Blockengine was closed.
In Q2 2024, the number of cooperative validators exceeded 500, covering 70% of Solana's MEV, processing 3 billion transactions in 2024.
By Q1 2025, the staking coverage rate had reached 94.71%. Today, the importance of cross-chain bridges remains self-evident.
【Image Source: https://www.jito.network/zh/stats/】
Thus, it can be said that Jito is the leading infrastructure in the MEV ecosystem on Solana, having established a solid support base from Solana validators over the past three years, ensuring that the vast majority of transactions go through Jito's system.
Its system diversion has significantly reduced Solana's downtime,
It has provided high-profit yields for the squeezers,
And it has allowed Solana validators to increase their MEV earnings by an additional 30%, and steadily.
Moreover, it has transformed from an initial dragon-slaying warrior into a dragon itself, oscillating between the roles of warrior and dragon, sometimes fierce, sometimes benign.
In the current mainstream meme narrative of the market, it has become a dual-purpose player.
1.2. What Kind of System Has Jito Built?
It actually consists of three core services: block-engine, Jito-Solana, and Jito-Relayer. Their relationships are illustrated in the following diagram:
[Image Source: Created by Shijiu]
First is the block-engine, which is an auction system.
Its typical scenario allows squeezers to submit a bundle of transactions consisting of up to five transactions in a fixed order for auction, where they can additionally send a transaction called Tips to validators as an extra incentive, encouraging validators to prioritize packaging that bundle.
Other scenarios include DEX platforms like OKX, GMGN, and BN Wallet, which can add tips to users' transactions to avoid being squeezed, thus speeding up the process of getting transactions on-chain.
Next is Jito-Solana, which is a client that replaces validators for transaction validation and block production.
Its core function is to allow validators to receive the bundle sent by the block-engine, thus prioritizing the processing of this transaction to complete the transaction sequence. At its peak, the number of bundles processed daily could reach 25 million (recently around 10 million), with almost every transaction being profitable.
The tips collected here are delivered to a unified account, later distributed to validators at 95-97%, with Jito itself taking 3-5%.
The most controversial part is Jito-Relayer, which can be understood as a gateway for validators to receive transactions.
Initially, when this relayer received transactions, it would delay for 200ms before sending them to Jito-Solana, while simultaneously sending transactions to the block-engine without delay, clearly selling order data. Thus, Jito's early rise was rooted in the profit margin at the expense of users.
It is important to note that in March 2024, this rule was officially announced to no longer transmit data, but to this day, the Jito-Relayer still has the forwarding switch and the 200ms delay setting.
So, whether validators are selling user data remains unknown due to the closed-source nature of block-engine.
1.3. How Much Money Has the Jito System Made?
Clearly, the profit margin from transactions being squeezed, along with the introduction of the tips mechanism, ultimately benefits validators, leading to its skyrocketing market share. Who would refuse an additional 30% in earnings?
In the past year, a total of 4.3 billion bundles have been initiated, generating a total tips fee of 5.51 million SOL, which, at a market price of 140, corresponds to an additional revenue of 7.7 billion USD from Jito's infrastructure.
[Image Source: https://explorer.jito.wtf/]
However, not all of this revenue goes to Jito as the system provider; as mentioned earlier, Jito and validators share a platform profit of 3-5%, so Jito's actual earnings over the past year are about 200,000 to 270,000 SOL, approximately 35 million USD in revenue.
This is roughly equivalent to two days' revenue from Honor of Kings, which may not seem high? Not necessarily, because this is indeed a solid platform revenue, especially when most industries in the web3 space cannot specify concrete earnings.
It has achieved oligopolistic dominance, with exclusivity over other competitors (after all, validators can only run one client), and its revenue is derived from the recent meme fatigue. If Solana explores more trading scenarios in the long term,
Even in the absence of market competitors, the platform could adjust profit sharing from 3-5% to 30% (which is a common platform fee rate after monopolizing the market in internet applications).
Thus, a very high PE estimate can be given; based on a 30 PE for web2 industry leaders, the valuation could reach 1 billion, while a common web3 estimate based on expected monopoly and potential industry growth could reach 10 billion. Similar valuation methods can be referenced in “Super Intermediary or Business Genius? A Look at the Year After LayerZero's Transition from V1 to V2”
However, today we are not here to outline such macro conclusions, nor merely to understand it through a fanciful virtual valuation. Instead, we hope to delve into the details to understand its deeper principles and analyze the future development of the market.
1.4. What Demand Scenarios Can Jito Support?
This topic actually relates to the types of MEV attacks currently present.
The most common is the Frontrun type, such as:
Arbitrage, risk-free arbitrage, similar to Ethereum.
Sandwich Attack, a typical sandwich attack, with sandwich profits on SOL around 2 USD each.
JIT - Just in Time liquidity, providing instant liquidity operations.
Another major category is the Backrun type:
This refers to inserting arbitrage transactions after a target transaction (such as a large DEX transaction or liquidation event), profiting from the market fluctuations caused by the target transaction. Specific scenarios include:
DEX arbitrage: You can understand that any transaction will create a profit margin between different DEXs. Thus, following closely to eliminate the margin.
Liquidation follow: After a user's collateral is liquidated, a follow-up transaction purchases the asset at a discount and resells it.
Oracle delay: Executing reverse operations based on outdated prices before the oracle updates the price.
Aside from obvious attack scenarios, other acceleration scenarios are also suitable for Jito. Therefore, it cannot be said that Jito only serves MEV; rather, it serves all scenarios with acceleration and batch transaction bundling needs,
For example, during the lively opening activities on Solana, the market makers will actually use the bundling and acceleration mechanisms to open and deploy chips.
For instance, major exchanges can also avoid being attacked by bundling tips for users' large transactions. However, it should be noted that these cannot prevent validators from engaging in malicious activities (in reality, you cannot determine which validator is acting maliciously).
2. In-Depth Differences Between Solana and ETH Systems
Why is Jito so suitable for Solana?
Why is there no similar competitive landscape like ETH with multiple bulls?
We need to start from the system differences between the two; you may have heard about the POH consensus many times, but the transaction lifecycle of Solana is different from that of ETH, which has led to two completely different ecosystems.
2.1. The MEV Landscape of ETH
Two years ago, on the first anniversary of Ethereum's merge, I conducted a systematic analysis: “The MEV Landscape One Year After Ethereum's Merge”
In this analysis, it is clear that the lifecycle of Ethereum's system is very distinct:
[Image Source: https://mp.weixin.qq.com/s/IepFvVpIxLpkXV5qgF68Rw]
This is due to two very important points that emerged after the merge regarding MEV:
The block interval of Ethereum has become stable. It is no longer the previously random and discrete situation of 3-30 seconds. This has both advantages and disadvantages for MEV; although Searchers no longer need to rush to send slightly profitable transactions, they can continuously accumulate a better overall transaction sequence to submit to validators before block production, which also intensifies competition among Searchers.
Miner incentives have decreased. This encourages validators to be more willing to accept MEV transaction auctions, allowing MEV to reach a market share of 90% in just 2-3 months.
Thus, there are roles such as Searchers, Builders, Relayers, Proposers, and Validators.
The lifecycle of each block is as follows:
Builders create a block by receiving transactions from users, Searchers, or other (private or public) order flows.
Builders submit the block to a Relayer (which has multiple Builders).
The Relayer verifies the validity of the block and calculates the amount it should pay to the block producer.
The Relayer sends the transaction sequence package and revenue price (which is also the auction bid) to the current slot's block producer.
The block producer evaluates all the bids they receive and selects the sequence package that offers the highest profit.
The block producer sends the signed header back to the Relayer (completing this round of the auction).
After the block is published, rewards are distributed to Builders and Proposers through the transactions within the block and the block reward.
Therefore, I believe that the MEV on Ethereum is inevitably characterized by a high level of internal competition between Searchers and Builders.
The actual data supports this: The overall yield has significantly decreased by 62%.
In the year before the merge, the average profit calculated from MEV-Explore was 22 MU/M (from September 2021 to September 2022, before the merge, the figures included Arbitrage and liquidation modes).
In the year after the merge, the average profit calculated from Eigenphi was 8.3 MU/M (from December 2022 to the end of September 2023, the figures included Arbitrage and Sandwich modes).
Of course, you might think, isn't the MEV-boost on ETH growing faster? Indeed!
But rapid growth does not mean high profits. We have already analyzed what the profits are, and the rapid growth of Ethereum stems from the decrease in miner incentives, which encourages validators to be more willing to accept MEV transaction auctions, allowing it to reach a 90% market share in just 2-3 months.
【Image Source: https://mevboost.pics/】
Moreover, the most significant difference between ETH and Solana is that there are multiple Builders, and their different final profits influence the decisions of validators, thus creating competition among Builders.
Due to competition, the profits of Searchers are continuously compressed; because of competition, the only factor affecting Builders, aside from algorithms, is the volume of data.
Searchers that cannot compete will exit the market, while Builders that can access large amounts of data often have their own infrastructure and market reputation, forming a stable total order flow, rather than relying on the propagation of the Mempool between nodes.
This leads to the conclusion that the MEV market on ETH is actually more market-oriented compared to Solana's purely oligopolistic platform system, thus providing users with a bit of breathing room.
2.2. Solana's Block Mechanism
After understanding the ETH system, please clear your mind, as many aspects of Solana are different from Ethereum, even the traditional blocks are different.
It is precisely these mechanisms that are the root cause of rampant MEV in the Solana system.
We can quickly compare these four core characteristics using a table:
The key lies in the lack of a memory pool and the direct connection to the leader. The former leads to transaction delays, while the latter allows for validator misconduct.
2.2.1. Solana Actually Has No Memory Pool
The 200ms delay mentioned earlier regarding Jito and the synchronous transmission to the block engine can be considered a form of monetized memory pool. Objectively speaking, how would the absence of a memory pool mechanism (which is actually an optimization feature for Solana's speed and privacy protection) affect the transaction block production mechanism?
If you are an ordinary user initiating a transaction to a certain node, it is equivalent to broadcasting.
Under default configurations, this node will immediately look for the current leader and the next leader (a total of two validators) to submit your transaction.
As for the transaction order, this needs to distinguish between native Solana and Jito-Solana:
Native Solana: After the leader receives the transaction, it theoretically follows FIFO (First In, First Out); whoever arrives at my leader first will be included in the transaction sequence. Combined with the POH mechanism, it effectively divides a block into many small ticks for synchronization.
Jito-Solana: Normal transactions have a queue for calculating the current gas limit (called CU, computational resources in the SVM system), which has a lower weight than Bundle transactions. Therefore, ordinary transactions will be behind Bundle transactions. If it is the same transaction (i.e., someone is attacking you), then Jito-Solana will prioritize packaging the transactions that are attacking you. Here, it allocates 80% to Bundles and only a mere 20% to traditional ordinary transactions.
Thus, Solana has no memory pool; it merely reduces public transmission rather than completely eliminating (which is impossible) it.
This characteristic, in turn, makes Searchers on Solana exclusive to high-end players.
2.2.2. The Subsequent Block Leader Can Be Predicted
Validators are randomly sampled from 1,300 validators every epoch (approximately 2-3 days). This uses the VDF algorithm and has a staking-weighted effect.
For example, if the total staked SOL is 2 million and you stake 200,000 SOL, then you will have a 10% chance of being selected each time.
If selected, you will be responsible for producing blocks for the next four slots (the corresponding concept of blocks in Solana) for about 1.6 seconds.
This speed is very fast, so any effective node can calculate who the subsequent validator is and attempt to connect with them to submit user transactions. Due to network delays, it is also easy for transactions to miss the current leader and be sent to the next leader.
2.2.3. The Leader's Connection Strategy Also Has Staking Weighting
This is the SWQoS mechanism, where the current leader's p2p connection capacity is 2,500, of which 80% (2,000 connections) are reserved for SWQoS (i.e., nodes that have staked).
The remaining 20% (500 connections) are allocated for transaction messages from non-staking nodes.
It sounds confusing, but this is a new mechanism to prevent spam and enhance Sybil resistance, aimed at allowing the leader to prioritize processing transaction messages that are relayed through other staked validators.
2.3. Why Is It Easy to Be Attacked on Solana?
Many ordinary users, in order to prevent their transactions from being squeezed, wonder if they can also offer high Priority Fees (transaction priority fees) to ensure that miners package their transactions first, thus avoiding being squeezed.
The truth is, it has a slight effect, but not much; in extreme cases, it can even have the opposite effect.
[Image Source: https://explorer.jito.wtf/feestats]
From the above image, we can see that users offering Priority Fees have a similar proportional probability, while tips can fluctuate and compete. Moreover, tips are essentially a separate transaction, and from an external perspective, it is impossible to know which transactions are in the Bundle.
Therefore, no matter how high your priority fee is, it only ranks in the last 20% of the validator's queue for this slot. However, for Searchers who can discover your order from the start and launch squeeze attacks against you, having a high Priority Fees Bundle actually results in a higher average CU unit price, naturally leading to it being processed first in the validator's Bundle consumption queue, and broadcasted synchronously.
Similarly, other seemingly scattered mechanisms in Solana appear to benefit users by making it difficult for them to be squeezed. So why is MEV even more rampant on Solana? The key points include:
- The difficulty of proving misconduct by the leader.
Both leaders A and B can access all user transactions, so the cost and ambiguity of misconduct by leader B are significantly reduced.
You think, as the second leader, if I see a profitable transaction, I can quickly construct a sandwich attack and send it to the block engine for auction. Under the 80% Bundle priority mechanism, my attack will naturally take effect first, while the one being packaged is leader A.
So how do you determine that I, leader B, am the attacker?
Of course, you could say that since leader A ultimately packaged the attacking transaction, he is the attacker. However, in the default logic, 95% of validators would do the same thing, which reduces the chances of intervening with them.
Punishing A is indeed unreasonable, as there are other links in the process, which could also lead to information leakage, as follows.
- Transaction retries and long wait times
Even though each slot only lasts 400ms, have you ever experienced a transaction on Solana inexplicably staying for over 23 seconds?
You might hastily think that the node you connected to lacks performance, but that’s not the case.
Due to the SWQoS mechanism, if you connect to a regular node, it will calculate and find the leader to submit the transaction. However, during network congestion, it only has 500 connection slots available for regular nodes. If it fails to connect, it will retry all transactions for that node every 2 seconds.
The above parameters are the default underlying parameters for Solana nodes, and different nodes can have different settings (for example, changing the retry to 1 second).
So how can ordinary users measure the probability of encountering retries?
As of March 2025, Solana has approximately 1,300 validators and 4,000 RPC nodes.
When congestion occurs, there are 2,700 nodes competing for 500 connection slots within 1.6 seconds (4 slots). If this leader's space is not filled, it will keep looking for the next one.
So under this illusion, if your transaction stays in the node for a long time, how will they treat it? If your CU price is not high enough and the leader is already full, what should he do when he sees your transaction?
Yes, sell data. For high-traffic nodes, some Searchers may buy order flows for $10,000 a month.
- Meme narratives and staking income scale
First, regarding the meme market phase, since the mainstream narrative on Solana is the Meme ecosystem, the pools on-chain are very shallow, causing users to set wider slippage for transactions to succeed, which amplifies the attack profits for Searchers (currently, several samples show profits reaching $2, which is quite high compared to ETH's nearly $0.1 profit).
[Image Source: https://www.jito.network/zh/stats/]
Secondly, the staking yield for Solana validators is around 8% annually, which has been a relatively stable figure for many years.
The annualized yield after MEV enhancement is about 1.5%.
Combining the two, it means that stakers running the Jito-Solana client can increase their staking yield by an additional 15-30%. In cases of local market surges, the yield from MEV can even exceed the staking yield itself.
2.4. Why Are Solana Validators Prone to Betrayal?
The profits are simply too high, and the costs are also very high, forcing validators to continuously expand their sources of income.
Validators incur an annual voting cost of about 300-350 SOL (estimated at $42,000 based on a market price of $140) and $4,200 in hardware costs (not including dynamic network costs).
Moreover, Solana's significant node configuration burden requires node performance to be at least 24 cores, 256GB of memory, and 2*1.9TB NVMe.
Among the commonly seen custom Latitude models in the market, currently, 14% of validators are using them, which costs about $350 per month.
As a result, only 458 out of 1,323 Solana validators are profitable. This is why the “SIMD-0228 Proposal” was voted down.
From the results, this proposal would further reduce block production incentives, inevitably forcing smaller validators to exit, leading to irreversible centralization of the platform. Moreover, when the yield from MEV increases while the essential work yield decreases, what do you think will happen?
Let’s take a look at the strategies of competitors outside of Jito.
3. Other Competitors in MEV on Solana
3.1. Paladin: VIP Front-Running and Transaction Protection
Current market share: 5%, launched at the end of 2023. As of March 2025, the official claim is that 205 validator nodes have deployed Paladin, staking 53M SOL. Using the Paladin client can increase node yields by about 12.5%.
In essence, it is a forked modified version based on the Jito-Solana client.
The core selling points are:
P3 Priority Port: Allows the block-producing leader to open this fast VIP channel, processing transactions according to the original FIFO rules.
Identifying and Excluding Sandwich Attacks: Although this initially seems disadvantageous for validator rewards, Paladin validators receive compensation through a trust-based mechanism. Validators that avoid "sandwich" attacks can attract direct transactions, thereby creating a trust ecosystem and increasing yields.
Paladin Bot: This is an open-source high-frequency arbitrage bot that runs directly on the validator node locally and only activates when that node is elected as Leader. When the Leader has the Paladin Bot, it will quickly execute simple and risk-free MEV strategies (such as DEX price arbitrage, centralized exchange and on-chain price arbitrage, etc.) and directly count the profits into validator earnings.
As of December 3, 2024, this bot has been officially announced to be removed.
3.2. bloXroute: Network Layer Optimization + Private Channel Protection
bloXroute Labs is an infrastructure company providing a blockchain data distribution network (BDN), previously accelerating transaction broadcasting and reducing latency on chains like Ethereum.
bloXroute does not directly participate in MEV distribution but helps front-running transactions reach the Leader faster by providing faster channels.
Unlike Jito/Paladin, bloXroute does not directly modify the Solana validator client or introduce transaction auction mechanisms; instead, it provides faster message channels for all nodes at the network layer.
The main idea is to relay Solana's block "shreds" more quickly to all validators through a globally distributed network of acceleration nodes, reducing the latency of data broadcasting when the Leader produces blocks and preventing forks caused by poor network conditions. The services provided include:
Solana BDN Acceleration: According to official documentation, bloXroute Solana BDN can reduce block shard propagation latency by 30-50 milliseconds.
MEV-Protect RPC service, similar to Ethereum's protective private transaction ports, indicating that bloXroute plans to allow users to privately send transactions to the Leader through its RPC, avoiding visibility from third parties to prevent front-running or back-running.
3.3. BlockRazor: Network Layer Optimization + Private Channel Protection
BlockRazor is a newly established MEV infrastructure project in 2024, with a team background primarily from Asia. It positions itself as an "intent-focused network service provider," planning to offer MEV Protect RPC, high-performance network acceleration, MEV Builder, and other services on mainstream blockchains.
Scutum MEV Protect RPC: This is a private transaction gateway service launched by BlockRazor, similar to Flashbots Protect. Users can submit transaction Bundles through Scutum RPC.
BlockRazor will ensure that these transactions are not published through the public mempool but are sent directly to the block producer to avoid being front-run or sandwiched.
4. Conclusion
4.1. How to View the MEV Competitive Landscape on Solana?
Just the day before yesterday, a new competitor entered the market.
Warlock Labs raised $8 million on March 27, 2025, aiming to reshape on-chain order flow.
However, it focuses on the Ethereum track, planning to provide some proof of order flow data and register it on-chain to ensure that they are accurate and responsible for processing user transactions.
This is my point of view: A truly good market will continuously see new competitors entering, while an oligopolistic market will lead to the blockage of challengers. What kind of market does the platform layer hope to become?
Let’s think deeper about what is truly important in this MEV infrastructure?
Paladin is built on Jito-Solana, which means that Jito can upgrade to a version that no longer supports the so-called P3 channel. This is similar to the 3Q war of the past, where the one with the more essential need (clearly social) wins. The same applies to WeChat banning sharing of NetEase Cloud Music in Moments; if there are no larger regulatory machines in place, this exclusive competitive strategy can be applied indefinitely in any track. Moreover, Paladin's current 5% market share is also due to its early use of built-in bots to enhance validator profits, although its open-source bot only revolves around non-aggressive strategies (i.e., doing arbitrage without engaging in obvious sandwich attacks that harm user interests), it has still been suppressed by market opinion.
Additionally, other competitors like bloXroute and BlockRazor are following the acceleration + privacy channel route. The so-called privacy can only limit the leader to the current one, thus avoiding the next one from committing misconduct and facing direct retaliation from both sides.
And the acceleration capability is indeed the solid technical strength of today. It is also the focus of the next wallet/Dex market battle.
Objectively speaking, the original client code of Solana has some historical debts, so there have been instances where people jumped out and modified the client to lower the configuration and speed up synchronization. Additionally, combined with the SWQoS mechanism, validators can also improve connection stability and success rates.
Additionally, the Jito block engine system is actually a multi-center system, but even in a multi-center (not completely decentralized) setup, single points of failure can still occur. Since it is a core upstream component, once it goes down, it is equivalent to Solana going down as well.
Therefore, to achieve multi-node disaster recovery and acceleration, it still needs to go through a system that has previously undergone rigorous stress testing. This is also why the bugs in the Binance wallet seem to be more frequent; many historical technical debts have yet to be resolved.
However, the issue of technical hard power will ultimately be resolved.
Any entity can perform global optimization with multiple nodes. In the end, wherever the leader is located, the shortest path will be established to ensure that their transactions reach the leader quickly. They can also establish multicast strategies to divert different user demands, and the future competitive results will inevitably be a result of refined operations.
But what cannot be resolved is the issue of market competition squeezing out others.
If Jito-Solana uses its oligopolistic advantage to modify the Bundle priority strategy from 80% to 90%, or even 95%, then ordinary users will only be able to infinitely raise Priority Fees to compete for the remaining 5% CU space.
However, when the overall CU utilization is insufficient, it will ultimately affect the total earnings of validators (and since a large number of transactions pile up in the unprocessed queue, the motivation for validators to act maliciously becomes stronger). Therefore, Jito will not initiate such a competitive model unless absolutely necessary.
So why is the market competition in ETH more open while Solana's competition is more exclusive?
The author believes the root cause is the lack of a Builder bidding role.
In ETH, multiple Builders can produce multiple final block sequences, and validators only verify and choose which one to accept.
However, in Solana, there are only multiple block engines (and they are all from the same entity). The transaction queue provided to validators is actually a single Bundle (5 transactions), which lacks the competitive aspect of multiple Builders.
Objectively speaking, from the development history of ETH, it can be seen that this competition significantly expands validator earnings while reducing Searcher earnings. When Searcher earnings decrease, the incidence of attacks will also reduce, ultimately achieving a balance.
In a future where both technology and market are balanced, what will true competitiveness be?
The author believes that when the technological gap is bridged along with talent competition and investment, and when the market's centralization and decentralization ultimately affect the overall SOL ecosystem, these issues will be resolved. Solana has now initiated discussions on multiple Builders and even further discussions on multiple leaders randomly producing blocks.
Although having multiple leaders also means more people will access your orders, since the final block producer is a random one from multiple simultaneous queues, it indirectly achieves competition among multiple Builders, and the market impact will follow a similar trajectory as before.
Thus, true competitiveness will shift to the data islands of order flow.
For example, Jupiter has already captured over 80% of the DEX market share, making its order flow the most sought-after. It will depend on how it balances providing the best price or randomly selecting "lucky geese" to extract profits, even at the cost of some brand reputation.
I think the reason they are not entering the MEV infrastructure space themselves is likely due to the evolving market stage; no one can claim to be as unshakeable as traditional giants. Therefore, focusing on profits could give competitors the opportunity to overtake.
Moreover, MEV is fundamentally a game theory problem. Once a monopoly position is reached, the support from validators that underpins the monopoly will push the infrastructure to provide profits.
Any dragon-slaying warrior seems to have an unstoppable potential to become an evil dragon, embodying both the dragon and the warrior.
Of course, you might say, Jito was initially built as an MEV infrastructure; how could it be a dragon-slaying warrior?
4.2. The Merits and Demerits of Jito for Solana
Much of what has been discussed earlier focuses on Jito's shortcomings, but does Jito have merits?
Objectively speaking, Jito does have merits.
When I started looking at Solana three years ago, I scoffed at it (okay, I admit I was too loud back then), but the root of this analysis was its high downtime rate.
So why is there such a high downtime rate?
On one hand, there were too many pitfalls in the early code, and later it was discovered that money could solve most problems (machine configurations were continuously upgraded).
On the other hand, there is the FIFO strategy. When a highly profitable transaction appears on-chain, even if it is just a backrun attack, the closer someone is behind, the higher the transaction's profit.
Clearly, every Searcher would establish a set of facilities to send transactions to the leader as quickly as possible, so early leaders were often subjected to flood attacks.
With the emergence of the block engine, Jito further created a bidding process. When you see a profit, you can bid first, which diverts the traffic.
This auction also has a function to intercept failed transactions. If your transaction conflicts with someone else's and their price is higher, since both Searchers are sandwiching the same person's transaction, there will inevitably be a storage conflict. If you cannot outbid, the block engine will directly reject you, and you will have to raise your bid and continue the auction (it may also randomly reject you, leading you to mistakenly believe you must further bid, ah, big data killing familiarity is so friendly).
Of course, you might ask, why do we still see many failed transactions on Solana?
That’s because the block engine is multi-centered, and the rapid block speed of 400ms makes it impossible to achieve fast data synchronization, thus excluding auction error situations that arise between different block engines.
Therefore, I believe Jito also has merits, as it has significantly reduced Solana's downtime rate.
Besides downtime, its bundled transactions have also created various application scenarios in the market.
For a market to thrive, it actually needs to serve market makers well. The most explosive market on Solana is the Meme market, which relies on the opening groups that need to "subtly" start collecting low-priced chips at the time of launch. This is a highly targeted scenario; if the operator of the market cannot collect enough profitable low-priced chips, they may directly abandon the pump and restart.
It is actually a mutually detrimental situation, as they would waste a good opportunity to launch.
Moreover, there are other scenarios that require accelerated transactions, such as various DEXs. Nowadays, they also trust that Jito-Solana will not blatantly sell data as before, so for high-value transactions, users will give an extra tip fee to take the fast route through the block engine, directly occupying 80% of the CU processing queue, thus improving transaction speed and avoiding being sandwiched.
Enhancing the earnings of Solana stakers and increasing the overall degree of decentralization
The data has already been analyzed; Solana's staking yield is around 8% annually, and through Jito's MEV tip earnings, it can reach about 10%, which is a good margin.
Among Solana's 1,323 validators, only 458 are profitable. The others are not entirely unprofitable (otherwise, who would still be doing it?). In fact, the others are either directly acting maliciously, indirectly acting maliciously, or not motivated by profit (for example, just for SWQoS acceleration). Essentially, the aforementioned statistics are based on staking earnings and do not fully incorporate MEV earnings.
Thus, it is because of Jito's existence that the remaining 800 validators can be profitable, allowing Solana to be less centralized.
So, overall, Jito-Solana does have merits; at least it has not fully adopted exclusive competitive strategies yet, allowing for third-party entry opportunities.
4.3. How Will the Future MEV Landscape Develop?
I have already mentioned several key points earlier. I believe that what seems like a dominant player with many strong competitors is actually a moment of hidden opportunity.
First, because MEV profits on Solana are generally high (around $2, compared to ETH's $0.1), the meme trend will continue to accompany different narrative scenarios, leading to eternal trading. Therefore, new Searchers will enter, although the high order flow acquisition costs on Solana have blocked some small players, competition among large players will also increase with profits.
Second, there are many opposing voices on Solana that are countering MEV infrastructure. This has forced Jito to announce the closure of data selling channels and has compelled Paladin to remove the built-in bot functionality. In proposals like SIMD-228, there is also the already passed SIMD-96 proposal.
Originally, half of the rewards earned by validators, which consisted of the sum of base fees and priority fees, would be burned. Now, only half of the base fee will be burned. This indirectly increases the earnings of validators packaging normal user transactions, thereby enhancing their motivation to counter Jito's reduction of ordinary transaction weights. New proposals are continuously participating in the macro decision-making game of Solana.
Third, the overall profit margin of MEV is substantial. For example, last year, Jito Labs' revenue in October was $78.92 million, double the record of $39.45 million set in May, surpassing established DeFi protocols like Lido and Uniswap. Even if Jito itself has to share profits with validators, the overall profit margin represents the lower limit of user loss.
The greater the loss, the greater the motivation. Users' expectations for reliable services can also be quantified. This presents opportunities for BlockRazor and bloXroute.
Moreover, what excites me are some more cutting-edge explorations:
Starting from private transactions: There are threshold encryption, delayed encryption, and SGX encryption, which fundamentally require conditions for decrypting transaction information, whether through time locks, multi-signatures, or trusted hardware models.
Starting from fair transactions: There are fair sorting (FSS) and order flow auction MEV Auction, as well as MEV-Share, Mev-Blocker, etc. The difference lies in moving from completely profitless to sharing profits to weighing profits, allowing users to decide what cost to incur for relative fairness in transactions.
Protocol-level improvements to PBS. Currently, PBS is actually a proposal from the Ethereum Foundation, but its implementation through MEV-boost has achieved separation. In the future, this core mechanism will transition to Ethereum's own protocol mechanism.
Most of these have already been proposed within Ethereum itself, but the compatibility differences have prevented them from surfacing in users' views. However, these are also areas from which Solana can learn.
5. Final Thoughts
The ultimate outcome of competition is often not surpassed by efforts within the same track. What will eliminate Jito will not be the next Jito (which has both merits and demerits), but a completely new application form.
In my previous research “[UniswapX Protocol Interpretation]”, I summarized the operational process and profit sources of UniswapX, aiming to fully depict the specific yield of MEV, as this is the source it combats and shares profits with users (essentially sacrificing the real-time nature of transactions for better exchange rates).
Similarly, order book exchanges (and even decentralized exchanges) are also effective tools against MEV. One can imagine that as computational power further increases and daily transactions widen, the AMM mechanism and the corresponding scenarios for MEV attacks will dissipate. However, the order book faces other challenges that are no less significant than the MEV issue.
From the recent turmoil of Hyperliquid, it can be seen that aside from the concerns of centralization, as the entire Web3 moves towards regulatory compliance, the players at the table have donned suits and stepped into the international hall.
At this point, compliance is an all-encompassing sword, as it stands on the side of the users.
This article, sprawling over ten thousand words, relies on the intersection of logic and data from the following articles. Thanks to those who have contributed research for the development of the industry!
Reference Documents:
https://dune.com/queries/3272756/5525700
https://www.helius.dev/blog/solana-mev-an-introduction
https://www.helius.dev/blog/solana-mev-report
https://solana.com/docs/core/pda
https://cogentcrypto.io/ValidatorProfitCalculator
https://jito-foundation.gitbook.io/mev/mev-payment-and-distribution/tip-distribution-program#mev-airdrops-in-depth
https://solanabeach.io/validators
https://medium.com/taipei-ethereum-meetup/after-the-merge-mev-309e836698cf
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