MEV on Solana: Huge Profits in the Dark Forest

In the past year, the Memecoin craze has made Solana a gold rush for traders. Many people have attempted to profit from the volatile Meme coins using trading bots. However, the truly stable and lucrative business is not reflected in price fluctuations, but rather hidden in the underlying operational mechanisms of the blockchain. This is what is known as MEV(, or maximum extractable value).

Compared to publicly visible bot profits, the profits from MEV are often hidden in the block construction and transaction ordering process, controlled by the "behind-the-scenes forces" that dominate the on-chain infrastructure. MEV is not known to the public because of its high operational thresholds, extreme information asymmetry, and highly concentrated control.

When ordinary users use robots to try to front-run or prevent being squeezed, MEV capture agents are manipulating transaction ordering behind the scenes, accurately capturing arbitrage opportunities. While retail investors compete on speed and strategy, large institutions with staking advantages and node permissions have solidly positioned themselves at the top of the profit pyramid with structural advantages.

In the Solana ecosystem, MEV is not just a trading arbitrage opportunity, but also a power at the infrastructure level. It is controlled by a few, forming a capital game with high barriers to entry, strong monopolistic tendencies, and substantial profits. Let's uncover the insider story of this big business of MEV on Solana.

Analysis of MEV Concept

MEV, or Miner Extractable Value, refers to the ability of block producers to gain additional profits by including, excluding, or reordering transactions when packaging them. Due to the Memecoin craze and the active DeFi space, the scale of MEV is enormous.

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

• Liquidation: Liquidating near-default lending positions to earn rewards.
• Arbitrage: Utilizing price differences between different DEXs for arbitrage trading.
• Sandwich attack: Inserting buy and sell orders before and after the target transaction to profit.

From the perspective of operation methods, there are mainly front-running ( and back-running ).

• Front-running: Identify other users' trades and execute similar orders ahead to profit.
• Post-trading: Profit from temporary price imbalances caused by the trades of others.

The Scale of MEV on Solana

As the activity on the Solana network increases and the 2024 Memecoin craze approaches, MEV profits on Solana have surged dramatically. According to a report by Helius, 90.44 million successful arbitrage trades were identified in the past year, with an average profit of $1.58 per trade and a maximum single profit of $3.7 million. These arbitrages generated a profit of $142.8 million, of which 88.7% was denominated in SOL.

Characteristics of Solana MEV

The MEV on Solana is more severe and centralized than that on Ethereum, which stems from its underlying chain design:

• Solana pursues high performance, with a block time of only 400 milliseconds, but sacrifices some decentralization.
• Solana does not have a memory pool, and other nodes need to obtain data from the current block validator.
• This design gives block validators significant power, lacking checks and balances.

In contrast, the Ethereum MEV market is more competitive, with competition between searchers and block builders driving down overall returns.

Jito: Solana MEV Dominator

Jito is the absolute leader in the Solana MEV space. After launching the Jito-Solana client in August 2022, by the end of 2024, over 94% of Solana validators ( are using this client, weighted by stake ), establishing an absolute dominant position.

How does Jito work?

1. Jito Bundles service: Allows traders to prioritize the execution of trades by paying a fee.

2. Jito Staking Mechanism: Attract users to stake SOL to Jito nodes, sharing staking rewards and MEV profits.

The success of Jito is based on three key characteristics:

1. Information Advantage: Millisecond-level speed and on-chain information sensitivity determine MEV profits.
2. Monopoly Effect: The higher the client coverage, the more stable the service, forming a self-reinforcing cycle.
3. Capital barriers: The more you stake, the higher the block production probability, and the more MEV profits.

Solana MEV Revenue Flow

The MEV profits on Solana mainly flow to three parties:

1. Jito Protocol: Obtain transaction fee sharing as infrastructure.
2. High-staking nodes: Obtain more block rewards and MEV through a higher block generation probability.
3. Blockchain Space Sales Intermediary: Purchase on-chain transaction rights for high-staking nodes and profit from packaging user transactions.

Solana Client Competitive Landscape

Currently, Solana mainly has the following types of node clients:

1. Official Solana node: basic client, does not support MEV optimization.
2. Jito Node: Mainstream choice, supports Bundles service.
3. Paladin Node: Jito improved version, providing fairer trade ordering.
4. Firedancer Node: A high-performance client developed by Jump.

In the future, client competition may shift from "run Jito to earn more" to "run high-performance Jito to avoid being eliminated."

The Layout of Solana by Large Institutions

Taking Sol Strategies as an example, large institutions become Solana interest manipulators through the following steps:

1. Acquire validator nodes to expand market share and ecological dominance.
2. Promote governance proposals, such as inflation rate adjustments, to consolidate the advantages of large nodes.
3. Promote the listing of Solana ETFs and become an ETF staking provider.

In short, the MEV on Solana is a highly concentrated and profitable monopoly business. As the ecosystem develops, institutions are infiltrating Solana in various aspects such as technology, governance, and financial systems, and the struggle for blockchain governance sovereignty will become an important trend in the future.