Understanding Solana’s staking and validator economics in 2025

Key takeaways

• Validator uptime, voting performance and commission rates directly impact your staking rewards on Solana. Choose validators carefully using platforms like Solana Explorer and Solscan.io.
• Rewards depend on the inflation rate, validator performance and total staked SOL. Inflation is decreasing, so transaction fees and validator performance become more important over time.
• Validators earn through inflation rewards, block rewards (based on leader slot selection) and MEV (rearranging transactions for profit).
• Network improvements, competitive yields, decentralization, DeFi growth and navigating regulations are all crucial for Solana’s long-term success.

Before diving into the economics of validators on the Solana blockchain, it’s essential to understand how the network operates. 

So, what is Solana and how is it different from other blockchains? Let’s break it down step-by-step. 

Understanding validator economics on the Solana network

Let’s learn about Solana’s consensus mechanism to grasp how validator economics work on the network.

Solana’s consensus mechanism explained

Solana’s architecture is built on a dual-layer consensus model, including: 

• The proof-of-history (PoH) mechanism serves as a cryptographic clock, enabling precise transaction ordering.  
• proof-of-stake (PoS) provides decentralization and network security, empowering users to participate in network governance. 

This combination creates an optimal environment for decentralized finance (DeFi), non-fungible tokens (NFT) and memecoins. For instance, in 2024, hundreds of thousands of new meme tokens were launched on the Solana blockchain.

Did you know? Solana’s PoH is technically a synchronization mechanism. It creates a historical record that proves an event occurred at a specific moment in time, which helps speed up transaction ordering for the PoS consensus. It’s like a highly accurate timestamping system that boosts efficiency.

Key participants in Solana’s staking ecosystem

The staking ecosystem includes two primary groups of actors:

• Delegators: Everyday users or companies staking Solana (SOL) tokens to earn staking rewards.
• Validators: Network node operators responsible for securing the blockchain and validating transactions.

But how do delegators maximize their reward potential?

Validator performance metrics, including their uptime and voting performance, determine delegator rewards. As a result, delegators should choose the validators carefully to optimize their rewards.

A delegator staking with a high-performing validator will earn more than the one who chooses to stake with a validator with low uptime. This makes platforms that provide insights into validator performance metrics crucial tools for delegators seeking to optimize their earnings.  

Still, validator performance is just one piece of the puzzle. Solana staking rewards are influenced by many factors that evolve from epoch to epoch. Among these, Solana’s network inflation is one of the most important factors determining the size of your staking rewards.

Solana staking rewards and inflation

Solana staking rewards depend on multiple factors:

• Inflation rate: Solana’s inflation rate started at 8% and has decreased annually by 15%, targeting a long-term rate of 1.5%. By 2024, inflation had reached 4.839%. 
• Validator performance: Validators with better uptime and efficiency offer higher rewards.
• Staked SOL tokens: More tokens staked mean higher potential rewards.

For perspective, current Solana staking yields are about 8% per annum, making it an attractive option for many.

As such, transparent validators offering competitive fees are essential for delegators looking to maximize staking rewards, as inflation directly impacts yields.

One inflation-related proposal on Solana suggests tying inflation rates to the total amount of SOL staked. This approach links the growth of staked SOL tokens to inflation adjustments, as illustrated in the Proposed Inflation Schedule chart. 

For instance, as of 2024, Solana’s network included more than 1,000 validators, collectively staking about 65.6% of SOL (394,514,721 SOL). 

Tools such as Dune Analytics and Solana Compass provide insights into stake growth over time, helping delegators better understand network dynamics and staking trends.

Key revenue streams including inflation APY, block rewards and MEV

Validators earn rewards through three primary streams:

1. Inflation APY: A fixed percentage tied to the network’s inflation rate.
2. Block rewards: Validators earn fees for creating new blocks (every 400 milliseconds). For example, the leader slot rotates every 1.6 seconds, giving validators with more staked SOL a higher chance of earning these rewards.
3. Maximum extractable value (MEV): Validators earn additional income by strategically ordering transactions to maximize profits.

Let’s break down these revenue streams further:

Inflation APY

As mentioned above, Solana’s inflation rate, which progressively declines over time, affects its staking incentives. Inflation, transaction fees and block rewards all contribute to the payouts. 

Staking yields are significantly influenced by inflation, and as it declines, attention turns more to transaction costs and validator performance. Because their staking returns will be shaped by the interaction of inflation and network dynamics, staking participants must remain aware of these changes to maximize their rewards.

Block rewards

Every time a new block is created, which happens about every 400 milliseconds, one of the validators takes on the role of the originator of this block — the so-called leader slot. Validators with more stakes delegated to them have a higher chance of being nominated as a leader. 

Leader slots are assigned at the beginning of every epoch, and the leader rotates every four blocks. This means that the leader changes every 1.6 seconds. On average, staking 1,000 SOL secures a validator roughly one leader slot per epoch.

Of course, running a validator isn’t free. 

While validators incur operational costs, such as daily voting fees of about 0.9 SOL, leaders benefit from block rewards. These rewards are funded through transaction fees, where 50% of each fee is burned, and the other half is awarded to the leader proposing the block. Block rewards consist of a base fee of 0.000005 SOL per signature and priority fees that increase with higher transaction demand. 

To stay competitive, some validators set their commission to 0%, meaning they don’t charge delegators a fee. Instead, they rely on block rewards to make up the difference. At the time of writing, there are 41 Solana validators offering  0% commission to attract stakers. 

But how is a validator’s performance determined?

Validator performance is dependent on the demand for onchain transactions. When activity ramps up, so do priority fees, which means validators can earn even more.

But here’s the thing — Solana staking rewards aren’t just about block rewards. Validators and delegators have another way to boost their earnings: MEV. 

MEV and its impact on Solana

Maximum extractable value (MEV) refers to the extra value that validators get by manipulating the order, inclusion or exclusion of transactions. There are many different MEV strategies. One of the most popular is placing transactions ahead of others to profit from market opportunities. One of the key players in the Solana MEV market is Jito.

The Jito-Solana client is a specialized validator client designed for MEV optimization strategies. Validators running the Jito-Solana client share MEV earnings with their delegators, improving validator performance. As of May 2024, MEV accounted for 14% of the rewards received by Figment’s Solana validators.

However, with higher profits for both delegators and validators, MEV also opens up a door for fraudulent MEV strategies. One notable threat is sandwich attacks, when an attacker strategically positions their transactions around the victim’s trade to exploit the resulting price impact for their own gain. 

Think of MEV as a fast lane on a busy highway — validators prioritize profitable transactions to maximize their earnings. However, like fast lanes, MEV can also lead to unethical practices.

MEV and sandwich attacks 

Here’s how a sandwich attack works:

• Step 1: Attackers monitor the mempool (a public waiting area for transactions) for large trades on DEXs. Solana Protocol’s mempool provides real-time transaction visibility, allowing attackers to identify a victim’s trade before it is confirmed. 
• Step 2: The attacker then submits a buy transaction just before the victim’s trade, driving the token price with their purchase. 
• Step 3: After the victim’s trade is executed — at a higher price than intended due to the attacker’s interference—the attacker follows up with a sell transaction to pocket the profits. 

MEV allows validators to earn additional profit from their activity, increasing the network’s sustainability and attractiveness to new nodes. Still, being a relatively new concept, MEV’s effect on the Solana Protocol’s ecosystem still needs to be studied and assessed.

As you’ve seen, validator performance is important in ensuring stable rewards. So, how do you go about picking a high-performing validator?

Did you know? Sandwich attacks often target traders using automated market makers (AMMs) like Uniswap or PancakeSwap. These platforms rely on liquidity pools and algorithms to determine prices, which can be vulnerable to manipulation when large trades cause price slippage.

How to choose high-performing validators?

The potential rewards that validators earn directly depend on performance. Thus, delegators should:

• Regularly monitor indicators like uptime, commission rates and fees to ensure their staked SOL tokens are working efficiently.
• Use tools kike Solana Explorer and Solscan.io to assess validator performance. This transparency builds trust between delegators and validators and helps boost the network’s stability and security.

The future of Solana staking beyond 2025

Solana provides opportunities for earning yields for both validators and delegators. However, rewards don’t come without risks. 

Thus, participants must stay vigilant against:

• MEV-related exploitation and fluctuating commission rates can affect the rewards of both parties. To maximize returns and reduce risks, participants must always monitor changes in real time. 
• Commission rug pulls, geographic clustering and unmitigated MEV exploitation can erode trust. Conversely, fair commission practices, robust governance and open-source tooling can strengthen community confidence. 

By understanding the economics of staking and validator operations and risks, participants can maximize their rewards while contributing to the network’s security and growth.

That said, the future of Solana staking hinges on network performance, staking rewards, decentralization, DeFi growth and regulation. Continued improvements to scalability and stability are crucial, as is maintaining competitive staking yields. 

Increased validator diversity and robust security practices will enhance network resilience. Growing institutional adoption and a thriving DeFi ecosystem will likely drive demand for SOL staking. Navigating evolving global regulations will also be key. If Solana can successfully address these factors, its staking ecosystem should enjoy a promising future.

About the author

Alexander Ray, co-founder of JPool and Albus Protocol, has over 20 years of experience in technology. Formerly with Deutsche Bank Frankfurt and General Electric, he specializes in infrastructure, cloud, and blockchain innovation, focusing on transformative tech solutions.