🧐The Situation

Validator meta.

At the time of writing there are currently 1523 Solana Mainnet-Beta Validators.

There used to be more than 3000 validators, as you know validator count and geographic distribution matters a lot for the decentralization and security of the network, so what happened to over half of all the validators?

As a base, running a validator requires some technical skill but more importantly capital and time. While being a demanding service to provide it is also a very competitive environment. Stake is often concentrated with large corporation run validators (Coinbase, Galaxy etc). Start up costs are high and data-center / hardware costs are substantial. However the number one cost a validator incurs is the on-chain vote fee's they pay. Every vote costs 5000 lamports, every 400ms. This adds up to around 0.92 $SOL per day.

At current market value that is $140 per day to keep your validator online and voting. This excludes hardware and bandwidth costs.

Now of course the goal is to be able to pay those fee's with the income you make through block rewards and commission.

As discussed in Staking Rewards - Unpacked block rewards are only awarded to validators that complete leader slots. You only get leader slots if you have stake, the more stake you have the more leader slots you get. The amount of block rewards vary per slot depending on the transactions in your block but on average with 0% commission you would need about 80k $SOL staked with your validator to just cover this fee. However after that point, block rewards become a huge source of income for validators.

This is why we see validators set their commission to 0% to attract more stake. They know block rewards will be more income for them than a 3-5% commission would at a certain amount of stake. This hurts smaller validators that have less than 80k $SOL staked with their validator as they cannot afford the vote fee, unless they have some other form of income (jito tips, self stake, etc). It would make sense to have a small commission to help subsidize the vote fee while they attract stake, but they are compelled to have 0% commission to remain competitive and attract stake from stake pools and users a like.

This leads to a lot of validators shutting down or remaining at a small amount of stake with a commission as they cannot pay for their vote fee's let alone for good hardware and data center costs.

This severely impacts the network as validators that are barely profitable cannot afford good hardware or priority bandwidth connections.

Over time this often leads to centralization of stake with companies who's goal is to maximize profit over network integrity and user benefit.

There are validators that once they reach a certain amount of stake, increase their commission to de-incentivize staking with them for APY reasons alone. This is the right thing to do as they increase their profits from current stake through commission and allow new stake to choose other validators, keeping the network safe and decentralized. There are however some validators that maximize their block rewards which remember after a certain amount of stake are worth more than a 5% commission. This results in more centralization and forces smaller validators to shut down. Its a win-loose.

This is just one example of how validators can operate however we believe there is a better, ethical manner in which validators can support the ecosystem. There are many ways you can be ethical running a validator.

For example you can vote with your stake on SIMD proposals, which in simple terms are changes to the Solana network and how it functions.

Recently there was a controversial SIMD that took place and passed. This was SIMD-0096. You can read a great article explaining the vote outlining the arguments for and against.

Essentially SIMD-0096 removes the priority fee burn, which increases validator earnings even more but at the cost of reducing the natural disinflation rate of Solana by a small amount. The caveat here is that the extra $SOL in circulation goes only to validator teams and not Solana users unless they share those extra block rewards.

We are not here to argue this change was good or bad but we can safely say we would have voted no on SIMD-0096 simply because the remedy is not yet in place to counter-act the economic change and there was no clear data supporting the reasons for the change, again you can read more about it here.

Guardian takes all changes very seriously and will always uphold an evidence based ethical decision making process that serves to make Solana better for everyone!

How will Guardian change the validator meta?

Solana finds itself in an in-between stage of its staking meta where users have limited understanding of their contribution and by extension their current and potential rewards for securing the network.

In short we find stakers will make less and less rewards as time passes and validators will make more.

The two biggest factors at play are:

• 1: Inflationary rewards decreasing over time.

• 2: Block rewards increasing over time.

We believe through competition the current meta will change as more and more ethical competitors enter the space. We are seeing this in small doses already but it is the early stages and it could take several more years to reach optimal conditions for the maximum benefit for the Solana network and its users.

Currently the trend is making it harder for validators to compete as the price of $SOL increases.

This 0% meta is not going to go away, however we would like to start a new meta where we can compete with these validators and provide stakers the opportunity to participate in the rewards we believe they deserve.

Sure we will make less money than other validators but our stakers will make more and we will being doing what we think is right for Solana. This project was born from our founders love for this space and his search for the absolute best place to stake his $SOL, Guardian is the perfect forever home for your staked $SOL! Guardian Validator plans to give away 62% of all its block rewards in a manner that is admin free for stakers. Guardian will always adapt to changing ecosystem dynamics ensuring it remains steadfast in its goals.

If you would like to support us there is no better way than by helping us with our mainnet-beta launch by participating in our Guardian NFT mint. Your Guardians will be backed by our validator always and be our number one benefactor for all our current and future endeavors.