Solana MEV Report: Trends, Insights, and Challenges

Lostin

Researcher

33 min read

Jan 15, 2025

Many thanks to Lucas Bruder, Max Resnick, Eugene Chen, Mert Mumtaz, 0xIchigo, Uri Klarman and Nitesh Nath for reviewing earlier versions of this work.

Actionable Insights

MEV on Solana operates differently from other blockchain networks due to its distinctive architecture and the lack of a global mempool. Out-of-protocol mempools must be developed independently, requiring adoption by a significant portion of the network's stake to function effectively, which presents a high technical and social barrier.
Jito suspended its public mempool in March 2024, incurring a significant revenue loss. This move immediately reduced harmful MEV practices. However, the decision has encouraged the rise of alternative mempools that lack transparency and primarily benefit a select group with exclusive access.
Memecoin traders are especially susceptible to sandwich attacks, as they set high slippage tolerances when trading illiquid and highly volatile assets.
Marinade Finance’s Stake Auction Marketplace (SAM) employs a competitive auction mechanism in which validators bid directly against one another for stake allocation in a “pay-for-stake” system, facing criticism for enabling validators engaging in user-sandwiching to outbid others.
Much of Solana's sandwiching originates from a private mempool operated by a single entity, DeezNode.
Jito bundles are the primary method searchers use to ensure profitable transaction ordering. Over the past year, more than 3 billion Jito bundles were processed, generating 3.75 million SOL in total tips.

Introduction

Maximal Extractable Value (MEV) is the value that can be extracted by manipulating transaction sequencing. This includes adding, removing, or reordering transactions within a block. MEV manifests in various forms and hinges on transaction ordering. On Solana, MEV functions differently due to its architecture.

Solana MEV Timeline

September 2021 to April 2022 - Spam and DDoS Attacks

NFTs were the first sector to gain significant traction on Solana, causing congestion spikes due to spam transactions from bots.

Mid 2022 - The Introduction of Priority Fees

Solana implemented priority fees within the compute budget instruction to prioritize transactions, aiming to reduce congestion.

August 2022 - The Jito-Solana Client is Launched

Jito has become the default Solana MEV infrastructure designed to democratize MEV capture.

January 2024: The Onset of Memecoin Season

Network activity surged with the emergence of memecoins in early 2024, increasing MEV activity.

March 2024: Jito Suspends Their Flagship Mempool Feature

Jito suspended its mempool, facing both support and criticism, but risking the emergence of alternative mempools.

May 2024: A New Transaction Scheduler

A new scheduler improved Solana's ability to order transactions deterministically.

June 2024: Marinade Launches Stake Auction Marketplace (SAM)

Marinade's SAM has been criticized for enabling validator sandwiching to secure more stake.

December 2024: Increased Concerns Over New Private Mempools

Concerns about the centralization of network stake were raised by Temporal, a Solana-focused research firm.

Forms of MEV

Liquidations

Liquidations occur when borrowers fail to maintain required collateral, allowing searchers to execute them, contributing to defi stability.

Arbitrages

Arbitrage aligns prices across venues by exploiting discrepancies, with intra-chain arbitrage as dominant on Solana.

Front-running

Front-running occurs when a searcher identifies a pending transaction and places their order before the original to profit.

Back-running

Back-running exploits price imbalances created by another transaction, often resulting in profit opportunities.

Sandwich Attacks

Sandwich attacks are detrimental; they occur when a searcher places one transaction before and another after a target transaction to reap profits.

Solana MEV Data

Jito

Jito bundles processed over 3 billion bundles, with significant increases during 2024.

Reverted Transactions

Transaction spamming leads to many reverted transactions, peaking at 75.7% of all non-vote transactions.

Arbitrage Profitability

Jito identified 90,445,905 successful arbitrage transactions over the past year, generating significant profits.

Case Study: Vpe Sandwich Program

DeezNode operates a sandwich bot gaining notoriety for executing user sandwich attacks, averaging 51,600 daily transactions with a high success rate.

MEV Mitigation Mechanisms

Validator Whitelists

Whitelists could create a semi-permissioned environment, conflicting with the decentralized ethos of the blockchain.

Dynamic Slippage + MEV Protection

Real-time optimization of slippage settings aims to reduce MEV extraction risk.

RFQ systems

RFQ systems enable orders to be filled by professional market makers off-chain, mitigating slippage and MEV.

Sandwich Resistant AMMs

These designs prevent sandwich attacks by ensuring no swaps are executed at a price more favorable than the pool's price.

Conditional Liquidity & Orderflow Segmentation

This mechanism allows DEXs to adjust spreads based on order flow toxicity, enhancing trading conditions.

Paladin

Paladin-Solana introduces a modified validator client aiming to prioritize high-fee transactions and drop sandwich bundles.

Multiple Concurrent Leaders

MCL introduces competition among block producers without delays, allowing users to select the most favorable transaction leader.

Conclusion

Solana’s MEV landscape is rapidly evolving, with searchers developing sophisticated strategies as the ecosystem adopts mechanisms to mitigate harmful MEV. Addressing MEV is integral to the network's long-term success.