# Solana MEV Report: Trends, Insights, and Challenges Lostin Researcher 33 min read Jan 15, 2025 ## Table of Contents - [Actionable Insights](/content/blog/solana-mev-report#actionable-insights/index.html) - [Introduction](/content/blog/solana-mev-report#introduction/index.html) - [Solana MEV Timeline](/content/blog/solana-mev-report#solana-mev-timeline/index.html) - [Forms of MEV](/content/blog/solana-mev-report#forms-of-mev/index.html) - [Solana MEV Data](/content/blog/solana-mev-report#solana-mev-data/index.html) - [Case Study: Vpe Sandwich Program](/content/blog/solana-mev-report#case-study-vpe-sandwich-program/index.html) - [MEV Mitigation Mechanisms](/content/blog/solana-mev-report#mev-mitigation-mechanisms/index.html) - [Conclusion](/content/blog/solana-mev-report#conclusion/index.html) 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.