Crypto

Solana Penalizes 30+ Validators, Targets 1.5M SOL in Private Mempool Crackdown

Solana expels 32 validators holding 1.5M SOL for facilitating sandwich attacks through private mempools.

By Jack Wilson

6/10, 13:05 EDT
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Key Takeaway

  • Over 30 Solana validators were removed from the Solana Foundation Delegation Program for facilitating sandwich attacks, losing payout boosters.
  • Jito Labs' shutdown of its mempool function in March pushed sandwich attacks underground, with private mempools still exploiting traders.
  • The Solana Foundation continues to enforce penalties on validators involved in these activities, targeting 32 operators with 1.5 million SOL staked.

Solana Validators Penalized

A significant development has emerged in the Solana (SOL) ecosystem as over 30 validator operators have been expelled from the Solana Foundation Delegation Program. This action, which took place over the weekend, is a response to allegations that these validators facilitated economic attacks against crypto traders. Although these operators remain validators on the network, they are no longer eligible for payout boosters that were previously awarded for validating transactions on the Solana blockchain. Notably, many of these operators are reportedly based in Russia.

The Shadow War and Sandwich Attacks

The expulsion of these validators is the latest escalation in a prolonged conflict within the Solana validator ecosystem. This conflict pits established validators against an underground economy of operators accused of exploiting traders through "sandwich attacks." These attacks involve bots that frontrun and backfill trades before they are executed, a strategy known as maximal extractable value (MEV). While Solana does not have a native mempool, the popular validator software developed by Jito Labs once included this feature, making such attacks possible.

In March, Jito Labs disabled the mempool function amid a surge in meme coin trading on Solana. The decision was made to protect traders from frequent and costly sandwich attacks, even though it eliminated a potential revenue stream for validators. Jito Labs' CEO described the move as being in the best interest of the Solana ecosystem. However, this did not completely eradicate the problem; instead, it drove the activity underground. Reports soon surfaced of private mempools where operators were making substantial profits by enabling sandwich attacks.

Private Mempools and Economic Penalties

One notable proposal from infrastructure operator DeezNode offered validators who joined its private mempool 50% of the profits generated by MEV. According to documents reviewed by CoinDesk, this arrangement allowed validators to continue profiting from sandwich attacks despite the public shutdown of mempools by Jito Labs. Jito Labs estimated that as of late Sunday, 10% of its validator network was operating private mempools. In response, the Jito Foundation has proposed additional economic penalties for these validators, including further restrictions on staked SOL.

The Solana Foundation's delegation blacklist currently targets 32 operators, who collectively hold 1.5 million SOL, representing about 0.5% of the program's stake. "Enforcement actions are ongoing as we detect operators participating in mempools which allow sandwich attacks," a representative for the Solana Foundation stated on Sunday.

Management Quotes

  • Jito Labs CEO:

    "The move [shutting off the mempool function] was in the best interest of the Solana ecosystem even if it cut off one potential revenue stream for validators."

  • Representative for the Solana Foundation:

    "Enforcement actions are ongoing as we detect operators participating in mempools which allow sandwich attacks."