The Future of Solana: Insights from Jito Co-Founder Zano Sherwani

In a recent episode of the Lightspeed podcast, Zano Sherwani, co-founder of Jito, shared his insights on the future of Solana and the broader blockchain ecosystem. The discussion covered a wide range of topics, from the origins of Jito to the intricacies of Maximal Extractable Value (MEV) and the potential impact of upcoming developments like Firedancer. This article delves into the key points discussed, offering a comprehensive look at the current state and future prospects of Solana and the innovative projects within its ecosystem.

The Jito Origin Story

Jito, a prominent player in the Solana ecosystem, emerged from a vision to capitalize on the potential of MEV in emerging blockchain networks. Zano Sherwani, with a background in crypto dating back to 2017, joined forces with Lucas (also known as Buffaloo) to create Jito. Their timing and foresight proved prescient, as MEV has become a significant talking point in the Solana community, with economic activity sometimes surpassing that of Ethereum.

Sherwani explained the rationale behind focusing on Solana: "Whatever chain we think that's going to be successful is probably going to have a market for MEV because I think MEV is generally a function of user activity and volumes." This insight led to the development of Jito, which now plays a crucial role in Solana's MEV landscape.

Understanding MEV on Solana

MEV, or Maximal Extractable Value, has become a hot topic in the Solana ecosystem. Sherwani provided a technical explanation of how MEV operates on Solana, particularly in the context of private mempools and sandwiching attacks.

The MEV Supply Chain

The process begins with a user initiating a transaction through a UI, signing it with their wallet, and sending it to an RPC (Remote Procedure Call). From there, the transaction's journey to inclusion in a block can be unpredictable. Sherwani noted, "If the RPC is malicious or maybe careless in how they broadcast the transaction to a leader, it could leak."

Private Mempools and Dark Pools

These leaked transactions can end up in private mempools or "dark pools," where they are exposed to a select group of searchers or traders. This creates opportunities for exploitation, as these entities can take advantage of the value leaked by the transactions.

Proposer Builder Separation (PBS)

Proposer Builder Separation is a concept that's gaining traction in the blockchain world, with Ethereum leading the way and Solana following suit. Sherwani explained the current state of Solana's architecture and how it's evolving towards PBS.

Current Solana Architecture

Currently, about 80% of the Solana network runs on the Jito Solana client. Jito operates an off-chain auction for block space access, where users compete to include their transactions in blocks. This system accounts for approximately 30-40% of each block's content.

The Future with PBS

PBS takes this concept further, with the entire block being built by a separate entity. Sherwani elaborated, "PBS is like that but on steroids where the entire block is actually built by this separate entity. As opposed to like sort of like the partial block building model that we have right now."

Benefits and Challenges of PBS

Drawing comparisons with Ethereum's implementation of PBS, Sherwani highlighted both the advantages and potential drawbacks of this system.

Advantages of PBS

1. Specialized block building: PBS allows for the separation of block building from block proposing and validation. This specialization can lead to more efficient and profitable block construction.

2. Optimization of complex tasks: Block building is an NP-hard problem that requires consideration of both on-chain and off-chain data. Specialized entities may be better equipped to handle this complexity.

Challenges with PBS

1. Centralization concerns: With PBS, there's a risk of centralization in block building. On Ethereum, for example, three builders currently win over 75% of the blocks.

2. Censorship risks: As block builders gain more control, the potential for transaction censorship increases.

3. Value distribution: PBS can shift value away from validators and towards those controlling private order flow, potentially altering the economic incentives of the network.

Firedancer: Solana's Next-Generation Client

Firedancer, the upcoming high-performance Solana client, is poised to significantly impact the network's capabilities. Sherwani expressed enthusiasm about Firedancer's potential, describing it as "probably going to be one of the most high-performance open-source pieces of code that's ever been published."

Impact on Network Performance

While Firedancer promises substantial improvements, Sherwani cautioned that users might not immediately feel the difference. He explained, "I don't think you'll feel anything until the 48 million CUs per block limit is increased." Currently, Solana blocks are consistently reaching their computational unit (CU) limit, indicating high demand.

Bottlenecks and Future Improvements

Sherwani noted that the real bottlenecks lie in downstream consensus mechanisms, such as SVM (Solana Virtual Machine) memory. Addressing these issues, along with improvements to the networking stack, could lead to significant performance enhancements.

Jito's Block Engine and Future Adaptations

As Solana evolves, so too must the systems built upon it. Sherwani discussed how Jito's block engine has been continuously improving to meet the demands of shorter block times and increased performance.

Current Auction Timings

Jito's block engine currently operates with auction times of 150-200 milliseconds. However, Sherwani emphasized that this is a configurable parameter that can be adjusted as needed.

Adapting to Shorter Block Times

With Solana potentially moving towards 120-millisecond block times, Jito is prepared to adapt. Sherwani stated, "If Solana can run at that speed, then there's no reason why the Jito block engine shouldn't be able to."

Centralization Concerns and Mitigation Strategies

The discussion touched on the potential centralization vectors introduced by systems like Jito's block engine. Sherwani addressed these concerns, explaining the current safeguards and future considerations.

Current Safeguards

Jito employs a separate relay component that validators are encouraged to run themselves. This relay adds a delay to transactions, providing time for the block engine to run bundle auctions while mitigating centralization risks.

Future Considerations

Sherwani acknowledged that in a full block-building scenario, censorship concerns become more pressing. He emphasized the importance of addressing these issues as the system evolves.

Restaking and Modular Consensus

The conversation shifted to the concept of restaking, which Sherwani prefers to call "modular consensus." This approach allows for the deployment of consensus rules for external networks or applications on top of existing blockchain infrastructure.

Benefits of Modular Consensus

Sherwani explained that this model could be applied to various use cases, such as Layer 2 solutions or oracle networks. It provides flexibility in implementing staking and slashing rules for different applications while leveraging the security of the underlying blockchain.

State Net: Enhancing Staking Protocol Resilience

Jito's State Net project addresses a critical issue in the staking ecosystem: the potential for staking protocols to become non-functional if their operating teams cease operations. Sherwani explained how State Net solves this problem:

1. Validator History Program: This component uses on-chain data to create a database of validator performance and metadata.

2. Steward Program: This program leverages the validator history data to score validators and automatically manage delegation and rebalancing of the stake pool.

3. Permissionless Operation: Anyone can trigger these functions, ensuring the stake pool can continue operating indefinitely without relying on a centralized team.

The Importance of Trust in Blockchain Infrastructure

Throughout the discussion, the theme of trust emerged as a crucial factor in the success of blockchain infrastructure projects. Sherwani highlighted how Jito has built trust with validators, enabling them to run Jito's code on a significant portion of the Solana network.

Building Trust with Validators

Sherwani emphasized the importance of establishing strong business relationships and trust with validators. This trust has been instrumental in getting 80% of the Solana network to run Jito's software.

Balancing Innovation and User Protection

When discussing controversial decisions, such as shutting down the mempool, Sherwani stressed the importance of protecting users while still innovating. He stated, "It's super important, especially in the early days, to not screw those same people over that you're trying to bring on to the chain."

The Future of MEV on Solana

Looking ahead, Sherwani shared his vision for the future of MEV on Solana. He anticipates a landscape with multiple sophisticated block builders competing to construct blocks, potentially through auction mechanisms for future block space.

Potential Challenges

While this model promises increased efficiency, Sherwani acknowledged the need to address potential censorship issues and ensure fair value distribution across the network.

Advice for Blockchain Founders and Developers

Drawing from his experience building Jito, Sherwani offered valuable advice for those looking to build in the blockchain space:

1. Lead by example: Be willing to work in the trenches alongside your team.

2. Act promptly: Address tasks and communications immediately rather than postponing them.

3. Prioritize culture in early hires: In the early stages of a company, cultural fit is as important as technical skills.

4. Balance technical excellence with business acumen: While building technically sound products is crucial, understanding how to distribute and market them is equally important.

The Importance of Distribution in Crypto Projects

Sherwani identified distribution as one of the most challenging aspects of building a successful crypto project. He highlighted the chicken-and-egg problem faced by MEV systems, where attracting both validators and traders is crucial for creating value.

Strategies for Success

1. Build trust with key stakeholders, such as validators in Jito's case.
2. Align with broader ecosystem goals, such as increasing staker rewards and growing the overall market for liquid staking tokens.
3. Focus on both increasing market share and expanding the total addressable market.

Solana's Evolving Ecosystem

The discussion painted a picture of Solana as a rapidly evolving ecosystem, with projects like Jito playing a crucial role in its development. Sherwani's insights revealed a blockchain landscape that is continuously adapting to new challenges and opportunities.

Flexibility and Experimentation

Sherwani advocated for a flexible approach to blockchain development, stating, "I like the idea of us and the network being flexible and trying things at work, and maybe some things don't work." This philosophy of experimentation and adaptation appears to be a driving force behind Solana's growth and innovation.

Conclusion: A Bright Future for Solana

As the conversation with Zano Sherwani demonstrated, Solana's future looks promising, with innovative projects like Jito pushing the boundaries of what's possible in blockchain technology. From advancements in MEV management to the potential impact of Firedancer and the exploration of concepts like restaking, Solana is positioning itself at the forefront of blockchain innovation.

The insights shared by Sherwani not only highlight the technical advancements being made but also underscore the importance of community trust, careful ecosystem management, and a willingness to adapt and experiment. As Solana continues to evolve, it will be exciting to see how these developments shape the future of blockchain technology and decentralized finance.

Facts + Figures

• Jito's Solana client is currently used by approximately 80% of the Solana network.
• Jito's block engine accounts for around 15-20 million CUs per block, or 30-40% of each block's content.
• Solana blocks are consistently reaching their 48 million CU limit, indicating high demand.
• Jito's block engine currently operates with auction times of 150-200 milliseconds.
• Solana is potentially moving towards 120-millisecond block times.
• Only about 7-10% of total staked assets in Solana are currently in liquid staking protocols.
• Three block builders on Ethereum currently win over 75% of the blocks.
• Jito's State Net project aims to make staking protocols resilient to team shutdowns.
• The Firedancer client is expected to significantly improve Solana's performance.
• MEV activity on Solana has at times surpassed that of Ethereum.
• Jito originated from a hackathon project focused on decentralized VPNs on Solana.
• The concept of Proposer Builder Separation (PBS) is gaining traction in both Ethereum and Solana ecosystems.
• Solana's current block time is approximately 400 milliseconds.
• Jito's approach to hiring involves a 3-4 month search process for each engineer.
• The Jito airdrop was credited with kickstarting a trend of airdrops in the Solana ecosystem.

Questions Answered

What is Jito and how did it originate?

Jito is a protocol built on Solana that focuses on Maximal Extractable Value (MEV). It was founded by Zano Sherwani and Lucas (Buffaloo) after they recognized the potential for MEV on emerging blockchain networks. The founders believed that successful chains would naturally develop a market for MEV, and they chose to focus on Solana due to its promising ecosystem and growing user activity.

How does MEV work on Solana?

MEV on Solana involves a complex process where transactions are potentially exposed to exploitation between the time they're signed by a user and included in a block. If an RPC (Remote Procedure Call) leaks transaction information, it can end up in private mempools or "dark pools." There, select traders or searchers can see and potentially exploit the value contained in these transactions before they're officially processed on the blockchain.

What is Proposer Builder Separation (PBS) and how might it impact Solana?

Proposer Builder Separation is an architectural concept where the task of building blocks is separated from proposing and validating them. In Solana's context, PBS would involve having specialized entities build entire blocks, as opposed to the current system where Jito's block engine partially builds blocks. This separation could lead to more efficient block construction and potentially higher profits, but it also raises concerns about centralization and censorship risks.

How will Firedancer affect Solana's performance?

Firedancer, Solana's upcoming high-performance client, is expected to significantly improve the network's capabilities. However, users might not immediately notice the difference until the current block limit of 48 million Compute Units (CUs) is increased. The real improvements are likely to come from addressing bottlenecks in consensus mechanisms and the networking stack, which could lead to substantial performance enhancements across the network.

What is State Net and how does it improve staking protocols?

State Net is a Jito project designed to make staking protocols more resilient. It uses on-chain data to create a validator performance database and includes a Steward Program that automatically manages stake delegation and rebalancing. This system allows stake pools to operate indefinitely without relying on a centralized team, addressing the risk of protocols becoming non-functional if their operating teams cease operations.

How is Jito adapting to potential changes in Solana's block times?

Jito's block engine is continuously evolving to meet the demands of Solana's improving performance. Currently, it operates with auction times of 150-200 milliseconds, but this is a configurable parameter. As Solana potentially moves towards 120-millisecond block times, Jito is prepared to adapt its systems to maintain efficiency and competitiveness in block building and MEV extraction.

What advice does Zano Sherwani offer for blockchain founders?

Zano Sherwani emphasizes the importance of leading by example, working alongside the team, and addressing tasks promptly. For early-stage startups, he stresses the significance of cultural fit in hiring, especially for the first few team members. Sherwani also highlights the need to balance technical excellence with strong distribution and marketing strategies, identifying this as one of the most challenging aspects of building successful crypto projects.

How does Jito address centralization concerns?

Jito employs a separate relay component that validators are encouraged to run themselves. This relay adds a delay to transactions, providing time for the block engine to run bundle auctions while mitigating centralization risks. Sherwani acknowledges that in a full block-building scenario, censorship concerns become more pressing, and emphasizes the importance of addressing these issues as the system evolves.

What is the future outlook for MEV on Solana?

The future of MEV on Solana is likely to involve multiple sophisticated block builders competing to construct blocks, potentially through auction mechanisms for future block space. While this model promises increased efficiency, there are challenges to address, including potential censorship issues and ensuring fair value distribution across the network.

How important is community trust in blockchain infrastructure projects?

Community trust is crucial for the success of blockchain infrastructure projects. Sherwani highlighted how Jito has built strong relationships and trust with validators, enabling them to run Jito's code on a significant portion of the Solana network. This trust has been instrumental in Jito's success and underscores the importance of maintaining a balance between innovation and user protection in the blockchain space.