Security Block: Neodyme - Who Controls Solana's Funds?

Here's a question that might surprise you: Which protocol controls the most funds on Solana? If you guessed Jupiter, Kamino, or Drift, you'd be wrong. According to new research from leading Solana security firm Neodyme, it's actually Squads—a revelation that most DeFi aggregators completely miss.

Summary

At Breakpoint 2025, Sebastian Fritsch, co-founder of Neodyme, presented groundbreaking research into how funds are distributed and controlled across Solana's smart contract ecosystem. The investigation began with a simple premise: if security researchers can ensure the top protocols by Total Value Locked (TVL) are secure, then most funds on the network are protected. This led to a remarkable discovery—80% of all funds on Solana are locked in just the top seven programs.

The research required solving a fundamental technical challenge: how to determine which smart contracts actually control which funds on Solana. Unlike viewing a simple wallet balance, understanding Program Derived Addresses (PDAs)—the mechanism that allows smart contracts to control funds—requires examining data that isn't readily available in the ledger. PDAs exist only at runtime, meaning you can identify an address as a PDA but cannot easily determine which program can sign for it or how it was derived.

To solve this problem, Neodyme built a comprehensive public database tracking all PDAs and their derivations in real-time. This database, now freely available to the public, contains over 104 million unique PDAs and provides unprecedented visibility into how funds flow through Solana's smart contract ecosystem. The implications for security researchers, developers, and the broader community are significant—anyone can now trace exactly how programs control funds, even without access to source code.

Key Points:

Understanding Program Derived Addresses on Solana

Solana uses a unique mechanism called Program Derived Addresses to allow smart contracts to control funds. In traditional cryptocurrency wallets, a private key signs transactions. However, smart contracts cannot hold private keys—uploading them to the blockchain would defeat their purpose entirely. Instead, Solana derives special addresses from a combination of "seeds" (arbitrary data) and the program ID.

The technical process involves hashing the seeds, program ID, and a special marker string ("program derived address"). For an address to qualify as a valid PDA, the resulting hash must not lie on the Ed25519 elliptic curve—this ensures no private key could possibly exist for that address. While there could theoretically still be a private key if the address lands on the curve, the system rejects these cases as an additional security measure.

Building the PDA Database

The real innovation from Neodyme was creating a method to capture PDA derivations as they happen. Since this information only exists at runtime and isn't stored anywhere in the ledger, the team patched the Solana validator runtime to intercept calls to the system functions that calculate PDAs—specifically create_program_address and try_find_program_address.

Fortunately, Neodyme already had relevant infrastructure in place from RiverGuard, a tool they built two years ago that scans every live transaction on Solana and checks for potential security vulnerabilities. By modifying this system to capture PDA seeds and push them to a database, they created a living record of all PDAs and their derivations. The database continues to grow as new PDAs are created on the network.

Surprising Findings About Fund Distribution

The research revealed that Squads—a multisig wallet solution—controls more funds than any other smart contract on Solana. This finding is particularly notable because most DeFi aggregators don't track Squads when calculating TVL rankings, since it doesn't generate revenue in the traditional sense. Following Squads, the next largest fund controllers are Lulo, Jupiter Perps, and Squads V3.

The database also provides granular visibility into how funds are stored within each program. Users can see which token accounts hold value, what seeds derive each PDA, and understand program architecture even without access to source code. For instance, examining Squads' PDAs reveals patterns indicating multisig structures—the seeds clearly show multisig IDs and vault designations.

Token Supply Distribution Between Contracts and Wallets

The research also examined how different token supplies are distributed between smart contracts and regular wallets. Approximately 40% of all USDC supply on Solana is locked in smart contracts. For Pump tokens, roughly 50% of supply sits in contracts. Most dramatically, nearly 73% of all wrapped SOL is held in smart contracts rather than personal wallets—reflecting its heavy use in DeFi applications.

These metrics provide important context for understanding Solana's ecosystem maturity and the degree to which funds are actively being utilized in smart contract applications versus being held passively in wallets.

Facts + Figures

• 80% of all funds on Solana are locked in just the top seven programs, following a Pareto distribution
• Squads controls more funds than any other smart contract on Solana, despite being overlooked by most DeFi aggregators
• The Neodyme PDA database contains approximately 104 million unique Program Derived Addresses
• There are roughly 25 million different PDA-owned token accounts on Solana
• The Jito tip distribution program has the most PDAs of any program, with 27 million
• Approximately 40% of USDC supply on Solana is locked in smart contracts
• About 50% of all Pump tokens are held in smart contracts
• Nearly 73% of wrapped SOL is controlled by smart contracts rather than wallets
• The PDA database is publicly available and free to use via QR code shared during the presentation
• Neodyme identified a historical bug where hash domain collisions between seeded addresses and PDAs caused fund losses

Top quotes

• "Follow the money. Today, we are going to follow the seats to find the money."

• "80% of the funds in Solana are locked up in the top seven programs."

• "Most DeFi aggregators don't care about Squads at all because it doesn't earn money or not that much, but it has the most funds locked in all Solana smart contracts."

• "If you look at the Solana Explorer, you will see a pub key. You will also know that it's a PDA because this pub key doesn't lie on the Edwards curve, but you won't know which program can sign for this pub key."

• "This is super useful. For example, we can already see by the seeds that this program apparently is a multi-sig."

• "Nearly 73 percent of all wrapped SOL tokens are held in smart contracts and not in any wallets."

• "The goal was quite simple. We want smart contracts to sign for an address."

Questions Answered

Which protocol controls the most funds on Solana?

Squads controls more funds than any other smart contract on Solana, making it the leader in actual TVL. This is surprising because most DeFi aggregators don't include Squads in their rankings since it's a multisig wallet solution that doesn't generate traditional protocol revenue. Following Squads, the next highest protocols by locked funds are Lulo, Jupiter Perps, and Squads V3. This revelation challenges conventional wisdom about which protocols are most important from a security perspective.

What is a Program Derived Address (PDA) and how does it work?

A Program Derived Address is a special type of address on Solana that allows smart contracts to control funds without needing a private key. PDAs are derived by hashing together arbitrary "seeds" (bytes of data), the program ID, and a special marker string. The resulting hash is only valid as a PDA if it doesn't fall on the Ed25519 elliptic curve—this mathematical property ensures no private key could exist for that address. Programs can then "sign" for these addresses during execution, enabling them to transfer tokens and interact with other contracts.

Why isn't PDA derivation information readily available on Solana?

PDA derivation information only exists at runtime—it's not stored anywhere in the blockchain ledger. When you view an address on a Solana explorer, you can tell it's a PDA if the public key doesn't lie on the Edwards curve, but you cannot determine which program can sign for it or what seeds were used to derive it. This information is calculated dynamically when programs execute, making it impossible to query from blockchain data alone. Neodyme solved this by patching the validator runtime to capture these derivations as they happen.

How can developers and researchers access the new PDA database?

Neodyme has made their PDA database publicly available and free to use. By visiting the tool, users can input any PDA and see its derivation information, including which seeds were used and which program controls it. The database also provides a ranking of programs by controlled funds, with drill-down views showing which token accounts hold value and their specific derivation paths. This makes it possible to understand program architecture even without access to source code.

What percentage of major token supplies are locked in smart contracts?

The distribution varies significantly by token. Approximately 40% of USDC supply on Solana is locked in smart contracts, indicating substantial DeFi activity with this stablecoin. Pump tokens show about 50% locked in contracts, likely reflecting bonding curve mechanics. Wrapped SOL has the highest concentration at nearly 73% held in smart contracts—this makes sense given its essential role in DeFi protocols requiring native SOL interaction. These figures demonstrate how deeply integrated smart contracts are in Solana's token economy.