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How Much Do Solana Validators Make?

Published on 2020-11-16

Curious about how Validators work on Solana?


How much do validators make?

With over a thousand Solana validators operating at present there is a huge range in earnings, with many of the validators running at a loss, while some of the largest could be making profits in the millions each year from delegators staking their solana.

Aside from hosting costs - which can run to the tens of thousands of dollars annually - Solana validators must pay to be eligible to vote. This means a fixed cost of roughly 3 SOL every epoch (2-3 days), which at the time of writing equals costs of ~$150 every single day.

In exchange, a validator earns revenue in two ways:

  • Charging a commission on the rewards generated by the stakes they hold
  • A smaller fee for the votes submitted as 'leader' - this is typically very small unless the validator also holds a lot of stake

Commissions can be set by the validator and for public validators they range between 0 and 10%. So as an example, the current Solana network rewards are around 8% of stake annually.

If a validator has 50,000 SOL in stake delegated to it across the network, then each year it would generate roughly 50000*.08= 4000 SOL in rewards for its stakeholders. Rewards are paid every epoch, and there are roughly 134 epochs in the year.

Depending on the commission the validator charges, it could earn

  • 4000 * .10 = 400 SOL annually at 10% commission
  • 4000 * .08 = 320 SOL annually at 8 % commission
  • 4000 * .05 = 200 SOL annually at 5% commission

Yet in the same period it would need to pay 134*3 = 402 SOL to the network to be eligible to vote.

This means any validator with less than 50,000 in stake from other parties is running at a loss, and likely hoping to grow their delegated stake before it becomes unsustainable. Presently there are 132 validators losing money on the network out of 1,002 total validators

Of course this calculation doesn't account for the staked amount the validator actually owns, as they will receive 100% of the rewards. So while 50,000 SOL is the breakeven point for a validator charging 10% commission, a validator needs to own 'just' 5000 SOL staked to its own network to break even. At current rates that is still around $750k worth of SOL, which few of us have sat around waiting to invest.

Instead, most validators will need to focus on marketing their validator, just like any other business startup. If they can hustle to attract stake to their validator then they can build a sustainable business, but they must be prepared to spend SOL in the short term until their stake grows to a sustainable level.

Want to support a smaller validator? We're bootstrapping our own validator to support the Solana network here - delegate stake to us to earn a great APY, help us become sustainable and secure + decentralize the Solana network

On the flip side, the validators at the top of the list are earning handsomely. The top validation network by size of stake is Chorus One, which currently has roughly 15 million SOL staked to its validator and charges a fee of 8%.

From that number we can estimate they make a profit of $18 million per year, although this is likely ignoring the costs of their hosting infrastructure, dev ops staff and other costs that come with scale, as well as over simplifying: SOL may be worth $180 today, but for most of the year the price of the coin - and the amount staked on the network - has been considerably lower.

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