Table of Contents Economics Attracting Stake Running a High Performing Validator Additional ResourcesEconomics
Running a validator should be looked at like running a business. Understanding the market economics related to your business is critical. Below we review the most important considerations when understanding the economics of operating a validator on Solana which are Revenue, Costs and Projections.Revenue
There are three sources of revenue for a validator.
Inflation: Solana has a predefined inflation schedule that started with 8% per epoch year with a 15% decrease per epoch year after (epoch years are 183 epochs). Right now the inflation rate is 7.2%. That means at the beginning of each epoch, a pool of tokens equating to 7.2% / 183 * total SOL volume is created by inflation. This pool of tokens is then distributed amongst the staked SOL across all validators. Validators with more vote credits (1 vote credit is earned from each successful vote on chain) earn more SOL per stake amount for themselves and their stakers. The validator can collect a percentage of the delegated stake’s inflation gains. This percentage is referred to as commission. The validator can change their commission rate at any time and it can range from 0% all the way to 100%. It is important to note that the commission charged for a given epoch is determined right at epoch start time. If a validator changes the commission mid epoch it wont take affect until the following epoch starts.
Transaction Fees: When the validator is the leader they collect 50% of the transaction fees generated by the network activity during that leader slot, the other 50% is burned. The more delegated stake you have the more often you are the leader. It is possible to break even with a 0% commission rate from transaction fees alone. You would need around 500k — 700k SOL delegated to break even without any commission.
Storage Rent Fees: Like transaction fees, storage ...