How To Become a Validator on Solana
How much does it cost? How much do Validators make? Where do the earnings come from? How to get set up? And more…
Disclaimer: We run a Solana validator. If you find this article helpful and would like to support us by staking our validator you can find the details at the bottom of this page.
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.
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 rent is given out to leaders during their leader slot. All rent is collected at the beginning of an epoch and is paid out as the leaders are voting on and processing transactions. The income from this source is also a function of the leader slots the validator is scheduled for and are therefore dependent on the total delegated stake.
Transaction Fees: Solana is unique in that voting is done on chain and the votes themselves cost the same as any other transaction. Voting transaction fees end up being the primary cost of running a validator. Each epoch has 432,000 blocks which need to be voted on and each vote transaction costs 0.000005 SOL, which ends up being 2.16 sol per epoch. Given that epochs take between 2 to 2.5 days, it costs roughly 315 SOL a year or just under 1 SOL a day.
Server Costs: Server costs are the next most significant expense you are likely to face. Depending on the data center you are using, expect to spend ~500 USD a month on your primary server. Note: If you run the Jito Client and use latitude you can pay as low as $249 a month
Bandwidth Costs: Solana Validation is very bandwidth intensive and data centers that charge by the gigabyte of in and out traffic are likely to get expensive quickly. It is recommended that you consider bandwidth costs as well as server costs when choosing a datacenter provider. Some providers offer unmetered bandwidth but many cloud providers, such as AWS, have very high bandwidth charges that can easily surpass server costs by 10x.
Time Costs: Your time isn’t free. It’s important to consider the time needed to be an operator on the Solana Network. Not only the time it takes to set up the validator but the time it takes to maintain, monitor and keep your validator up to date. As people delegate their stake to your Validator, your responsibilities grow significantly. Providing a way for stakers to contact you can help maintain and grow stake but also has some time considerations.
With any business it’s important to run projections on how much you can make or lose depending on various scenarios. We have created a profit estimator for you to better understand where your break even point would be and what you can expect on the top end.
If you have gotten the chance to check out the profit estimator, you’ll understand that the most critical piece to running a profitable validator is attracting stake. Before committing to starting a validator you should have a rough idea of how you will go about attracting stake
Acquiring Stake Through Stake Pools
Stake Pools are protocols that facilitate liquid staking. If a staker stakes directly with a validator they are subjected to a cool down period which means their SOL will not be available until the end of the current epoch. To help get around this issue, stake pools will exchange SOL for a protocol token. The value of the protocol token is determined by the protocol itself. The value increases over time because of the gains they have made staking the exchanged SOL amongst a pool of validators.
Validators should read the overviews and read the docs of each of the stake pools to learn how to maximize their opportunities to get stake delegated to them from the various stake pools. The best stake pools for validators that are just starting out are those with an algorithmic and automated delegation strategy. e.g. Marinade and Socean for now. Your best approach to getting out of the losses stage of starting a validator is meeting and optimizing towards those stake pool requirements.
Marinade: SOL→ mSOL :
Marinade’s delegation strategy is entirely protocol driven. They utilize a score function which considers validator performance (anything below average receives 0 score), commission rate, a minimum of 100 self stake, no delinquencies, and data center concentration. Marinade stakes anywhere from 10k to 100k SOL with its validators. Getting on this stake list by performing well in your first 5 or so Epochs can allow you to break even quickly.
MNDE Validator Guages: One of the best ways to get initial stake while you are still proving out your validator is to use Marinade Finance’s MNDE directed stake. Marinade has enabled validators to buy MNDE and use it to contro 20% of marinade’s staked sol. This is done on chain through marinade’s governance page.
You can read a bit more about how the validator gauges work in Marinade’s docs and from there you can use this handy MNDE calculator we wrote to help determine how much it would cost to get a certain amount of stake to your validator along with the expected ROI.
Jito: SOL→ jitoSOL :
Jito’s delegation strategy can be found here. Ultimately you have to run the jito validator client and share a majority of your MEV with stakers, while running a high performing validator.
Blaze Stake: SOL→ bSOL :
Blaze Stake delegation strategy can be found here: Blaze sol delegates to a large number of performant validators with a focus on decentralization and performance.
Blaze Stake Validator Gauges: BLZE can be used to direct addtional stake to your validator via governance voting. This is very similiar to Marinade’s MNDE incentive program
Acquiring Stake through Solana Foundation Delegation Program:
The Solana Foundation has a delegation program that can help new validators get started. The base stake amount is 25k SOL that the Solana Foundation will stake with your validator. If you meet certain bonus criteria, that stake increases to roughly ~45k SOL. As there are more validators we can expect the bonus stake to spread out more (decline) over each epoch. You can see the changing amounts per epoch here.
Delegation Program Criteria
The latest information regarding the delegation program criteria can be found on the Solana criteria page.
Base Stake Criteria: Your commission rates must be 10% or under. You must have at least 100 SOL self stake. You must run a Testnet server that successfully participated in at least 5 of the last 10 Testnet epochs. More detailed requirements here.
Bonus Stake: To get the bonus stake you must not skip your leader position more than 30% + average skip rate in the last epoch. e.g. The average skip rate of epoch 260 was ~1% so your skipped leader position rate will have to be below 31%. If your validator is set up properly you will not have an issue qualifying for the bonus stake if you already qualified for the base stake.
Delegation Program Timelines
The largest roadblock when it comes to utilizing the delegation program is the backlog of validators that are currently onboarding through the program. You can expect to wait ~6 months to go through the whole process.
Note: You can and probably should start your Mainnet validator while waiting to get Solana Foundation delegation.
Mainnet: Once you’ve been staked/onboarded onto Testnet you are eligible to onboarded for what we are ultimately after, Mainnet stake. Unfortunately only 25 validators a week are onboarded onto Mainnet. The priority ordering for this step is determined by your vote credits over the last 64 epochs, roughly 4–5 months, on your Testnet validator. Vote credits are an accounting of the amount of votes you successfully casted on the leader produced blocks.
Attracting Stake Organically
Getting stake by the various pools and the delegation program can get you out of the red but to really thrive as a validator you must find a way to attract stake above and beyond the aforementioned programs. As part of your long term strategy you need to have a plan to attract stake organically. This can be done by being an active member of the Solana community and providing value in a way that convinces end users to delegate their staked SOL to you. What that specifically looks like is up to you.You will have to use your imagination and innovation to come up with ways to stand out amongst many other validators.
Running a High Performing Validator
Once you’ve understood the economics, have a plan on how you will attract stake, and feel ready to take on the rewarding journey to run a validator, you are ready for the next step which is to set up your first validator.
Because the expense of running a validator is considerable from a vote fee perspective it is advised to first set up a validator on the Devnet to get a feel for the process. The hardware requirements for Devnet are minimal and can be managed at home or on a reasonably powerful Cloud based server. Nordstar has written an excellent step by step guide on how to set up a Devnet validator.
Mainnet Hardware Requirements
Although the most significant cost to running a Solana Validator is the SOL for voting, the hardware requirements are nothing to sneeze at. Solana’s official documentation has clear guidelines. There are four critical considerations.
- 1 gbs of up and down network bandwidth and 100% uptime. This usually means being hosted in a dedicated data center unless you have access to an extremely fast and reliable network.
- 128 GB of RAM with observations showing 256 GB to be significantly safer during an activity spike.
- CPU with 12+cores where a single core can keep up on the PoH timer. e.g. you need at least 3 GHZ to keep up properly.
- Recommended: Two extremely fast NVMEs (~1 TB each) that are distinct from your boot drive. One for the swapfile on the ramdisk that holds the accounts data and another for the ledger data. Depending on how much RAM you have you may not need the 2nd NVME to hold the accounts data.
Getting bare metal servers with the appropriate specifications can be difficult to find but there are a few that can make sense for a validator just starting out. One solid option is going through the Solana Foundation Server Program. They have made long term deals with a few reputable data center providers and have a reasonable cost of $600 -$800 a month with commitments no greater than a month. Aside from the foundation program, there are other noteworthy options such as https://www.latitude.sh/r/97C9DE96 (this referral link will provide both Cogent & yourself with $200 in credits) and https://www.ovhcloud.com/en/bare-metal/advance/adv-4/ that one could explore.
Once you have your validator up and running it will be important to set up monitoring. You do not want your validator to go down or stop voting and, in turn, losing you and your stakers potential earnings. The simplest way to monitor your validator is to utilize the built-in Solana Watchtower application. It will alert you if the validator stops voting and becomes delinquent. You can also configure it to alert you when your identity account (the account that pays the vote transaction fees) goes below a certain threshold of SOL. This is more of a concern in the beginning while your rewards are less than your vote fees. i.e. Your commission + leader awarded network fees are less than the consensus vote transaction fees. If your balance goes to 0, your validator can no longer vote. There are a few different ways to receive alerts. You have text options through Twilio, Discord, Telegram and Slack. These must be set up via env variables. Running Solana Watchtower helps provide clear instructions on how to set up alerts.
As an example, we use the following command to monitor our validator from a completely separate server in a different data center with the incentive being that the monitor alerting abilities won’t be lost in the event of a data center wide malfunction.
solana-watchtower --validator-identity Cogent51kHgGLHr7zpkpRjGYFXM57LgjHjDdqXd4ypdA --minimum-validator-identity-balance 15 --unhealthy-threshold 2 --monitor-active-stake
The --validator-identity flag sets which validator we want to focus on.
The minimum-validator-identity-balance 15 flag sets the lower bound of sol before being alerted.
The --minimum-validator-identity-balance 15 flag sets the lower bound of SOL on the vote account before alerting
The --unhealthy-threshold 2 flag sets the amount of times a trigger would have to hit before we get notified
The --monitor-active-stake flag enables getting alerted when the entire network has less then 80% stake active. This could be an event where all validators might be needed to make an important change.
Official Solana Discord Channel: We and many others are often available to answer questions and provide information. #validator-support #mb-validators and #mb-hardware-tuning are all excellent sub channels
Official Validator Documentation: The official Validator documentation is an excellent resource and, with enough technical savvy, could be used as your only resource.
Official Solana Documentation: The official Solana Documentation is an excellent source to understand how Solana works at its core above and beyond just the relevant parts for validation.
Please consider staking with us if you found this article helpful. Search “Cogent” in your wallet or stake directly on our website https://cogentcrypto.io/.
Why stake with us?: At Cogent Crypto we strive to be a helpful and contributing part of the Solana community, deliver maximum value to our stakers and provide the opportunity to bring others along the ride of our success. We are a JITO enabled validator who are proud to offer our stakers healthy and competitive APY returns, consistently being in the top of the APY return leaderboards. Besides offering top rewards, Cogent Crypto also offers a unique NFT collection known as the Cogent Cogs, with priority going to stakers. You can learn more by joining our Discord or you can check out our website CogentCrypto.io for more information and additional instructions on how to stake.