HomeNewsSolana's Secret: Is Alameda Subsidizing 90% of Validators, Threatening SOL's Future Price?

Solana’s Secret: Is Alameda Subsidizing 90% of Validators, Threatening SOL’s Future Price?

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  • Over 90% of Solana’s validators are alleged to receive hefty subsidies from the Solana Foundation and Alameda Research.
  • Solana’s co-founder, Anatoly Yakovenko, responds, emphasizing the significance of validators’ votes over their individual stakes in the network.

Solana’s Validator Subsidies: Transparency or Trouble?

Solana, recognized as a formidable competitor to Ethereum, operates on a unique hybrid consensus mechanism, merging proof-of-stake (PoS) with proof-of-history (PoH). In this framework, validators bear the critical responsibility of verifying transaction legitimacy and appending them to the blockchain, while simultaneously ensuring the security and decentralization of the network. To serve as a validator, nodes must stake SOL, Solana’s native cryptocurrency.

The volume of SOL staked dictates the validator’s voting power, often termed “voting keys”. Comparable to crypto miners, validators earn SOL rewards for authenticating blocks in each epoch.

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However, an analytical post by a user, arixon.eth, on October 4 set off alarm bells. The analysis unveiled a potentially staggering statistic: of the 1,997 Solana validators currently operating, an overwhelming 1,818 have received delegations from two primary entities – the Solana Foundation and Alameda Research. Cumulatively, these validators have been delegated an impressive 106 million SOL, with the Foundation contributing 73 million and Alameda Research adding another 33 million.

By examining these figures, arixon.eth deduces a potentially unsettling scenario. Without such robust incentivization, Solana‘s validator count might dwindle significantly. The report goes on to assert that the substantial validator count can be attributed to what is described as

“two centralized entities dispensing free funds to node operators.”

This subsidization strategy might be a double-edged sword. With a sizeable chunk of delegations emanating from two dominant entities, there’s potential for undue influence. The Solana Foundation could, in theory, leverage its position to sway node operators, especially if these operators are wary of having their stake retracted. To further compound this notion, the analyst highlighted the noticeable absence of delegations from regular SOL stakeholders.

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Co-Founder’s Rebuttal: Counting Votes, Not Stakes

In light of these revelations, Solana‘s co-founder, Anatoly Yakovenko, offered a counter-narrative. Yakovenko underscored that while there are around 2,000 validators, it’s their collective node and voting keys that fortify the network, not the magnitude of their individual stakes. The crux of his argument pivots on the essence of validator votes. As the network relies on unanimous validator approval for authenticating blocks, it’s their collective votes, rather than individual stakes, that underpin the network’s stability and security.

Further elucidating on this, Yakovenko highlighted that when a node unstakes SOL, potentially to claim rewards, their voting prowess diminishes. Consequently, the network would then lean on the broader validator community for sustained decentralization and safety, regardless of each validator’s stake. Reinforcing this perspective, a Solana node operator emphasized the pivotal role played by the distribution of active validators in such scenarios.

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Brian Johnson
Brian Johnson
A dedicated Bitcoin journalist passionate about uncovering the latest trends, developments, and innovations in the world of cryptocurrency, while delivering engaging and well-researched articles to inform and educate readers on the dynamic digital finance landscape.
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