Validator economics and system design choice has been a criticism from Solana, particularly due to high requirement overheads and lack of sustainable validator profitabibly. In this article, we will examine the cost/ revenue to run a validator. the breakdown of various fees and how that came to be throughout the system. This will be followed by solutions implemented to help improve profitability, as well as upcoming SIMDs and further research questions.

So, what’s the profit calculator for a Solana Validator? and what factors go into the equation?

Fortunately for us, we could start by taking a look at CogeenCrypto’s Profit Calculator:

https://cogentcrypto.io/ValidatorProfitCalculator

Solana Validators earning comes from 2 major inflow:

Inflation: The Solana protocol has an inflation rate begins at 8%/year, and will gradually decrease 15% per year until it reaches a nominal rate of 1.5%/year. This inflation reward is distributed to validators proportioned to their staked SOL across the network, at the beginning of each epoch.

You can think of inflation as more or less network kick-start fee, or as a defi degen, inflation from liquidity mining. The goal here is to setup a base of participation, and let others join the network,

Transaction-validation fee: The validators earn by participate in validating the network, and vote on the next block. The block consists of both votes and non-votes (user-generated) transactions. Every transaction on the networks carry a base fee (signature verification fee), and non-votes transaction can have a priority fee for inclusion in the validating queue.

For every block, the block rewards is burned 50%, while the rest goes to the leader of the block. If this ratio seems like a random pick number, it is because it is, as I have yet to find any writeups for the number being disscussed.

On the other hand, there are 2 major cost to running a validator on for Solana, hardware cost + data bandwith cost. and voting cost. Let’s break it down further:

Hardware cost: