Solana Blockchain Faces Revenue Redistribution Proposal

According to Blockworks, Solana may experience a significant shift in revenue distribution due to a new proposal from Jito’s DAO. The proposal suggests allocating 3% of all maximal extractible value (MEV) tips collected by the protocol to the DAO treasury and TipRouter, an in-house program developed for Jito’s upcoming restaking platform. Additionally, Jito Labs plans to reduce its own tip share from 5% to 3%, resulting in a total of 6% of all Jito MEV tips being taxed under the new program, up from the current 5%. The proposal estimates that this fee adjustment could generate $22.8 million in annual revenue for the newly-formed Jito DAO. MEV refers to the potential profit generated by reordering transactions within blockchain blocks. Jito has developed a validator client, which is the software validators use to connect to the blockchain. In this system, “MEV searchers” bid to have validators process their profitable sequence of transactions first, often adding tips to incentivize validators. These tips have proven to be quite lucrative, especially during periods of high trading activity on Solana. From March through September of this year, Jito MEV tips generated approximately $232 million in economic value, according to Blockworks Research. Last week alone, Solana processed $20 million in Jito tips amid a surge in memecoin trading. MEV tips accounted for 54% of Solana’s real economic value (REV), a metric that estimates the income generated by blockchains. The Jito DAO proposal represents a significant change in how one of Solana’s major income sources is distributed. Currently, Jito Labs’ 5% share of MEV tips earns it around 2.5% of Solana’s REV. If the proposal passes, less REV would go to Jito Labs, with a portion redirected to the DAO. This shift raises questions about whether stakers or validators should receive more REV, or if Jito deserves a larger share of Solana’s economic value. Another recent change in Solana stakeholder revenue came from Solana Improvement Document (SIMD)-0096, which directs priority fees entirely to validators rather than burning half. Most of the new tip structure would benefit Jito’s DAO, with 0.15% allocated to TipRouter, a protocol designed to programmatically distribute MEV tips. TipRouter will operate as a node consensus network (NCN) on Jito Restaking, similar to EigenDA on EigenLayer. The proposal is subject to a vote from Jito governance, but given the potential $22.8 million annual revenue for the DAO, it is likely to pass.