The Short and Long of Validator Economics

In an article posted over four months ago, DoubleZero laid out a pitch on the wide-ranging benefits to Solana validators and the fees (5% of validator revenues, as a seat fee) for those services. That pitch remains the long-term vision of the project.

But as mainnet now looms, we want to lay out the pathway to that vision. Some of the benefits to validators are apparent in the short run; while others will only manifest in the long run. As such, some of the fees will be levied in the short run; while others will be deferred until later.

Specifically, validators can expect to see improvements bucketed along the following timeline:

1. At launch, the largest benefits will be in terms of delivering votes across the validator cluster, transactions from RPCs, and bundles and shreds to and from MEV systems, through a combination of performant infrastructure and routing innovations like multicast.
2. In the short to medium term, DoubleZero plans to bring transaction filtration online and expand its reach to more geographically-distant locations.
3. In the medium to long term, DoubleZero is set to support radical overhauls of the Solana protocol itself, e.g. shorter slots times, substantially larger block sizes, or the Alpenglow rearchitecture of the chain.

As such, the fees associated with DoubleZero will similarly be structured around this timeline:

1. At launch, the network will charge 5% of base, voting, and priority fees as the seat fee to access the network.
2. When DoubleZero can show that it creates more than 5% in MEV revenue (i.e. Jito tips) to validators, it will then charge 5% of that stream, but only when validators see a net positive.
3. DoubleZero will defer charging 5% on inflationary rewards until it can truly support the next generation of the Solana protocol.

Finally, DoubleZero has recently announced its stake pool program, which has launched with 3MM SOL. This will support both DoubleZero adoption and decentralization of Solana, in pursuit of its higher-level goal of performant distributed systems.

The Path to Value

Solana validators who join DoubleZero would ultimately receive a litany of services: filtration of spam or invalid transactions, faster potential slot times, larger block sizes (well beyond 60 million compute units), faster voting, wider geographic reach, and better delivery from RPCs and MEV participants. These, which are discussed in more depth in the original article, can be organized by anticipated timeline.

1. Short Term: DoubleZero has dedicated, high-bandwidth, low-latency fiber linking major data centers and cities now. This means that any existing flow on Solana can instantly benefit from this form of connectivity upon launch. For instance, votes — which matter critically for validators to earn vote credits — can benefit from its deterministic, jitter-free routing, rather than relying on the public internet. Moreover, transactions from RPCs, bundles from searchers, and shreds back to those searchers can similarly benefit from DoubleZero’s fast and wide paths on launch, allowing validators to better monetize their transaction flows. Finally, DoubleZero has enabled multicast in its network, which allows the network to truly optimize efficiency in sending parallel data flows.
2. Medium Term: At launch, DoubleZero will focus primarily on the locations where Solana stake currently lives. But over the medium term, DoubleZero intends to lead rather than follow the geographic footprint of the Solana validator set, bringing connectivity into regions and cities that were previously difficult or infeasible to operate in. Moreover, DoubleZero's core developers are actively testing FPGAs to filter away spammy, duplicate, and malformed transactions, so that validators can spend their leader slot focusing on block production. This too is expected to be deployed in major data centers over the medium term.
3. Long Term: Once a large (e.g. supermajority) of Solana stake is on DoubleZero, the protocol itself can evolve well beyond current standards. Solana need not be limited by 400ms slot times or 60 million compute units in blocks (recently raised from 50 million), which allow for a high TPS metric by blockchain standards but are still woefully insufficient for true adoption. Slot times that are 200ms and blocks with hundreds of millions of compute units become potentially feasible with the dependency on the public internet removed. Indeed, DoubleZero is an important component of Alpenglow’s rearchitecting of Solana altogether.

The Path to Fees

While infrastructure has substantial upfront fixed costs, the DoubleZero network intends to charge fees commensurate with the services provided. As such, the fee model can similarly be organized across the timeline.

1. Short Term: DoubleZero aims to charge 5% on base, voting, and priority fees now. Validators currently earn 50% of base and voting fees, and 100% of priority fees; and so we believe this will be least disruptive to the ecosystem as validators join DoubleZero and network effects start to unlock.
2. Medium Term: Once DoubleZero can show that it increases Jito fee streams for validators by more than 5%, it will charge 5% on these revenue streams. This ensures validators do not incur short-term losses on this line of business.
3. Long Term: As a supermajority of Solana stake joins DoubleZero, fundamental changes of the protocol — from raising protocol limits on block sizes or slot times to entire overhauls like Alpenglow — become possible. This is when DoubleZero will charge 5% on inflation rewards, as it is now a critical part of the Solana stack.

As a brief reminder, validators pay these revenue streams as seat fees for the network, denominated in SOL. Such seat fees have many strong economic properties, such as removing marginal disincentives from communicating over the network, aligning DoubleZero with validator bottom lines, hedging price risk, and streamlining validator operations; and this is further discussed in the original article.

Stake Pool

Finally, DoubleZero recently announced a stake pool delegation program with 3,000,000 SOL. This stake pool is designed to support the overarching ethos of DoubleZero, which is geographic decentralization, and help validators to locate themselves in faraway cities that wouldn’t otherwise be economically viable initially.

This stake pool remains a critical component of DoubleZero’s economics. Validators who join the DoubleZero network are automatically eligible, and stake is delegated on the basis of their organic stake, their tenure on DoubleZero, and other factors. This can help smooth the transition onto the network.