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Memecoin Frenzy Prompts Solana Foundation to Unstake Malicious Validators

Last Updated 3 days ago
Eddie Mitchell
Last Updated 3 days ago
Key Takeaways
  • The Solana Foundation is unstaking MEV-abusing validators from its delegation program.
  • Ethereum devs have discredited the Solana (SOL) network as a competitor.
  • 500,000 tokens launched on Solana in May 2024.

The Solana Foundation has taken action to improve the integrity of its network by removing malicious validators from its delegation program.

The move has drawn criticism, as it is also a broader clampdown on validators using maximal extractable value (MEV) by a centralized authority. So what is going on here?

Solana Unstakes Validators

A group of validators have been removed from the Solana Foundation Delegation Program in a bid to overcome woes caused by MEV abusers that resulted in “sandwich attacks” on traders.

A group of Solana validators had been found to be sharing mempool transactions. By sharing these, malicious actors can conduct sandwich attacks. This is when malicious actors encircle a pending transaction by placing one order before it and one immediately after.

Solana validator relations lead, Tim Garcia, announced their removal on Discord, writing :

“Anyone found engaging in such activity will be rejected from the program, and any stake from the Foundation will be immediately and permanently removed,”

With both co-occurring, the attacker can effectively manipulate the asset’s price, and guarantee the worst possible price for the trader. The attacker profits from this difference.

There has been some criticism of the move. Some view this as a centralized power punishing certain validators, just to appease memecoin traders, who are argued to be the largest users on Solana.

Right to Remove

The delegation program was set up to alleviate validators of holding heaps of tokens by assigning them SOL tokens. It allows users to assign staking rights to a validator or pool, which is then in charge of creating new blocks and verifying transactions.

Malicious validators would then scam retail user out of their money using the sandwich attack method. Because the Solana Foundation provides these validators with SOL tokens, it arguably has the right to prevent retail investors from being exploited by the validators they support.

Mert Mumtaz, co-founder of Solana RPC provider Helius, elaborated on these issues. He noted that the Solana Foundation “isn’t interested” in seeing retail users being robbed, therefore they will not delegate to people who are abusing the system.

Centralization Concerns

Naturally, there are concerns that the anti-MEV move was an act of centralized authority wielding too much power. But, it is argued that as a staker, the Solana Foundation has a vested interest in seeing the network it supports thrive as a trustworthy ecosystem.

To Ethereum core dev Ryan Berckmans, this move is simply to prevent Solana from becoming a “ghost chain”. Berckmans posits that by appeasing memecoin traders, they are less likely to switch over to a faster and cheaper network like Ethereum L2.

“I think this story writes itself. The SOL/ETH ratio vastly overstates Solana’s durability as a serious competitor to either the Eth L1 or our best L2s.

Put simply, Solana is positioning itself as a pro-memecoin platform, whereas Ethereum is taking the opposite approach. However, the latest enforcement actions from the Solana Foundation could suggest a switch away from this narrative.

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