Understanding MEV Rewards

The Solana blockchain operates differently from other chains, particularly in how it handles MEV (Maximal Extractable Value). On Solana, there's a strong incentive for searchers to run their own nodes or integrate closely with high-staked nodes.

At stakefish, we have opted to use the Jito-Solana client instead of the native Solana-Labs client. Jito offers an out-of-protocol blockspace auction for partial blocks, providing off-chain inclusion guarantees for specific transaction sets known as bundles. Searchers submit bundles with a guaranteed on-chain execution if they win the auction.

Note: It's important to note that Jito tips are separate from in-protocol priority fees. They are not automatically compounded into your staked balance, instead they will accumulate in your stake account's SOL balance.

Every epoch, we establish a unique TipDistributionAccount (denoted as the 'Tip Piggy Bank' above). The purpose of this account is to collect and aggregate all the MEV that is paid out to our validator throughout the entire epoch.

At the end of the epoch, we take a snapshot of the last slot from the previous epoch which contains the claims for each validator and stake account. This is then uploaded to the blockchain, ensuring transparency and verifiability of the claims.

Subsequently, each stake account receives an airdrop of their proportional share of the distributed MEV adjusted for our commission rate.

Note: Tip distribution is managed by Jito, and should be completed within 24 hours of an epoch being concluded.