Lido on Solana: Validator's Set Vision

Pavel Pavlov -

Lido applies the same mission to all blockchains they participate in - to make staking simple, secure, and decentralized.  Each of the networks has its own specifics when it comes to "what a good validator set means”.

We propose a new way of developing the Lido validator's set on Solana and in our opinion, a sustainable and solid set should follow 3 principles:

1. Validator set should be decentralized

According to Solana Beach, there are currently 1,788 validators on Solana, giving the network a Nakamoto Coefficient of 25. This means that the top 25 validators control enough staked Solana to collude and attack the network. The staking pool program emerged with the goal to redistribute the stakes more evenly across the network. In our view, to create a decentralized set, we must adhere to the following rules:

  • Increase the number of independent entities that create and maintain infrastructure for the network.
  • Increase censorship resistance by reducing the concentration of stake in the same data centers and jurisdictions.
  • Not distribute stake to the superminority group of validators.

To make the Lido on Solana validator set more decentralized we plan to:

  • Not add validators nodes from the superminority group to the Lido validator set
  • Increase the number of distributed nodes in the pool by removing barriers in the form of 100% commission nodes.
  • Bring in validators from other ecosystems and non-crypto projects.
  • Train new operators to configure and run nodes.
  • Assist validators with server configuration and data center location.
  • Onboard independent validators into the Solana cluster and Lido pool

2. The set must be attractive for validators

To ensure a highly available and secure staking infrastructure, it is critical to consider the long-term sustainability of the operator and the ability to fund new equipment. Operators are responsible for managing risks, maintaining their node, ensuring the highest uptime possible, troubleshooting errors. To make the set more attractive to validators, we must adhere to the following rules:

  • Operators must earn well enough to build a profitable, reliable staking business.
  • Validator nodes must be able to participate in subsidy programs (ex. SFDP)
  • Operators should receive marketing support to attract stakes.

To make the Lido on Solana validator set more attractive to validators, we will do the following:

  • Change the smart contract by removing 100% of nodes and adding the ability to use a public node in a cluster to participate in the Lido program
  • Create a P&L tool to calculate validator yield and share it with the community.
  • Provide marketing support to validators in Lido’s set to increase the stake on their public node and help to build a profitable staking business.

3. The validator set has to bring value to the network

Validator performance metrics are, in our opinion, one of the most important criteria for developing the Solana ecosystem. The faster, cheaper, and more sustainable the network, the easier it is to attract investments, partners, and NFT/DeFi/P2E project developers, leading to the development of a sustainable community and product ecosystem.  For DeFi users, speed of transactions is important; for oracles, the ability to quickly provide more detailed data on a large number of quotes; for developers, a better user experience; for stakers, greater rewards on average and higher SOL price growth potential.

To make the set more productive and sustainable the following rules should be adhered to:

  • Operators must understand the value of metrics and be able to compare their performance with the best on the network
  • Operators must be notified about software updates
  • Operators must understand how to update without downtime

To make the Lido on Solana validator set more stable and productive, we will do the following:

  • Publish our vision of "good validator" performance metrics
  • Make a public dashboard displaying validator metrics
  • Make a system of alerts for problems with validator performance in the pool
  • Conduct education and share best practices for validator management in Solana

Conclusion

There are ~384.5M SOL staked on the Solana network, of which only ~9.7M SOL is distributed among various staking pools. P2P has partnered with Lido and stSOL since their launch as a validator and has been involved in the development of TVL in collaboration with Lido through incentives, integrations, and more. We see great potential for the development of liquid staking, which will increase economic activity and the speed of the economy in a decentralized network.  

Three key principles will form the basis of our new strategy:

  • Truly decentralize the validator network by simplifying entry and adding validators from other ecosystems.
  • Make the network economically attractive for validators by dropping 100% nodes and marketing support from Lido
  • Ensure that the validator set works better for the network to ensure transactions are passed and various applications are running on the network.

If you have ideas or suggestions for achieving our principles, we are always open to community feedback and consider it very important.

Join the new validator set! Together we will make Solana even more decentralized and sustainable!