As a delegator, whenever you seek to stake on Solana, you need to decide on which validator to pick. This decision might be confusing at times, especially since there are so many options and data to analyze. Luckily, this guide and Solana Beach validators’ data can make this process way easier. In this article, you will not only learn how to choose validators on Solana, but also all the basics about these vital players of the Solana ecosystem.
To be able to choose the best validators for your needs, it is important to first understand what validators actually are. In short, a blockchain validator is an entity that is responsible for verifying blockchain transactions and maintaining the ledger. But to fully understand their function and contributions to the operations of a given network, it is vital to explain what staking and Proof-of-Stake are.
The process of actively engaging in transaction validation is known as staking. As a less resource-intensive option, it is akin to mining. Staking entails ‘locking’ the blockchains' native asset in a smart contract for the purpose of maintaining the security and operations of a blockchain network. The individual who made these funds available for network maintenance receives some type of compensation for doing so.
Thus, staking is the act of contributing to the security and maintenance of the underlying blockchain and being compensated for it. Ryan Sean Adams from Bankless elegantly summarized the definition of staking as ‘digital work agreements [that] involve collateralizing value for the right to provide work and earn rewards [for the underlying network]’. This ‘digital work agreement’ is a right that is baked into any PoS token.
To completely comprehend staking, you must first understand Proof-of-Stake (PoS). The core idea is that users may "stake" tokens in order to be eligible for the ability to enter new transactions into the ledger, thereby adding and verifying the next block to a blockchain. The quantity of tokens you have locked up or staked, determines your chances of getting picked. This implies that the more tokens you have locked up, the more likely it is that you will be chosen to add and validate the following block.
Now, in order to prevent a severe 'rich-get-richer' scenario, randomization is also important in validator selection. Consider a lottery drum. The more stake one has, the more tickets one can place into the drum. At regular intervals, tickets are picked at random. When compared to Proof of Work, PoS is a faster and less energy-consuming method of keeping the blockchain network running and secure.
You can learn more about Proof-of-Stake and Staking in our dedicated blog post.
Finally, once understanding how staking works in a PoS network, it is possible to explain what validators are. In PoS networks, validators take on the role of miners, which you find in PoW networks such as Bitcoin (BTC) and Ethereum (before ETH turns into PoS lately). Being a validator is a difficult duty that necessitates a high level of technical expertise, funds in the form of the blockchain network's native currency, and effort. You can nonetheless carry out your 'digital work agreement' as a token holder without having to manage your own validator company. Simply delegate your tokens to a validator of your choosing to do this. This increases the stake of the associated validator, making the validator more likely to win rewards, which are subsequently shared with its delegators (the people who delegated their tokens to it).
The network of validators in Solana is constantly growing and as of September 2021, there are more than 1000 active Solana validators on Mainnet Beta & by November 2022 that number reached 1800+ Solana validators. However, a better metric for the decentralization of a PoS network than the simple number of nodes, is the minimum number of nodes that together control 33.33% of the network’s stake. This set is referred to as the ‘Superminority’ in Solana lingo. At the time of writing this (November 2022), the ‘Superminority’ is constituted of 28 independent, globally distributed nodes, which renders Solana a fairly decentralized network with still lots of room to further decentralize.
A validator on the Solana Mainnet is in charge of running a node 24 hours a day, 7 days a week. Because the chain relies on this process of validating transactions and blocks to function properly, a validator must ensure that its network involvement is optimal at all times.
In addition to maintaining nodes, there are certain Solana validator requirements to meet such as participating in governance and community debates, thus influencing the network's ecosystem development. Solana, being a next-generation Proof-of-Stake network, allows on-chain governance, and validators will be asked to vote on decentralized network parameters and upgrades like they did for example in February of 2021 to enable inflation on Mainnet Beta.
Since Solana depends on its validators to function, it is expected that the entities that do this receive rewards and financial returns for their contributions. In the Solana network, there are two main ways that Solana validators are compensated for their work:
On Solana, validator nodes can receive performance scores, which are calculated based on their overall uptime statistics. This data is what will assist you when choosing the validator node you wish to stake with. So, get ready to check for the following information to base your decision on:
The first intuitive move when choosing a validator on Solana might be to go for the ones with the most SOL delegated to them. However, when it comes to decentralized networks such as Solana, being bigger doesn’t necessarily mean being the better option. In fact, the more validators receive leader slots, the less of an influence a single bad node may have on the network's integrity, censorship resistance, and decentralization.
As a delegator that wishes to contribute to the security of the Solana blockchain and ultimately its’ value, it is great to delegate to validators outside the ‘Superminority’. The Superminority consists of the smallest group of validators that collectively control 33.33% of the total stake of the network and could halt or censor Solana if they all colluded. Such a scenario is very unlikely. However, the more validators are part of the group, the safer the network will be. Thus, try to avoid choosing validators from within the Superminority when staking. Solana Beach actually hides the halt group behind an additional click on its validators interface to promote other validators of the Solana ecosystem.
The commission charged by the validator has an impact on the returns you will get. That is because the commission consists of the percentage cut of your staking rewards that the validator keeps for his or her services.
A validator's Annual Percentage Yield (APY), on the other hand, is the number of the compounded yearly earnings you can expect after accounting for the fee and the performance of the validator - how well they vote on each block. In other words, your yearly interest from staking with a validator after discounting their commission.
When you pick multiple validators to stake your SOL with, you are giving them the weight of your token and all the power that comes with it. Thus, it is important to know that the validators you chose are reliable and professional. Most serious validators have a website available with information about the team, content about their approach, and means to contact them. If you found a validator on Solana Beach that you wish to know more about, you can just click on the validator’s line, which will bring you to its detailed profile page. There, you can easily find more information about the respective validator.
It might be worth checking the team that runs this validator to make sure they have the needed experience. Also, look for information about the type of hardware or cloud setup they use, transparency about their practices, and fee strategy. For example, if the validator is currently charging 0% in commission, research until when they will keep it like this. Trusting the team and set up you are choosing to delegate SOL tokens to is very important.
This is the percentage of slots that were successfully included in the blockchain. Validators can miss slots for various reasons related to performance and network latency. However, keep an eye on this percentage. If it’s too low, it might mean the validator is facing greater issues that might end up affecting your earnings or even the security of the blockchain if the validator is too big.
Validators hold a lot of responsibility for the blockchain. Due to that, having a validator team that is engaged in contributing to the community is extremely important. Validators are expected to take part in governance and community debates, helping stir the direction of the Solana network. When choosing your validator, look for information on how they contribute to the Solana community, from being active when the network faced issues to creating educational content to expand the community further. Also, try to check how they use their governance power to make Solana a better ecosystem for both validators and delegators.
There is not a perfect answer when it comes to how you should choose your validators on the Solana ecosystem. It ultimately depends on your needs and preferences as a SOL token holder. Still, remember your responsibility as a delegator. Avoid only staking within the Superminority and make sure you trust in the validator nodes you chose. Once you do your due diligence, you will be able to better enjoy the gains staking SOL can bring.
To keep yourself updated about the validators’ performance, we’re suggesting the below references:
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Please note that none of this is to be considered financial nor investment advice. We highly advise you to always do your own research (’DYOR’) before interacting with any of the projects or tools we write about. Crypto is a highly dynamic and fast paced environment with lots of moving parts that can quickly change.