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October 31, 2022 • 2 minute reading time

Delegation Strategy for JitoSOL

Jito Foundation
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Solana HFT

The Jito Foundation unveiled JitoSOL today. JitoSOL is the first liquid staking derivative on Solana including an MEV reward mechanism. JitoSOL is designed to complement the Jito-Solana validator client and improve Solana’s performance.

Delegation Goals

JitoSOL will be delegated to third-party validators in a transparent and formulaic manner. The delegation formula is designed to accomplish several goals. First, encourage decentralization of stake weight and geographies. Jito will not delegate to validators in the superminority.

The mechanism prioritizes highly performant validators. These validators improve network throughput while delivering high yields to stakers.

Jito will only be utilizing validators with a MEV-reward sharing mechanism. Currently, this requires validators to run the Jito-Solana client. Structured MEV extraction is necessary to reduce network congestion. MEV auctions also increase rewards to validators and stakers, thereby increasing incentives to stake and secure the network.

Initial Delegates

JitoSOL is starting with a curated list of high quality validators, including some not collecting MEV rewards. The delegates will include four Jito Labs-operated validators, three of which are in the superminority.

This decision was driven by the short window between the release of Jito-Solana’s validator client and the launch of JitoSOL. Jito will be transitioning to the mechanistic delegation strategy once sufficient validators have switched to Jito-Solana. The transition will be gradual, given large stake movements reduce JitoSOL’s yield.

The Jito Foundation understands this strategy is not reflective of the Foundation’s mission but is a necessary compromise at launch. Jito hopes by the end of November to eliminate any Jito Labs stake and be 100% delegated to Jito-Solana validators outside the superminority. Complete reliance on the delegation formula should be done within a few months. However, the progression depends on variables outside Jito’s control so timing may change as required.

Delegation Requirements

There may be changes to the delegation requirements and/or weights over time as the environment evolves. Changes will be communicated in advance along with significant shifts in stake weight.

In order to receive a delegation, validators must meet the following requirements:

  • Run MEV-enabled client
  • Vote on >80% of all valid blocks during the sampling window
  • Retain a commission rate ≤ 10%
  • Retain a delinquency rate <10% over the course of the sampling window
  • Not belong to the validator superminority
  • Not run unsafe consensus modifications
  • Only stake to one validator operator at a time (no sybil)

Scoring Mechanism

Jito will be publishing the exact scoring methodology soon along with a sample of results including all active validators. In the meantime, interested validators should review Jito-Solana documentation and consider switching.

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