Solana’s Anti-Frontrunning Bot, SPL PYUSD Now On Leading Super App & More

Welcome back!

This is J264G and this week I’ve got these titbits for you:

• Filipino Stablecoins: Solana PYUSD launches on Filipino super app. 

• Disincentivising Frontrunning: Meet Paladin, an anti-frontrunning bot.

• Crypto ≠ Securities: The SEC’s Binance case is increasingly bullish for crypto.

While TradFi platforms struggled with downtime during recent market volatility, Solana and its DeFi ecosystem demonstrated remarkable resilience, maintaining 100% uptime throughout the turbulence — there’s a lesson in there somewhere 🤔

Now, let’s jump right into this week’s newsletter!

Click on any underlined heading/hyperlink to learn more.

Spotlight

Validator Evolution

Solana's decentralisation has faced some challenges lately.

From a robust Nakamoto Coefficient (NC) of 34 in August 2023, the network's NC has dropped to 19 — a ~40% reduction. Complicating matters, several validators within the supermajority are operated by the same entities — e.g. Figment and Ledger by Figment, or Jito 1 and Jito 2 — suggesting the true NC is even lower than 19.

While Solana still maintains a higher NC than Ethereum, this shouldn't be our benchmark.

The decline of Solana's Nakamoto Coefficient can be attributed to several factors:

1. Costly validator hardware requirements, despite solutions such as Latitude.

2. Scarcity of talent capable of operating up-to-date and advanced Solana validators.

3. Established validators with strong brand recognition and distribution dominate stake inflows. 

4. Stake on institutional validators such as Galaxy, Coinbase, and Figment is sticky — it's incentivised not to move.

5. Large stakers seem to be commission insensitive, as they can only stake via certain platforms with a limited set of validators anyways.

6. Concentration of stake in a handful of stake pools with a rigid set of well-established validator partners.

7. Absence of slashing, which could incentivise stake diversification outside of the supermajority.

Bearing in mind these factors, new and smaller Solana validators must prioritise operations and marketing — evolving into fully-fledged businesses with far-reaching distribution — to successfully draw stake from both within and beyond the supermajority. Without visibility and market reach, they will struggle to attract demand and remain overlooked by institutions, large stakers, and retail in a crowded market — precisely what's currently happening.

For example, I've yet to see a validator startup that truly embraces a comprehensive business approach: secure funding, assemble a top-tier technical, operations, and marketing team, and systematically hunt SOL in all forms — locked, unlocked, staked, and unstaked. Or did I miss anything?

Running a Solana validator should not merely be seen as a hobby or side quest — the sooner we make this perspective shift, the better for Solana’s Nakamoto Coefficient.

Chart Of The Week

News Bites

Filipino Stablecoins: Solana-based PYUSD is now available on Gcash, the Philippines' leading super app. This integration enables users, in particular freelancers, to leverage Solana's minimal transaction fees and rapid settlement times.

Stablecoin Hackathon: The Global PYUSD Portal Hackathon, a virtual 5-week event focused on fostering PYUSD innovations within the Solana ecosystem, is accepting registrations until August 19.

Crypto ≠ Securities: The SEC's intention to amend its complaint against third-party tokens in the Binance case suggests that the judge won't need to determine whether tokens such as SOL are unregistered securities in order for the case to proceed — which could be bullish for the crypto industry and crypto ETFs.

Disincentivising Frontrunning: Solana developers, in collaboration with teams at Anza, Firedancer, Solana Foundation, and Solana Labs, have launched Paladin — a decentralised MEV bot designed to disincentivise frontrunning by Solana validators.

Shared Sequencer: A couple of weeks ago I wrote about Rome, a project aiming to expand the Solana Virtual Machine (SVM) codebase to new execution environments, enabling L2s and applications to use Solana as their shared sequencer. If you'd like to learn more, have a look at this thread.

Enhanced Security: Radar, an open-source static analysis engine for Solana and other Rust-based programs (smart contracts), is now available for testing.

Caught In 4K

Weekly Take

Keks & Giggles

And that's a wrap!

If you'd like to reach me, respond to this newsletter or reach out to me on 𝕏.

Talk soon!

J264G

_{DISCLAIMER
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. Lastly, please be advised that we discuss products and services from our partners from which our team members may hold tokens/equity.}