The Decentralization of Solana at Risk: Only 795 Validators Remaining on the Network

The Solana network faces a critical challenge to its decentralization. Since March 2023, the number of validator nodes has collapsed alarmingly, dropping from 2,560 to just 795, a devastating 68% decrease. This phenomenon is not a technical issue but an economic crisis that threatens the fundamental principle of any blockchain: its decentralization and resilience.

The Alarming Drop in Validator Nodes

According to data reported by PANews, this massive reduction has raised significant concerns about the long-term viability of the network. Independent validators, which once formed a robust fabric of geographically distributed participants, are disappearing from the ecosystem. The problem does not stem from a lack of trust in the project or its technologies but from a brutal economic reality: maintaining a validator node has become prohibitively expensive for mid-sized and small operators.

Nakamoto Coefficient: The Indicator Revealing Centralization

Solana’s decentralization metric, known as the Nakamoto Coefficient, has experienced a parallel deterioration. In less than three years, this crucial indicator has fallen from 31 to 20, representing a 35% decrease. This index measures how truly distributed a blockchain is; its constant decline indicates increasing concentration of power and control over the network. When the Nakamoto Coefficient decreases, the decentralization that defines the promise of blockchains is progressively eroded.

Operating Costs: Main Barrier to Decentralization

What is the real culprit behind this collapse? The answer lies in unsustainable operating costs. According to the technical documentation of Solana’s validator client Agave, maintaining a node involves significant investments. Validators must allocate a minimum of 401 SOL annually just to pay voting fees, not including expenses for hardware, servers, and maintenance. In total, this requires an initial investment of approximately $49,000 in SOL tokens to start operations.

For large validators with the financial capacity to charge 0% commissions, this structure is manageable. For smaller validators relying on commission income, it becomes an economic trap.

Small Validators: Between Profitability and Decentralization

Moo, an independent validator operator, expressed on X platform a harsh reality many in the ecosystem share: most small validators are seriously considering shutting down their operations. They are not leaving Solana out of distrust but because the economic equation simply doesn’t work. Large validators operating at no commission cost have created unfair competition that leaves smaller nodes without viable profitability.

“Decentralization has become an act of charity,” Moo stated, capturing the essence of the dilemma. A small validator cannot compete against massive operators working at a loss or without profit. This transforms what should be a diverse and decentralized ecosystem into a space increasingly dominated by a few actors with enough capital to absorb operational losses.

Systemic Risk: Compromised Decentralization

The simultaneous decline in nodes and the Nakamoto Coefficient reveals a concerning trend: Solana is sacrificing its decentralization on the altar of operational efficiency. While the network maintains speed and processing capacity, it is losing the resilience and true independence that small and medium validators provided.

So far, the Solana Foundation has not issued public comments on the situation, leaving the ecosystem without clear guidance on how to address the deterioration of decentralization.