A Deep Dive into Jito Stakenet

Introduction

JitoSOL is a liquid staking token on the Solana network designed to streamline and optimize the delegation of SOL tokens to a set of Solana validator operators. The system behind JitoSOL relies on a delegation manager who is responsible for managing the SOL deposited by users. This delegation manager operates within Solana's delegated staking system, handling the delegation and cooldown of SOL. The evolution of this process from an off-chain bot to a decentralized, on-chain system marks a significant step in enhancing the transparency and efficiency of staking on the Solana network. This transformation is primarily driven by the introduction of StakeNet, a decentralized solution that brings the entire delegation process on-chain.

Transition from Off-Chain to On-Chain Delegation

Initially, the delegation process for JitoSOL was managed by an off-chain bot. This bot was responsible for monitoring validator performance, storing this data in a database, and periodically deciding how to allocate the SOL deposited across eligible validators. While functional, this system's off-chain nature lacked transparency and relied on external infrastructure.

With the advent of StakeNet, the delegation process has been fully decentralized and moved on-chain. Instead of relying on an off-chain database, all necessary information is stored on the Solana blockchain. Additionally, the off-chain delegation bot has been replaced by an on-chain program that anyone can interact with to keep the staking pool updated.

StakeNet Programs: Validator History and Steward

StakeNet comprises two key programs: the Validator History program and the Steward program.

The Validator History program maintains a record of validator performance metrics. This program ensures that up-to-date and accurate data inform the delegation process.

The Steward program is the core of the StakeNet system, managing the delegation of stakes to validators. It utilizes the data stored by the Validator History program to compute validator scores based on various factors, including voting performance, commission rates, MEV commission, and superminority rank. The program operates as an on-chain state machine, where operators can permissionlessly interact to perform tasks such as delegating new stakes, moving stake accounts, and swiftly removing stakes from underperforming validators.

Monitoring and Data Integrity

StakeNet operators are critical in maintaining the system by periodically sending transactions that copy information from Solana accounts into the StakeNet program. These accounts include the vote account, which stores validator voting performance and commission details, and the tip distribution account, which tracks MEV commission and earnings.

Moreover, operators upload P2P gossip data from the Solana network using the Ed25519SigVerify syscall to verify the authenticity of the signed gossip data. This gossip information includes the validator client, version, and IP address, providing insights into the status and performance of validators on the network.

The collection of gossip data is essential for monitoring the health and efficiency of the Solana network. It enables operators to assess whether a validator is online, responsive, and actively participating in consensus. Early detection of possible problems through gossip data monitoring allows operators to take corrective actions before issues escalate.

StakeNet Steward Program: Optimized Delegation

The StakeNet Steward Program leverages on-chain validator history to compute scores and optimally delegate stakes based on a comprehensive set of criteria. The state machine managed by the Steward program allows for dynamic adjustments to staking allocations. Validators that perform well receive additional stakes, while those that perform poorly see their stakes redelegated. In cases where a validator exhibits particularly poor performance or engages in malicious behavior, such as a commission rug, the stake is immediately unstaked and redelegated to another operator.

Validator performance scores are computed every 10 epochs using a 30-epoch lookback window. Based on these scores, stakes are redelegated to operators according to the parameters stored in the Steward program's configuration.

JIP-3: Transfer of Jito Stake Pool Management to StakeNet

JIP-3 outlines a plan to significantly decentralize the Jito Stake Pool's management processes by transitioning to the StakeNet protocol. This move aims to enhance security, efficiency, and transparency while empowering the community through on-chain governance.

Key Points from JIP-3

• StakeNet Protocol: A decentralized protocol developed by Jito Labs to automate staking processes on Solana.
• Phased Transition: The transition is divided into three phases: Preparation, Partial Transition, and Full Transition.
• Benefits: Increased decentralization, scalability, community involvement, and reduced risk of centralized control.
• Risks: Potential implementation challenges, community adaptation period, and security vulnerabilities.
• Cost: No immediate cost to the DAO, but future proposals might require funds for bug bounties and keeper incentives.

Transition Requirements

• Minimum 3 cycles (30 epochs) successfully completed on mainnet without any bug fixes required.
• Minimum 2 independent parties besides Jito Labs running Steward keepers with demonstrated reliability of landing transactions.
• Demonstrated ability to continue state transitions during network congestion.
• Bug bounty program live for 3 months without critical or high severity vulnerabilities reported.

Key Developments after JIP-3 Passed

Successful Transition: The Staker authority of JitoSOL was successfully transferred to the Steward Program, marking a significant milestone in the decentralization process.

Security Enhancements: Jito Labs has addressed all important feedback from Ottersec to strengthen the StakeNet protocol.

• Two independent validator infrastructure providers (Edgevana and Laine) have agreed to run dedicated keeper bots alongside Jito Labs for redundancy.
• There is a robust monitoring and alerting setup for any critical issues.
• A UI is available to see the progress of the state machine, all validator stake movements, and scoring.

Challenges and Considerations

• Historical Commission Threshold: Validators with temporary configuration errors could be excluded from the Stake Pool. Jito Labs is considering potential solutions such as ignoring short-term errors or implementing a redemption mechanism.
• MEV Commission Manipulation: While checks are in place to prevent malicious actors from manipulating MEV commissions, there is still a potential risk. Jito Labs is actively monitoring this and may implement additional safeguards.
• Audits and Security: StakeNet has been audited by Ottersec but there are edge cases that cannot be predicted.

Conclusion

JitoSOL, through the implementation of StakeNet, has significantly improved the delegation and staking process on the Solana network. By transitioning from an off-chain bot to a fully decentralized, on-chain system, StakeNet ensures greater transparency, security, and efficiency. Integrating the Validator History and Steward programs within StakeNet allows for optimal delegation of stakes, ensuring that the Solana network remains robust and validators are held accountable for their performance. JitoSOL and StakeNet set a precedent for how decentralized staking can be effectively managed on blockchain networks as the system continues to evolve.