How Large Stake Accounts Shape the Solana Validator Set

Introduction

Chainflow has supported Solana from the early days. We helped design Tour De Sol — the original testnet program that set the foundation for the healthy ecosystem of validators securing the network today — and have run a high-performing Solana validator ever since. As a result, we were able to attract about 3 million staked SOL in the months after the launch of mainnet beta.

We've remained an active supporter of the network, leading initiatives like building Solana Validator Mission Control, launching Nakaflow.io, sponsoring the Decentralized Infra track at Sandstorm hackathon, and co-organizing the network's independent validator community calls.

Over time, however, we've lost about 90% of our staked SOL. The vast majority of this loss happened when a few large stake accounts delegated away from us. This raised the question: "How many other highly-staked validators are similarly dependent on a small number of stake accounts?"

Heavy Reliance on Heavy Bags

We looked at stake distribution by stake account across the 50 highest staked validators, which together account for roughly 40% of all staked SOL. Our initial research illustrates that many of the 50 highest staked validators also rely heavily on a small number of stake accounts.

Percentage of Stake Held by Top Two Delegators

• 7 of 50 validators (14%) rely on 2 delegators for 99%+ of their stake. Unsurprisingly these are all "anonymous" validators.
• 11 of 50 validators (22%) rely on 2 delegators for 90%+ of their stake.
• 19 of 50 validators (38%) rely on 2 delegators for 80%+ of their stake. This is a mix of named and "anonymous" validators.
• 26 of 50 validators (52%) rely on 2 delegators for 50%+ of their stake.

Percentage of Stake Held by Top Five Delegators

• 18 of 50 validators (36%) rely on 5 delegators for 99%+ of their stake.
• 25 of 50 validators (50%) rely on 5 delegators for 90%+ of their stake.
• 29 of 50 validators (58%) rely on 5 delegators for 80%+ of their stake.
• 36 of 50 validators (72%) rely on 5 delegators for 50%+ of their stake.

Whales Crown Kings

It's pretty clear from this analysis that whales with big bags heavily influence what the validator set looks like. In many ways, these delegators act as the validator kingmakers.

Though these whales are largely anonymous, to the extent their identities are known, they're likely most-known to the larger validator businesses, staking-as-a-service providers, and other institutional-focused entities that receive their stake.

The Impact on Smaller, Independent Validator Operators

This creates a concerning imbalance of power, as smaller, independent validators are likely much more dependent than larger staking companies on whales, yet have less visibility into the whales' intentions.

For independent validators like Chainflow, losing a few key stake accounts can be the difference between running a sustainable validator and a break-even or even money-losing operation. A healthy validator set must include smaller, independent operators — it's these operators who often punch above their weight and make outsized contributions relative to their size.

What About Solana's Nakamoto Coefficient?

Solana's Nakamoto Coefficient typically hovers in the 30-32 range, near the top among the networks tracked at Nakaflow.io. It would seem, even from this cursory analysis, that shifting a few stake accounts around could push this number even higher.

Conclusion

Our research suggests that a small number of large stake accounts heavily influence Solana's validator set, with a small number of big-ticket delegators accounting for a significant portion of the stake held by some of the largest-staked validators.

This leaves independent validators particularly vulnerable: if a whale decides to move their stake elsewhere, a smaller validator operator can transition quickly from a sustainable and profitable operation to a money-losing and unsustainable one.

This isn't to say that our findings are entirely grim. Whales may have the power to concentrate their stake with a small set of larger validators, but they also have the power to distribute their stake more equitably across the broader validator set. A few moves by some of the larger stake account holders could help to increase Solana's Nakamoto Coefficient.