Solana’s approvals are down 68% from their 2023 peak
Solana's verification count has fallen dramatically over the past three years, raising concerns about the decentralization of the blockchain network, and the economics of running a node are squeezing smaller operators.
According to Solana Compass data, the number of Solana validators has dropped 68% to 795 from a peak of 2,560 validator nodes in March 2023.
Validators are responsible for adding new blocks and validating transactions in proposed blocks, playing a critical role in the functioning of a decentralized ledger.
While some of the declines reflect the removal of inactive or “zombie” nodes, industry participants say operating costs and fee competition are forcing smaller verifiers offline.
An independent Solana verification operator, who goes by the name Mo, said on X that many smaller verifications are considering closing because the economics don't make sense.
“Many smaller issuers (including us) are actively considering closing. Not because of a lack of confidence in Solana, but because the economics just don't work anymore.”
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According to Mu, large validators who pay 0% fees are forcing smaller validators out of profits, making it difficult to continue running the economic node.
“We started to prove to support decentralization. But without economic benefits, decentralization will be charity,” he said.
The trend shows that retail verifiers cannot sustainably contribute to securing the network. It also shows that Solana nodes are increasingly dominated by large operators, crowding out smaller players and raising concerns about the network's level of decentralization.
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Solana Nakamoto's coefficient has dropped by 35%.
Along with the decline in the confirmatory count, Solana Nakamoto's coefficient has decreased by 35% over the same period. It falls from Wednesday 20 March 2023 to 31 March 2023, according to Solanacompass.
The Nakamoto coefficient measures the decentralization of a blockchain by determining the minimum number of independent entities such as validators or miners. The decline shows that the stocked Solana supply is being fragmented and the network is decentralized.
The reason behind this decline could be the rising costs of running a profitable verification node, which has increased significantly with the Solana (SOL) token over the past three years.
Not including hardware and server costs, validators will need an initial investment of at least $49,000 in SOL tokens for the first year, which will require at least 401 SOL each year to stay operational for voting fees.
This is because validators must participate in a protocol agreement that requires the validator to send a voice transaction for each block agreed upon, which costs up to 1.1 SOL per day, according to the Solana validator Agave technical document.
Cointelegraph reached out to the Solana Foundation for comment, but did not receive a response by publication.
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