Howdy!

After taking some time to romp around the Irish countryside, I’m back to Lightspeed. It appears that SOL had quite the bullish week during my absence — but I will not be taking the hint and will be continuing to tap out these newsletters with reckless abandon.

Today, we have upgrades to the tech, how Solana’s income is spread around, and a news roundup:

Solana upgrades software as validators see fortunes shift

Two months ago, I reported on some of the woes facing Solana’s smaller validators, which are computer nodes that verify Solana’s ledger is accurate. Solana’s fees and tips were in decline amid apparent fatigue from memecoin traders. In response, the Solana Foundation — the non-profit charged with supporting Solana — set a cap on the commissions that validators could charge while receiving a staking delegation from the foundation, which is a necessity for some small validators. 

Most crucially, the price of SOL was languishing, limiting upside for validators’ biggest potential source of revenue. Some estimated that validators would need to attract millions of dollars more in SOL than before to break even. 

Today, that all appears to have shifted. SOL’s price crossed the $200 mark for just the third time since 2021, and daily validator revenue has been in excess of $30 million every day since mid-October, according to data from 21.co. In early September, revenue was around $22 million per day. 

Anza, which is the developer shop spun out of Solana Labs, just released v2.0.14 of Solana’s software, one of its first upgrades since it implemented a central scheduler over the summer. 

So far, only around 40% of validators have made the switch from v1 to v2. The upgrade makes minor tweaks to the Solana protocol, but validators who made the switch have anecdotally reported better performance. 

One validator said the new client version has better maximal extractible value (MEV) rewards than the old one. Another said their votes — or transactions made to validate the blockchain ledger is accurate — have been going through quicker since the upgrade.

Knoxtrades, the anonymous owner of the Juicy Stake validator, told me that they have noticed Solana’s central scheduler “works in conjunction” with stake-weighted quality of service (SWQoS), a feature that lets larger validators land transactions more effectively. This has caused a “noticeable change in block rewards” because Solana blocks are packing in transactions more efficiently, knoxtrades said in a text.

But what could be most important to look for is how many validators plug their computers back in. A year ago, the Solana network had around 1,970 nodes, according to Solana Compass. Today, that figure is 1,358, indicating a less distributed set.

Still, some validators have chosen to get back in the game during Solana’s recent metrics and price rally: The network has added 58 new nodes since Sept. 28.

— Jack Kubinec

Despite sunnier conditions, validators’ slice of the economic pie keeps shrinking:

Stakers, who once claimed next to no REV, or the fees and tips ginned up by Solana, now command nearly half. Taking a cursory glance at the numbers, it appears that staker REV ramped up at the same time that Jito Labs’ block engine began drawing revenue. This would make sense, because the Jito-Solana client lets validators share MEV rewards with stakers. These MEV rewards have increased dramatically in recent weeks. 

A rising tide does lift all boats, but validators likely wish their boat was a bit bigger.

— Jack Kubinec

ICYMI — Stories you may have missed from Solanaland this week:

• Coinbase launched cbBTC, a Bitcoin-backed token, on the Solana blockchain with an initial $10 million deployment. This move aims to fill the void in Solana's DeFi ecosystem left by FTX's collapse.

• Libeara, backed by SC Ventures, will introduce an on-chain US Treasurys fund on Solana and other chains. This new ULTRA Fund aims to tokenize treasury assets, bringing institutional credibility to Web3 finance.

• Phantom wallet has integrated Venmo, giving over 60 million US users a seamless way to purchase SOL via MoonPay.

• The M^0 Foundation is bringing its stablecoin $M to Solana, enabling institutions to issue and manage tokenized USD assets across ecosystems with Wormhole NTT.

• Pump.fun rolled out a "Tips" feature, allowing users to support developers and discourage small sell-offs, helping sustain developer engagement.

• Syndica announced significant upgrades to its Solana RPC services, adding 10 million free calls, improved rate-limiting, multi-region routing, and real-time analytics to support developer scalability.

• deBridge will publish a community-driven proposal for DBR staking and governance, seeking input on staking, governance roles, and validator oversight to further decentralize its platform.

• Solana's price increased by more than 21% over the past week, reaching a peak of $205 on Friday. This surge has pushed Solana past BNB, making it the fourth-largest cryptocurrency by market capitalization.

— Jeffrey Albus

A message from Sebastian Kühne, co-founder of Phase Labs: