Solana: How the Decentralization Coefficient Reveals Network Decay

The Solana blockchain is in a quiet crisis. While network activity appears stable on the surface, a troubling development becomes evident upon closer inspection: the degree of decentralization of the network is continuously eroding. A key indicator of this problem is the Nakamoto coefficient, a metric that measures how distributed control over a blockchain network truly is. For Solana, this coefficient has dropped from 31 (March 2023) to the current 20 – a 35 percent decline that clearly indicates increasing concentration of network control.

The Dramatic Decline of Validator Nodes

The decrease in the coefficient can be traced to a concrete development: the massive reduction in independent validator nodes. In March 2023, the Solana community operated 2,560 validators. Today, there are only 795 – a 68 percent drop in just over two years. These numbers are not only statistically significant but also violate a core principle of blockchains: decentralization as the foundation for security and trustworthiness.

Validators are the backbone of any blockchain network. They process transactions, secure the network, and contribute to decentralization. The dramatic shrinkage in their numbers raises important questions: Can Solana still be considered decentralized if fewer and fewer actors operate the network?

Why the Coefficient Is Falling: The Reality Behind the Numbers

The Nakamoto coefficient provides the answer. The metric shows that not only are fewer validators active, but the remaining actors hold a higher concentration of staking power. In other words: control over Solana is concentrating in fewer hands.

The problem is not a lack of trust in the technology but simple economic pressures. The independent validator operator Moo made this clear on X: “Many small validators are considering shutting down their nodes – not due to a lack of trust in Solana, but because it is no longer economically viable.” Large node operators, especially those charging zero fees, make it impossible for smaller validators to operate profitably. The result: decentralization is becoming unpaid charity work.

The Invisible Wall: Operating Costs

Barriers for new or smaller validators are significant. According to the technical documentation of the Solana validator software Agave, operators must hold at least 401 SOL per year to cover voting fees. Add hardware, bandwidth, and server costs. Altogether, running a validator requires an initial investment of about $49,000 in SOL tokens – an amount that many smaller actors cannot afford.

This financial barrier creates a selection mechanism: only wealthy organizations or large stakeholders can afford to operate the network. Small, decentralized actors are systematically excluded.

The Silent Crisis

Notably, the Solana Foundation has remained silent on these developments. While the Nakamoto coefficient is falling and the validator base is shrinking, the foundation has not yet addressed decentralization concerns. This leaves room for speculation: Is the extent of the problem known? And if so, is there a plan to restore decentralization?

Current trends suggest that Solana is inevitably heading toward a network design dominated by a handful of large validators. The coefficient will continue to fall until decentralization becomes only a theoretical concept.