Restaking is an emerging concept that has quickly become a central theme in the current crypto cycle. However, this concept is not new; the earliest example of restaking can be traced back to Polkadot’s Parachain system. Each Parachain can have its own specific use case, governance model, and tokens, but they all benefit from Polkadot’s shared security model, meaning they don’t need to secure their own networks. Instead, they rely on the Relay Chain for security, allowing the stake on Polkadot to secure other chains.
This concept has also been adopted by Cosmos through Interchain Security. The concept of Replicated Security involves one blockchain serving as a security provider for other blockchains. The blockchain that provides security is referred to as the Provider Chain, while the blockchains inheriting the full security and decentralization of the Provider Chain are called Consumer Chains.
More recently, the concept has been brought to Ethereum via EigenLayer, and projects like Symbiotic and Karak have also emerged, actively competing within Ethereum's ecosystem. On Cosmos and Polkadot, restaking is embedded directly within the protocol, in contrast on Ethereum, restaking is facilitated via smart contracts, creating a more open market where restaking marketplaces can operate independently. Here, the idea is to use ETH, ETH LSTs, or ERC20s to secure other networks, known as Actively Validated Services (AVS), in order to earn additional yield while accepting additional risks, such as slashing (which would come in the future). With Ethereum’s rollup-centric roadmap and the growth of Layer 2s, liquidity and dApps are increasingly shifting away from Ethereum Layer 1 to L2s. As a result, the core value proposition of Ethereum Layer 1 will become its economic security and large market capitalization. EigenLayer, along with other restaking marketplaces like Symbiotic and Karak, capitalizes on this by offering economic security to Ethereum-aligned external networks.
In this paper, we will provide an overview of the restaking market on Ethereum as it stands today, explore its business model and economics, and discuss the future of the restaking landscape and its challenges.
In the Ethereum restaking space, 3 prominent platforms have emerged: EigenLayer, Symbiotic, and Karak. EigenLayer has taken the lead as the first restaking marketplace to launch on Ethereum Mainnet and continues to dominate in terms of Total Value Locked (TVL), with over 4.17 million ETH equivalent.
On June 19, 2024, EigenLayer reached its peak TVL, hitting an all-time high of 5.43 million ETH equivalent before experiencing a slight decline.
Symbiotic began accepting deposits on June 11, 2024, quickly reaching its initial deposit cap of 41,290 wstETH in just 5 hours. A second cap of 210,600 wstETH was set on July 3, 2024, and was also reached within 4 hours. The last cap was introduced on August 14, 2024, coinciding with the launch of BTC deposits. These different deposit caps are clearly visible in the graph below.
Currently, Symbiotic has approximately 644,000 ETH equivalent deposited on its platform.
Note: Symbiotic has not yet launched its mainnet, users can only deposit funds at this stage.
Karak successfully launched its mainnet on October 18, 2024, marking a significant milestone for the platform. However, the protocol has attracted slightly fewer deposits compared to both EigenLayer and Symbiotic, with around 205,000 ETH equivalent deposited.
In this competitive market, despite the emergence of new platforms, EigenLayer remains the clear leader, holding approximately 6x more TVL than Symbiotic and 20x more than Karak.
A significant portion of EigenLayer's TVL is driven by Liquid Restaking Protocols (LRTs). Our analysis of the major LRTs on EigenLayer shows that they currently account for approximately 75.37% of the platform's TVL, with an all-time high of 75.46% in July 2024. This indicates that more than 75% of the TVL in EigenLayer comes from users interacting with Liquid Restaking protocols rather than directly through the EigenLayer application.
The protocols included in our analysis are EtherFi, Renzo, Puffer Finance, Kelp DAO, Swell, and Bedrock.
When examining the composition of each LRT, we can see that EtherFi is the largest LRT contributor on EigenLayer, followed by Renzo and Puffer.
There are several reasons why LRTs have become the primary liquidity source for EigenLayer and restaking platforms in general:
Looking at Symbiotic, a similar pattern emerges, with approximately 61.61% of the TVL coming from Mellow vaults and EtherFi. This highlights that a large portion of liquidity is funneled through external protocols rather than directly through Symbiotic itself.
Only about 38.39% of the total TVL has been deposited directly via the native Symbiotic app.
For Karak, the situation is a bit different. It appears that there is only one major LRT on Karak, which is EtherFi with around 17% of the TVL, while 83% of the Karak TVL has been deposited on the native app.
Let’s dive into recent movements in the restaking space. A quick look at the inflows and outflows between EigenLayer and Symbiotic suggests that large inflows into Symbiotic correspond with outflows from EigenLayer.
Based on a recent analysis from Gauntlet, covering the period from June to September 2024, approximately 1,011,000 ETH was withdrawn from EigenLayer during this time. Of this, around 170,000 ETH was moved directly to Symbiotic. However, users didn’t just transfer this amount, they added another 37,000 ETH on top, making a total of 207,000 ETH deposited into Symbiotic.
The 207,000 ETH deposited into Symbiotic accounts for about 42.20% of the 488,000 ETH locked in Symbiotic at that time, meaning that approximately 42.20% of Symbiotic's TVL came directly from withdrawals on EigenLayer.
However, it’s important to note that only 16.5% of the ETH withdrawn from EigenLayer has remained within the restaking ecosystem, while the other 83.5% has exited the market entirely for now.
EigenLayer and Symbiotic flows, Source: Gauntlet
Restaking is supposed to allow networks, commonly known as Actively Validated Services (AVSs) in the restaking ecosystem, to quickly bootstrap a validator set and get a certain level of economic security with minimal time investment.
In this model, platforms like EigenLayer, Symbiotic, and Karak act as marketplaces where restakers, operators, and AVS entities come together. However, their goals are not the same. Here’s a breakdown:
At this point in the market, very few AVSs have clearly defined how much economic security they need or how much they are willing to offer to attract operators and restakers.
Who is restaking meant for?
Restaking has not yet found a clear product-market fit. It isn’t particularly suited for high-value, high-FDV networks, as these networks are large enough to offer large incentives, manage their own validator sets, and provide additional utility for their native tokens (for example, staking the native token to earn a staking yield, rather than paying restakers who hold a different token). It’s difficult to imagine large networks like Monad or others using restaking.
That said, restaking seems more suitable for small to medium-sized projects that don’t yet have the resources to bootstrap a totally sovereign network. Restaking allows them to grow, mature and find product-market fit before being totally sovereign without relying on 'rent' payments to holders of other tokens. However, there are also some AVSs that use restaking for very specific purposes and are not intended to be sovereign, as they bring services and value to the underlying Layer 1.
EigenDA stands out as the first AVS to distribute yield to both restakers and operators. Currently secured by around $10 billion in economic security, it has become a significant player in the emerging restaking ecosystem. However, the economics of maintaining such a network pose several challenges and require a closer examination.
Yield Distribution and Economic Security
EigenDA currently offers 10 ETH per month in rewards to restakers and operators. With a TVL used for economic security of around $10 billion, the total annual amount distributed to operators and restakers corresponds to $300,000 assuming the price of ETH at $2,500. Assuming an economic security of $10 billion, this represents a gross APR of just 0.003%.
This low yield highlights a key challenge in the restaking model: balancing the need for economic security with adequate incentives for participants.
The Cost of Running an AVS
The cost of operating an AVS varies based on the specific infrastructure and requirements needed for it, but on average, we estimate the monthly infrastructure cost to run at around $400 per AVS. Over the course of a year, this represents approximately $4,800 for a single AVS. With 18 AVSs currently in the market, the annual cost for one operator to run all of them comes to $86,400. It’s important to note that this figure does not account for additional expenses such as the salaries of the DevOps teams required to maintain and secure the infrastructure.
EigenLayer currently has 340 operators running at least one AVS each. If an AVS wants to fully leverage the economic security provided by EigenLayer while ensuring that operators cover their infrastructure costs, the financial commitment grows significantly. The formula is simple:
• $400 per month per operator
• 340 operators
This results in a total annual infrastructure cost of $1.63 million. And that’s just for maintaining the infrastructure by 340 operators, it doesn’t include the incentives that need to be paid to restakers.
Cost for an AVS to cover infrastructure costs
EigenLayer has introduced programmatic incentives to maintain its TVL on the platform. You can track the yield from these incentives here. EigenLayer is distributing 16,736,467 EIGEN to Eigen restakers and operators over one year, and 50,209,400 EIGEN to ETH and ETH LST restakers. This not only supports the restaking economy but also helps AVSs to take the time to find ways to incentivize operators and restakers.
In most cases with restaking, AVSs that aren’t yet generating revenue will likely introduce a native token to incentivize restakers. This means they will use their native token to compensate ETH restakers or other ERC20 restakers. As a result, restakers who may simply prefer their rewards in ETH or a specific ERC20 token, are likely to automatically convert these AVS rewards back into their preferred tokens.
Economically, this model is fundamentally weaker than a traditional Proof of Stake system. In traditional staking, participants buy the native token, show commitment to the project, and stake to earn rewards. Since they’ve invested in the native token, they are more likely to hold onto their staking rewards longer than restakers who receive AVS rewards.
In today’s restaking market, there are also auto-compounding products that automatically convert restaking rewards into ETH to boost the restaked position, which encourages immediate selling of AVS tokens.
As slashing goes live, we expect restakers to pay closer attention to the operators they select, particularly the quality of services offered. Additionally, TVL growth will likely be driven by operators’ ability to deliver the best risk-adjusted returns.
Marketplaces are expected to become more flexible, with leading AVSs establishing caps on the amount of security they require or incentivize. The evolution of TVL numbers for AVSs is likely to change as soon as the activation of slashing and yield mechanisms will encourage each AVS to set limits on the TVL they incentivize. This implies that delegations to each AVS will be limited, or yields will be diluted, as AVSs aim to avoid paying for excess security they don’t need.
The introduction of a new security model that distinguishes between "unique" and "total" stake will reshape distribution.
We anticipate different methods by which AVSs will compensate operators for providing security:
At this stage, we believe the leading node operators will benefit in two key ways:
This change in economic conditions could impact major Liquid Restaking Protocols. They attracted substantial liquidity thanks to their own incentives in native tokens, but they now have billions in economic security to provide to AVSs, which, on the other hand, will be difficult to incentivize given the high amount to incentivize for the AVSs. What we see is the following:
To be sustainable, the best LRTs must offer at least the Ethereum staking yield and compete directly with Liquid Staking Tokens (LSTs). This is why many LRT protocols accept native ETH (such as EtherFi, Renzo, Swell, etc.). Even if the restaking yield isn’t significant, users still gain exposure to an LST+ protocol, meaning they receive the benefits of liquid staking as a baseline, with potential upside if the restaking yield becomes attractive.
The Ethereum restaking ecosystem has unlocked new possibilities, enabling small to medium-sized projects to leverage Ethereum’s economic security. While restaking offers significant advantages, its current economic model and design face some challenges. As Ethereum restaking continues to evolve to address these issues, we can expect increased collaboration between AVSs and leading operators, fostering a stronger and more sustainable ecosystem for restakers.
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
The TON blockchain has emerged as a promising platform, but for institutions (wallets, exchanges, custodians etc.) looking to offer Toncoin staking to their customers, current options come with serious limitations. From high staking minimums to complex pool management, existing solutions fall short of meeting the needs of large-scale, flexible staking.
Recognizing this gap, we have launched TON Pool – a staking solution designed to meet the unique requirements of institutional players while making Toncoin staking simpler, more efficient, and scalable.
The TON ecosystem currently offers the Nominator Pool and Single Nominator contracts as staking options. However, both models restrict the number of delegators and impose high minimum stake requirements, which limits accessibility for larger institutions that manage staking services for numerous clients. These limitations force institutions to distribute stakes manually across multiple pools, adding operational complexity and increasing transaction fees, while impacting the final yield. (We covered the current TON staking mechanisms in detail here.)
With these pain points in mind, we saw an opportunity to create a tailored solution that eliminates these barriers and optimizes staking for our customers needs.
TON Pool addresses the shortcomings of current models by providing a flexible, high-efficiency staking solution that scales for larger institutions and various service providers. TON Pool aggregates Toncoin from an unlimited number of users into a single pool, offering seamless in-protocol distribution across multiple validators and removing the need for complex management. The result? A more streamlined, cost-effective, and yield-optimized staking experience for institutions and their customers.
TON Pool is designed for:
One of the most significant advantages of TON Pool is its streamlined staking flow. Here’s a comparison of how staking works with traditional models versus TON Pool:
With TON Pool, customers no longer need to juggle multiple addresses or pay per transaction. Instead, they delegate once, paying a single fee, while all technical complexities are managed seamlessly within the protocol.
“TON Pool is our answer to the challenges institutions face when staking on the TON blockchain. We built this solution to remove unnecessary steps, lower costs, and provide a scalable option for institutions that require a higher degree of flexibility. TON Pool makes staking more accessible and profitable, which we believe is essential to driving the TON ecosystem forward,” - Brian Fabian Crain, CEO, Chorus One.
For more details about TON Pool and to get exclusive discounted commission rates, reach out at staking@chorus.one, and sign up now to be among the first to experience streamlined, scalable Toncoin staking.
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
Our latest episode welcomes Bo Du, Founder of Polymer Labs! 🔥
In this episode of the Chorus One Podcast, hosted by our Research Analyst, Kam Benbrik, Bo shares his journey from Web 2.0 to DeFi and discusses the mission of Polymer Labs in enhancing blockchain interoperability.
Key topics include the intricacies of rollup mechanisms (OP stack vs. Arbitrum), the importance and challenges of blockchain interoperability, and Polymer's integration with the Cosmos ecosystem. Bo also explores the future of scalable infrastructure, the trade-offs in decentralizing sequencers, the economic implications of ZK technology, and the incentivization of relayers in the IBC ecosystem.
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About Chorus One
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
Due to the unique architecture of blockchains, block proposers can insert, censor, or sort user transactions in a way that extracts value from each block before it's added to the blockchain.
These manipulations, called MEV or Maximum Extractable Value, come in various forms. The most common are arbitrage¹, liquidations², NFT mints³, and sandwiching⁴. Arbitrage involves exploiting price differences for the same asset across markets. Liquidations occur in lending protocols when a borrower’s collateral drops in value, allowing others to buy it at a discount. NFT mints can be profitable when high-demand NFTs are resold after minting.
Most types of MEV can benefit the ecosystem by helping with price discovery (arbitrage) or preventing lending protocols from accruing bad debt (liquidations). However, sandwiching is different. It involves an attacker front-running a user’s trade on a DEX and selling immediately for a profit. This harms the ecosystem by forcing users to pay a consistently worse price.
Solana's MEV landscape differs from Ethereum's due to its high speed, low latency, lack of a public mempool, and unique transaction processing. Without a public mempool for viewing unconfirmed transactions, MEV searchers (actors specializing in finding MEV opportunities⁵) send transactions to RPC nodes directly, which then forward them to validators. This setup enables searchers to work with RPC providers to submit a specifically ordered selection of transactions.
Moreover, the searchers don't know the leader's geographical location, so they send multiple transactions through various RPC nodes to improve their chances of being first. This spams the network as they compete to extract MEV—if you're first, you win.
Jito
A key addition to the Solana MEV landscape is Jito, who released a fork for the Solana Labs client. On a high level, the Jito client enables searchers to tip validators to include a bundle of transactions in the order that extracts the most value for the searcher. The validators can then share the revenue from the tips with their delegators.
These revenues are substantial. Currently, the Jito-Solana client operates on 80% of validators and generates thousands of SOL daily in tips from searchers. However, searchers keep a portion of each tip, so the total tip amounts don’t reveal the full MEV picture. Moreover, the atomic arbitrage market is considerable, and as we’ll explore later, Jito's tips don’t give an accurate estimate of the atomic MEV extracted.
Jito⁶ introduced a few new concepts to the Solana MEV landscape:
There’s more to the current MEV landscape on Solana, particularly concerning spam transactions, which largely result from unsuccessful arbitrage attempts, and the various mitigation strategies (such as priority fees, stake-weighted quality of service, and co-location of searchers and nodes). However, since these details are not central to the focus of this article, we will set them aside for now.
It's still early for Solana MEV, and until recently, Jito was the only major solution focused on boosting rewards for delegators. Following the same open-source principles, the Paladin team introduced a validator-level bot⁷ and an accompanying token that accrues value from the MEV collected by the bot.
The main idea behind Paladin is this:
Paladin’s success, therefore, depends on validators choosing honesty over toxic MEV extraction by running the Paladin bot.
Bots like Paladin⁸ operate at the validator level, enabling them to capitalize on opportunities that arise after Jito bundles and other transactions are sent to the validator for inclusion in a block.
In this scenario, once the bot assesses the impact of the transactions and bundles, it inserts its transactions into the block. The bot doesn’t front-run the submitted transactions but leverages the price changes that result after each shred is executed.
Paladin can also extract MEV through DEX-CEX arbitrage and optimize routes for swaps made via DEX aggregators. However, these features are currently not used in practice, so we only briefly mention them. Since the bot is a public good, the community can contribute by adding features like NFT minting or liquidation support in the future.
The PAL token is where 10% of the value extracted by the bot in SOL gets accumulated. Paladin will go live at TGE, which will airdrop the entire supply of 1 billion PAL in the following proportions:
At the architecture level, the MEV extracted by the bot is sent to a smart contract, which then distributes it as follows:
The crucial part of the Paladin architecture is slashing. If the validator misbehaves and extracts MEV through sandwiching, staked PAL holders (other validators and their delegators) can vote to slash the rogue validator. The slashing happens if >50% of the majority is reached and stays at this level for a week. The slashed PAL is burned.
Other actions that could lead to slashing include not running Paladin, using closed-source upgrades, or not participating in slashing votes. This isn't an exhaustive list, as PAL stakers can vote to slash for other reasons at their discretion. While sandwiching is easy to spot, other "misbehaviors" may not be as obvious and would require monitoring tools, potentially leading to enforcement issues.
Unstaking PAL is capped at 5%, and a cooldown period of one month before the next withdrawal can be made.
There are several controversies about Paladin⁹. Here are common criticisms:
Validators Profit Unfairly
This is not true. Palidators (validators running Paladin) receive 90% of the MEV extracted by the bot, which they can redistribute to their delegators while keeping their standard commission. The remaining 10% goes to the PAL token, with 7.5% each going to validators and their stakers. This setup ensures validators don't take a larger share of MEV profits. If a validator doesn’t share the captured MEV, delegators can switch to one with a healthy long-term track record, like Chorus One.
Run Paladin or Die
Validators must run Paladin and avoid toxic MEV extraction or any actions that could undermine their reputation for honesty. Slashing can also occur if validators run closed-source software on top of Paladin. This doesn't mean market participants can't enhance the bot. On the contrary, they are encouraged to do so and can be rewarded in PAL if their improvements are openly available to others.
No Development Post-TGE
After the PAL airdrop, the Paladin team will no longer develop the bot¹⁰. All maintenance and strategy updates will be the community's responsibility from then on. This includes adding new liquidity pools or tokens to identify emerging MEV opportunities. While a fund has been set aside for future development, it is uncertain how long it will last. Development may stall if the incentives dry up.
With the knowledge of how Paladin works, let’s evaluate its target market and assess its performance based on our collected data.
Atomic Arbitrage Market
We will start by analyzing Jito tips paid for atomic arbitrage and compare them to the overall atomic arb market to see how much of the atomic opportunities have been captured through Jito.
We will use data from mid-August 2024¹¹ onward, when the share of Jito tips related to atomic arbitrage rose significantly. We exclude earlier data to avoid bias. Interestingly, this spike happened despite the drop in the total MEV extracted through atomic arbs, indicating increased competition among searchers now willing to share more Jito tips.
Even though tips from atomic arbs have increased compared to the total arb MEV market, they still make up only a small percentage of the total Jito tips paid.
Only 4.25% of the tips searchers paid during the sampled period were from atomic arbs (SOL 10,316 out of SOL 242,754). At a SOL price of $150, this is $1,547,400, while the total atomic MEV extraction reached $6,567,554.
So, only about 23% of the total atomic arbitrage opportunities were shared through Jito! Some striking examples include:
This shows that most on-chain arbitrage MEV is being captured outside of Jito. Unfortunately, this also leads to a high number of failed transactions.
During one of the measured five-day periods, over 1 million arbitrage transactions were made, with 519k of them submitted through the Jupiter aggregator [source]. This led to a significant number of failed transactions because:
The above data shows that Paladin can tap into a sizable on-chain arbitrage market by finding opportunities more efficiently and avoiding failed transactions. This approach would benefit validators by filling blocks with successful transactions and improving the ecosystem by reducing congestion.
The annual atomic arbitrage market is around $42.4 million. With 392 million SOL staked [source] ($58.9 billion at $150 per SOL), this could add about 0.07% APY to validator performance.
Let's dive deeper into the data to see how much market the bot can take.
Distribution and Dataset
The distribution of atomic arb MEV in USD per slot for the data collection period (15 August to 10 October 2024) looks as follows:
The median value is $0.00105 per slot, with atomic arbitrage opportunities occurring in 51.6% of slots.
Paladin operated on our main validator with a 1.15m SOL stake for a week between 4 October and 11 October. Let’s see the atomic arbitrage market opportunities during the bot's operation period:
The median value is $0.00898 per slot, and the chance of atomic arbs is present in 59.47% of slots.
The KS test shows inconsistencies in both datasets, with a positive shift in the distribution, indicating higher values in the second dataset. Therefore, Paladin operated in a more favorable environment, with more significant and more frequent MEV extraction opportunities than the broader measurement period. This is especially clear when you look at the size of Jito tips during our timeframe.
Now, let's look at how Paladin performed in these circumstances.
The median arb profit is $0 per slot, with opportunities taken only in 29.64% of slots.
Here’s a more detailed summary of all three distributions:
As we can see, Paladin underperformed, capturing significantly less MEV and earning less per slot. The bot only managed to capture 15.84% of the total available atomic arbitrage opportunities.
In some of the most striking examples, the bot extracted only 0.00004 SOL (here and here), while the actual extractable value was $127.59, as seen in Tx1, Tx2, Tx3, Tx4, and Tx5.
The reason for failing to extract MEV from the opportunities in the linked transactions is that Paladin doesn’t support the traded token ($MODENG). This is a problem since memecoins are currently driving network activity and will likely contribute the largest share of MEV. These tokens emerge rapidly, requiring frequent updates to routing. One of Paladin's top priorities should be quickly adapting to capture MEV from new memecoins as they arise, and the lack of team involvement in the process is problematic in this context.
Estimated Returns
Now, let’s run a simulation to estimate the returns under different scenarios based on a stake share of 0.3% (Chorus One's share), 1%, and 10%. The returns are capped at 15.8%, which is the portion of opportunities Paladin captured in our data.
The median value for 0.3% of the total stake is around $20k, which matches the annualized value of what Chorus One earned. This increases to about $65k for a validator with 1% of the total stake and exceeds $700k for a hypothetical validator with 10%.
We also ran a simulation to estimate how much Paladin’s performance could improve if it captured 80% of available opportunities for a validator the size of Chorus One across different adoption levels—1%, 10%, 25%, and 50% of total stake using Paladin. At an estimated 1% adoption, our validator earns an additional 0.01% APY from the bot, while the total potential atomic arbitrage could generate 0.07% of the total stake.
The simulation assumes:
And in a more tangible form:
As we see, Paladin could generate a median of additional 0.29% in APY for a validator with 0.03% of the total stake once adoption reaches 50%.
We've been in touch with the Paladin team, who confirmed that a new version of the bot, P3, is in the works. This version will pivot from focusing on the atomic arbitrage market, which they no longer see as substantial enough to prioritize.
Maintenance
The bot has been stable without major issues, but Paladin requires patches to update strategies and fix smaller bugs. Maintaining the bot is also time-consuming for the engineering team, as each patch requires a restart and the process is more complex than anticipated, adding extra overhead.This is a similar problem we faced with our Breaking Bots—maintenance and strategy update costs were high. Eventually, we concluded that the effort was not exactly worth it. With Paladin, however, a whole community could tackle this problem, so things may look different.
Paladin has great potential to boost earnings for validators and stakers by tapping into new opportunities, but it's still in the early stages of development. While our analysis shows that Paladin currently captures only around 15.84% of available atomic arbitrage opportunities, this will likely improve as the bot becomes more optimized and widely adopted. The upside is promising—the total atomic arbitrage market could add 0.07% to a validator’s APY. While capturing all of it is unlikely, even a share of this can lead to solid gains.
That said, there are challenges to address. The bot’s development will shift to the community after the token TGE, raising questions about whether there will be enough resources and motivation for continuous updates. Additionally, maintaining the bot on the validator side can be tricky, as each patch requires a restart, making it time-consuming for validators to run.
At Chorus One, we believe that the long-term health of the Solana ecosystem is paramount. Paladin builds on the same core principles as Jito—to mitigate the toxic MEV and democratize good MEV.
We developed Breaking Bots with these ideas in mind, and we see Paladin as an extension of our efforts. Two solutions are better than one, and Paladin offers an interesting alternative to what exists today. Supporting multiple approaches is a cornerstone of decentralized systems, and we welcome new ideas that build resilience.
While we don't agree with all of Paladin's choices, especially regarding the team's lack of future bot development, we believe its success will benefit the entire ecosystem, and that's why we support it.
That being said, if the core principles Paladin is built on change, or the maintenance costs outweigh the benefits in the mid-term, we will reevaluate our position.
References:
1 You can find an interesting overview of arbitrage MEV here.
2 A detailed analysis of liquidations in DeFi is available in this paper.
3 More about the NFT MEV here.
4 Chorus One also provided an analysis on Solana sandwiching in here.
5 An in-depth write-up on searchers by Blockworks is here.
6 Information based on Jito documentation.
7 At Chorus One, in our “Breaking Bots” paper, we proposed a similar solution. The implementation details are available on GitHub.
8 Information based on series blogposts by the Paladin team.
9 Some of the examples available here, here,
10 Per the blogpost: We’re not a Foundation or Labs — we don’t run any part of Paladin, we don’t develop it, we don’t maintain it…
11 The data used in this section is available here and can be retrieved using these queries.
About Chorus One
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.