Solana Network Experiences 68% Decline in Validators Over Three Years: What’s the Situation?

The Solana network has seen a significant drop in its validator count, plummeting by over 68% in the past three years. This decrease raises questions about the integrity and security of the blockchain, while some view it as an essential cleansing of inactive nodes.

Key Takeaways

Solana's validator count has decreased from around 2,500 to approximately 800.
The decline raises concerns about the network's health and security.
Some believe the loss of 'Sybil validators' could be beneficial for network efficiency.
The decrease has not necessarily improved network quality, as many leaving were legitimate validators.
Solana is also facing liquidity challenges, indicated by a declining profitability trend.

Solana

Solana's Validator Count Drops Dramatically

According to a recent report by Criptonocias, the Solana network is experiencing a steep reduction in both active and inactive validators. This decline has raised alarms in the crypto community regarding the overall security and vitality of the network.

In just three years, the validator count has fallen from 2,500 to 2,100 in November 2022, and now it hovers around 800. This means that the network has lost approximately 1,700 validators. Such a significant reduction would typically raise red flags; however, it may also reflect ledger pruning—an efficient process that involves removing inactive nodes to enhance network performance without sacrificing security.

Validators perform essential roles within a blockchain, including running nodes, verifying transactions, and upholding system integrity. A diverse group of validators is crucial for minimizing the risk of any single entity gaining too much control over the network.

Solana Chart
Source: Chart from Criptonocias

Some voices within the Solana ecosystem view this reduction as a positive development. They argue that the removal of "Sybil validators," which are nodes that masquerade as multiple independent operators but are actually controlled by a single entity, can be advantageous. From this viewpoint, having fewer but reliable validators is preferable to maintaining a large number of non-contributing nodes.

However, Criptonocias reported that many of the validators exiting the network are not Sybils but legitimate operators—implying that the decline in numbers does not necessarily translate to improved network quality, despite discussions about ledger pruning.

The impact of this trend on the Solana network, whether positive or negative, will largely depend on the independence of the remaining validators and the power dynamics among them. An updated validation report indicates a further decrease in the validator count from 800 to 795.

Solana Struggles with Liquidity and Profitability

Amid this validator decline, the Solana network is facing liquidity challenges, accompanied by decreasing profitability. On-chain data from Glassnode points to a concerning trend in trading activity, with the 30-day average realized profit-to-loss ratio dropping below 1 since mid-November.

A profit-to-loss ratio below 1 is generally an indicator of bear market conditions and signifies a growing disparity between profits and losses among traders. This trend highlights that traders are realizing losses more often than profits, signaling a weakening sentiment in the cryptocurrency market.

Solana Trading Chart
SOL trading at $136 on the 1D chart | Source: SOLUSDT on Tradingview.com