A Deep Dive into Jito Stakenet

Chainflow -

JitoSOL is a liquid staking token on the Solana network designed to streamline and optimize the delegation of SOL tokens to a set of Solana validator operators. The system behind JitoSOL relies on a delegation manager who is responsible for managing the SOL deposited by users. This delegation manager operates within Solana's delegated staking system, handling the delegation and cooldown of SOL. The evolution of this process from an off-chain bot to a decentralized, on-chain system marks a significant step in enhancing the transparency and efficiency of staking on the Solana network. This transformation is primarily driven by the introduction of StakeNet, a decentralized solution that brings the entire delegation process on-chain.

Transition from Off-Chain to On-Chain Delegation

Initially, the delegation process for JitoSOL was managed by an off-chain bot. This bot was responsible for monitoring validator performance, storing this data in a database, and periodically deciding how to allocate the SOL deposited across eligible validators. While functional, this system's off-chain nature lacked transparency and relied on external infrastructure. With the advent of StakeNet, the delegation process has been fully decentralized and moved on-chain. Instead of relying on an off-chain database, all necessary information is stored on the Solana blockchain. Additionally, the off-chain delegation bot has been replaced by an on-chain program that anyone can interact with to keep the staking pool updated.

StakeNet Programs: Validator History and Steward

StakeNet comprises two key programs: the Validator History program and the Steward program. The Validator History program, located at the address HistoryJTGbKQD2mRgLZ3XhqHnN811Qpez8X9kCcGHoa, maintains a record of validator performance metrics. This program ensures that up-to-date and accurate data inform the delegation process.

The Steward program, found at the address Stewardf95sJbmtcZsyagb2dg4Mo8eVQho8gpECvLx8, is the core of the StakeNet system, managing the delegation of stakes to validators. It utilizes the data stored by the Validator History program to compute validator scores based on various factors, including voting performance, commission rates, MEV (Maximum Extractable Value) commission, and superminority rank. The program operates as an on-chain state machine, where operators can permissionlessly interact to perform tasks such as delegating new stakes, moving stake accounts, and swiftly removing stakes from underperforming validators.

Monitoring and Data Integrity

StakeNet operators are critical in maintaining the system by periodically sending transactions that copy information from Solana accounts into the StakeNet program. These accounts include the vote account, which stores validator voting performance and commission details, and the tip distribution account, which tracks MEV commission and earnings. Moreover, operators upload P2P gossip data from the Solana network using the Ed25519SigVerify111111111111111111111111111 syscall to verify the authenticity of the signed gossip data. This gossip information includes the validator client, version, and IP address, providing insights into the status and performance of validators on the network.

The collection of gossip data is essential for monitoring the health and efficiency of the Solana network. It enables operators to assess whether a validator is online, responsive, and actively participating in consensus. Furthermore, gossip data offers valuable information about network performance, including latency, congestion, and potential issues. Using the Ed25519SigVerify syscall ensures the authenticity of this data, safeguarding the network’s security and integrity. Early detection of possible problems through gossip data monitoring allows operators to take corrective actions before issues escalate.

StakeNet Steward Program: Optimized Delegation

The StakeNet Steward Program is integral to how JitoSOL delegates stakes to validators. It leverages on-chain validator history to compute scores and optimally delegate stakes based on a comprehensive set of criteria. The state machine managed by the Steward program allows for dynamic adjustments to staking allocations. Validators that perform well receive additional stakes, while those that perform poorly see their stakes redelegated. In cases where a validator exhibits particularly poor performance or engages in malicious behavior, such as a commission rug, the stake is immediately unstaked and redelegated to another operator.
Validator performance scores are computed every 10 epochs using a 30-epoch lookback window. Based on these scores, stakes are redelegated to operators according to the parameters stored in the Steward program’s configuration. The next scheduled rebalance is set to occur at epoch 669, nine epochs from the current period.

JIP 3: Transfer of Jito Stake Pool Management to StakeNet outlines a plan to significantly decentralize the Jito Stake Pool's management processes by transitioning to the StakeNet protocol. This move aims to enhance security, efficiency, and transparency while empowering the community through on-chain governance.

Key Points from the Proposal JIP-3:

  • StakeNet Protocol: A decentralized protocol developed by Jito Labs to automate staking processes on Solana.
  • Phased Transition: The transition is divided into three phases: Preparation, Partial Transition, and Full Transition.
  • Benefits: Increased decentralization, scalability, community involvement, and reduced risk of centralized control.
  • Risks: Potential implementation challenges, community adaptation period, and security vulnerabilities.
  • Cost: No immediate cost to the DAO, but future proposals might require funds for bug bounties and keeper incentives.

Progress and Updates:

Community Review: The StakeNet code has been open-sourced, allowing for community review and feedback.
Performance Analysis: Jito Labs has shared historical analysis and mock LST performance data to help validators understand StakeNet's potential.
Transition Phases: The initial phases are underway, with Jito Labs maintaining control over upgradability and delegation parameters during the Partial Transition phase.

  • Minimum 3 cycles (30 epochs) successfully completed on mainnet without any bug fixes required
  • Minimum 2 independent parties besides Jito Labs running Steward keepers with demonstrated reliability of landing transactions
  • Demonstrated ability to continue state transitions during network congestion
  • Bug bounty program live for 3 months without critical / high severity vulnerabilities reported

Key Developments after Proposal JIP-3 Passed

Successful Transition: The Staker authority of JitoSOL was successfully transferred to the Steward Program on Monday afternoon, marking a significant milestone in the decentralization process.

Security Enhancements: Jito Labs has addressed all important feedback from Ottersec, to strengthen the StakeNet protocol. While the formal report is not yet available, it can be found here: https://github.com/jito-foundation/stakenet.

Ongoing Development: The StakeNet protocol continues to evolve. The current version, which is available for review on GitHub, is part of the steward-test-branch branch. https://github.com/jito-foundation/stakenet

Keeper bot is open sourced. Current statusJitoStakenet in https://github.com/jito-foundation/stakenet/tree/master/keepers/stakenet-keeper

  • Two independent validator infrastructure providers have agreed to run dedicated keeper bots alongside Jito Labs to give redundancy to the cranking of Validator History and Steward programs. Those parties are Edgevana and Laine. They are not being compensated
  • There is a robust monitoring/alerting setup for any critical issues.
  • UI will be available on launch day to see the progress of the state machine, all validator stake movements, and scoring

Challenges and Considerations

Historical Commission Threshold: Validators with temporary configuration errors could be excluded from the Stake Pool. Jito Labs is considering potential solutions to address this issue, such as ignoring short-term errors or implementing a "redemption" mechanism.

MEV Commission Manipulation: While checks are in place to prevent malicious actors from manipulating MEV commissions, there's still a potential risk. Jito Labs is actively monitoring this and may implement additional safeguards if necessary.

Audits and Security: StakeNet has been audited by Ottersec but there are edge cases that "cannot be predicted"

Conclusion

JitoSOL, through the implementation of StakeNet, has significantly improved the delegation and staking process on the Solana network. By transitioning from an off-chain bot to a fully decentralized, on-chain system, StakeNet ensures greater transparency, security, and efficiency. Integrating the Validator History and Steward programs within StakeNet allows for optimal delegation of stakes, ensuring that the Solana network remains robust and validators are held accountable for their performance. JitoSOL and StakeNet set a precedent for how decentralized staking can be effectively managed on blockchain networks as the system continues to evolve.