Why Solana’s Fattest Fees Don’t Burn a Single Lamport

In a November 6 report, Fidelity Digital Assets senior research analyst Max Wadington argues that Solana earns from competition over transaction ordering rather than scarce blockspace, keeping basic transactions cheap while time-sensitive traders pay a premium.

The report puts numbers on that trading business. Fidelity puts Solana at roughly 15% of all exchange trades through 2026 and says the network briefly overtook the New York Stock Exchange in weekly trades executed. Solana-based perpetual futures exchanges processed more than $590 billion in notional volume over the past 12 months, by Fidelity’s figures. In 2024 and 2025, when on-chain trading peaked, priority fees and Jito tips supplied the bulk of network revenue, while base fees were far steadier.

Fidelity concludes that this fee design positions a growing share of trading activity to accrue to validators and stakers, with SOL acting less as “a claim on scarce blockspace.” That conclusion compresses two separate steps. Validators collect first. Whether stakers and ordinary holders follow depends on a burn rule and on sharing decisions the protocol does not enforce.

Traders bid for position, not space

A wallet transfer gains nothing from landing a few hundred milliseconds early. A bot chasing a $1,000 price gap between two markets gains everything, and Fidelity’s report notes that such traders may raise their priority fees right up to the point where the trade stops paying.

Solana gives that bot two places to bid. The priority fee is part of the protocol’s own charge and moves a transaction up the block producer’s queue. A Jito tip goes into a separate auction run by Jito’s block engine, where traders submit bundles: up to five transactions that execute in a fixed order and either all succeed or none land. Jito’s documentation suggests that traders sending single transactions split their spend roughly 70% priority fee and 30% tip, so a single trade can carry both payments.

The two payments treat losers differently. Solana’s fee rules charge the priority fee whether the transaction succeeds or fails, so a bot that bids and misses still pays the validator. A failed bundle never reaches the chain, and Jito advises placing the tip inside the trading transaction itself so a failed attempt costs nothing in tips. Some of Solana’s priority-fee income can come from traders who lost the race.

Validators collect the premium in full

Three groups sit along the payment path. Validators run the network and take turns producing blocks, and the validator scheduled as leader collects that block’s fees. Stakers delegate SOL to a validator and share in its rewards on that validator’s terms. Unstaked holders own SOL outside the arrangement entirely.

Under Solana’s fee rules, every signature carries a base fee of 5,000 lamports, the smallest unit of SOL, with one billion lamports to a coin. Half of the base fee is burned and half goes to the validator producing the block. The priority fee goes to that same validator in full. Jito tips are paid into Jito’s tip accounts and distributed to validators and their stakers, with the validator first taking its tip commission.

Those are gross receipts. Validators also pay for hardware, bandwidth and the vote fees that Fidelity classes as a fixed cost of consensus, unrelated to trading volume. Record Solana fees have already coincided with cuts to validator rewards, a squeeze that limits how much an operator can afford to pass on.

A bigger fee bill can burn less

The burn touches only the base fee, and the base fee depends on the number of signatures, not on how hard anyone is bidding. Here is the split for a single-signature trade carrying an assumed priority bid:

Multiply the priority bid by ten and the burn stays exactly where it is. Growth that comes from trading competition therefore lands almost entirely with block producers, and a record fee month on its own says little about how much SOL left circulation.

That outcome follows a deliberate change. Priority fees were once split like base fees, half burned and half paid out, until SIMD-0096 routed all of them to the block producer. Its author argued that the 50/50 model did not fully align validator incentives and encouraged side deals. The cost of that alignment is a burn that no longer grows with the most active part of the fee market.

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Stakers get what their validator passes on

A validator’s headline commission applies to inflation rewards. Tips carry their own commission, and Jito’s JIP-33 proposal for Coinbase-operated validators shows how separately the two are set, with caps of 5% on rewards and 10% on tips. Priority fees have no built-in route to delegators at all: the block producer receives them, and sharing any portion is the validator’s choice. A 0% commission describes one income stream, not every stream.

Jito tried to change that for JitoSOL, its liquid staking token. Under JIP-16, validators had to share at least 50% of their priority fees to qualify for stake from the JitoSOL pool, with the Jito DAO taking 1.5% of distributed priority fees. JIP-25 then paused that requirement while expanding the pool’s validator set from 200 to 400 and ranking validators mainly on commission, MEV commission and age, according to Jito’s StakeNet governance records.

The case for Fidelity’s reading is that competition for stake does the sharing the protocol does not: validators chasing delegations cut commissions, and pools such as JitoSOL rank them on those cuts. The JIP-25 pause shows the limit of that argument. When a stake pool’s own governance drops a sharing rule, nothing in the protocol replaces it. Priority fees reach stakers through policy, and policy can change in a single vote.

Unstaked SOL sits outside the fee stream

A holder who does not stake has no claim on base fees, priority fees or tips. Fee activity reaches them only indirectly, through the SOL that transactions require and the SOL that the base-fee burn removes. As the example above shows, the priority-fee and tip side of the trading boom adds nothing to that burn.

Issuance pulls the other way. Solana’s staking schedule began at 8% annual inflation, lowers the rate by 15% each year and settles at a long-term 1.5%. New SOL is paid to stakers, so an unstaked balance loses share of total supply whenever issuance exceeds the burn. For a holder who never stakes, Solana’s fee income counts only through the value the market places on the network.

The premium lasts only as long as the race

Fidelity names two risks to this revenue model: trading cycles and competition. Its report says competition for profitable trades fell significantly in the latest bear market compared with the prior bull run. It also describes decentralized trading as one of the most competitive corners of crypto, with Solana’s perpetual futures exchanges up against venues such as Hyperliquid.

Activity and revenue can also move apart. Tokenized stock trading on Solana already showed the gap, as volumes expanded while network revenue declined. Transactions that settle without a race pay base fees, not premiums.

What would confirm Fidelity’s case for stakers

Fidelity’s thesis covers validators and stakers together, but the evidence for each is different. Two signals over the next two quarters would test the staker half. The first is whether priority fees and Jito tips keep their share of revenue, measured in SOL, through quieter trading periods. The second is whether any major stake pool writes priority-fee sharing back into its delegation rules after JIP-25. Revenue that holds without the second signal would show a model working for whoever operates the leader slot, with stakers dependent on each validator’s policy.