Solana has emerged as one of the most efficient and scalable blockchains, but with its rapid growth comes the challenge of managing transaction fees effectively.
Unlike other blockchains, Solana's transaction fees are structured into two main components: Base Fees and Priority Fees. Over time, network congestion has led to significant changes in the way transactions are prioritized, impacting both user costs and validator revenue.
Understanding Solana’s Fee Model
Solana’s transaction fees consist of a Base Fee, which is a fixed cost of 0.000005 $SOL (5,000 lamports) per signature, and a Priority Fee that allows users to pay extra for faster processing.
As network activity surged, congestion led to delays and failures, making Priority Fees essential for transaction prioritization.
How Priority Fees Work and Their Impact on Congestion
Priority Fees act as an auction where users bid extra per compute unit (measured in microlamports) to prioritize their transactions. Higher fees improve the chances of inclusion in a block.
When network congestion increases, especially for transactions interacting with the same program ID, users raise their bids to secure execution, further driving up Priority Fees.
Transaction Failure Rates and Priority Fees
Recent data from Flipside shows that in the past 60 days, Solana’s transaction failure rate has ranged from 20% to 45.5%, with an average of 39%—a notably high figure compared to other blockchains.
However, Priority Fees have significantly reduced transaction failures by enabling users to prioritize their transactions effectively.
In mid-January, Priority Fees peaked at over 122,000 $SOL in a single day, the highest in 60 days. This coincided with a drop in transaction failures to 20%, showing a clear correlation between higher Priority Fees and improved transaction success rates.
Notably, the launch of the TRUMP memecoin during this period triggered a surge in decentralized exchange (DEX) activity, significantly increasing network transactions and congestion, which in turn drove Priority Fees to record highs.
Priority Fees Dominate Transaction Costs
Currently, Priority Fees account for over 97.5% of total transaction costs on Solana. However, as network congestion on certain programs has eased since January 19, the share of Base Fees has been rising, increasing from 0.4% to 8.5% of total fees.
Over the past 30 days, 259,700 $SOL has been paid in Priority Fees, with 5,800 $SOL in the last 24 hours alone—equivalent to $725,000 at current $SOL prices.
The highest recorded priority fee in the past 60 days was 998.9 $SOL on January 12. Currently, the average priority fee stands at 0.000058 $SOL, with a median of 0.000001 $SOL. Notably, the average priority fee peaked at 0.0015 $SOL on January 19, while the median priority fee reached 0.000008 $SOL on February 10.
The Role of MEV Revenue on Solana
Another significant revenue stream on Solana is MEV (Maximal Extractable Value). MEV refers to profits that validators and network participants can extract by reordering, including, or excluding transactions in a block.
MEV and Tip Bundles
Over the past 60 days, more than 1.1 billion Tips (Bundles) have been recorded, with daily ranging from 13 million to over 25 million.
The number of tippers interacting with MEV has also been high, with daily active addresses between 513,000 and 1.5 million.
Validator and Infrastructure Revenue
Due to this high activity over the last 60 days, validators have earned over 1.6 million $SOL from MEV strategies. Meanwhile, Jito, which provides MEV infrastructure, has earned 81,900 $SOL over the same period.
The highest daily Tips volume was recorded on January 20, reaching 98,120 $SOL. However, as memecoin hype has cooled, MEV-related Tips have declined, now falling below 10,000 $SOL per day, a 90% drop from the peak.
Solana’s Fee Revolution: How Priority Fees and MEV Are Shaping the Network
Solana’s unique fee structure and revenue streams have been key to maintaining network efficiency. Priority Fees have improved transaction reliability, while MEV activity has become a major revenue source for validators and infrastructure providers like Jito.
As Solana grows, these dynamics will continue to shift based on congestion and market demand. For now, it remains a highly innovative blockchain with unique monetization opportunities.
This piece is part of our Solana Data Insights series. Make sure to subscribe to Solana Data Insights for weekly onchain analysis.
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