What Is Jito TipRouter?

Introduction

How does Solana distribute billions in real economic value (REV)? 

Throughout the course of 2024, Solana’s on-chain activity soared, and the fees the chain generated spiked in turn. According to analysis from Blockworks, in Q4 2024 Solana even managed to eclipse Ethereum in terms of REV with $1.4 billion in tips and fees generated, and heading into 2025 Solana sits comfortably as the leading blockchain ecosystem for capturing value on user activity. 

But where does all that value go, and what does it have to do with restaking? 

With the launch of Jito (Re)staking, Solana-based protocols can now leverage the Jito ecosystem to deploy Node Consensus Networks (NCNs), securing key portions of their infrastructure stack with economic security. TipRouter, the first NCN developed by the Jito ecosystem, will play a key role in distributing billions of dollars in real economic value across Solana in 2025. 

This article aims to provide an understanding of Node Consensus Networks (NCNs) by exploring how Jito will utilize the TipRouter NCN to distribute MEV rewards – a growing pillar of Solana’s real economic value. 

What are Node Consensus Networks (NCNs)

To understand how TipRouter will help Solana distribute economic value, let’s work through the terminology step-by-step, starting with NCNs. 

Node Consensus Networks (NCNs) are sets of infrastructure providers (or ‘nodes’) running software or hardware for the same network, working together to achieve consensus and provide services for on or off-chain processes. 

They are distributed networks that use a consensus mechanism to validate and verify information. These networks rely on a collective effort from multiple nodes to ensure the accuracy and security of transactions and other data. 

Crucially, NCNs leverage Jito (Re)staking to ensure the integrity of consensus with economic incentives and economic security. This means that each node operator receives rewards for helping the network achieve consensus, and has staked assets at risk of being slashed if the node acts maliciously or fails to perform the intended computation. 

Popular use cases for NCNs might include:

• Layer-2 blockchains, including sequencers or transaction batchers 
• Cross-chain bridges
• Co-processor networks
• Interoperability solutions
• DePIN networks 
• Solver networks
• Oracle networks

To get more understanding of NCNs, make sure to read our previous blog post where we covered NCNs in depth. 

Jito's Block Engine: Powering Solana 

The second crucial element to understanding TipRouter is the Jito-Solana, a key cog in both the Jito Network as well as the broader Solana ecosystem. 

When most users transact on a blockchain, they pay a priority fee in order to ensure that their transaction will be included in a block. Jito-Solana introduces a parallel auction mechanism where users bid “tips” in order to secure additional transaction inclusion guarantees. Jito-Solana is the dominant validator client for Solana, with over 90% of network stake weight utilizing the software. 

In addition to vote fees and priority fees, the tips generated from Jito-Solana now account for roughly half of Solana’s REV: 

There are a broad range of users who benefit from Jito-Solana. Advanced DeFi users such as arbitrageurs use Jito-Solana to pay tips to earn MEV and maintain efficient markets. Validators running Jito-Solana earn an additional revenue stream from tippers. And DeFi protocols such as Jupiter can include Jito tip functionality to help make sure their frontends land transactions at high rates – while Jito is associated with MEV, the majority of tip volume now comes from DeFi frontends. 

Almost every user cohort participating in the Solana network benefits from Jito-Solana in some way, and heading into 2025 Jito tips account for nearly 50% of Solana’s REV, having paid out $674 million to stakers and validators. 

Decentralizing Tip Distribution 

With an understanding of NCNs and Jito-Solana, we can now turn to the first NCN developed by the Jito Network: TipRouter. 

Up until now, the distribution of $674 million of tips was managed with a manual, offchain process, ensuring that Jito tip rewards were properly distributed to the correct participants. However, Jito is now transitioning to a decentralized approach for tip reward distribution using the TipRouter NCN.

Under TipRouter, a network of node operators will be empowered to come to consensus on the correct distribution of Jito tips. At the end of every Solana epoch, node operators will use a distributed open-source software to agree on the correct Merkle root to upload to an on-chain program for tip distribution, making the distribution of Jito tips a transparent and verifiable process.

Economic security in the form of JitoSOL and JTO will undergird the network, with vault managers accepting stake from depositors and issuing liquid restaking tokens in return. You can learn more about how TipRouter works here. 

(Re)distribution of Value

The launch of TipRouter marks a pivotal moment in Solana’s history, hardening and decentralizing a major cog of the value flow of the network. Crucially, however, TipRouter also plays a key role in the future of the Jito Network.  

At launch, TipRouter will take a flat 3% fee on all tips distributed. From that 3%, .15% will flow to SOL vault operators, which will split the rewards between node operators and stakers. Additionally, .15% will also flow to JTO vault operators, which will also split rewards between node operators and stakers. The remaining 2.7% fee on all Jito tips will flow directly to the Jito DAO. You can read more about fee splits here. In addition to collecting 2.7% of all Jito tips, the Jito DAO controls all future parameters for Jito tip take rate and distribution. 

With the launch of TipRouter, the Solana community will have unprecedented control over the flow of the chain’s REV. Jito DAO participants will be able to programmatically govern the parameters and beneficiaries of nearly half of the value of the leading blockchain ecosystem.

What to do with that power is in the hands of the community.

Next Steps

Following the launch of TipRouter, there will be a gradual transition of MEV tip distribution responsibility to the Jito TipRouter NCN over a roughly four-week period. The transition will begin with Jito Labs validators before expanding to additional stakeholders. This staggered approach is designed to ensure a seamless migration and system stability throughout the process.

Jito (Re)staking NCNs enable secure and efficient consensus mechanisms. The Jito Network’s TipRouter NCN is an ideal example of a project leveraging restaking to decentralize and secure a key cog of its infrastructure stack, and there are a multitude of use cases that have yet to fully utilize this emergent model. 

Projects interested in building on the Jito (Re)staking platform are encouraged to contact us through this form. This includes NCNs, VRTs and node operators.