Author:SpecialistXBT
Before the Chinese New Year, an article titled "Payment for Order Flow on Solana" exposed a dark side of the fee market on Solana, sparking a phenomenon-level amount of attention on English Twitter.
PFOF (Payment for Order Flow) has long been a mature business model in traditional finance. Robinhood leveraged this model to deliver its "zero-commission trading" strategy, rapidly distinguishing itself from numerous established brokerage firms. This approach not only made Robinhood highly profitable but also forced industry giants like Charles Schwab and E-Trade to follow suit, fundamentally altering the landscape of retail brokerage in the United States.
In 2021 alone, Robinhood generated nearly $1 billion in revenue through Payment for Order Flow (PFOF), accounting for half of its total annual revenue. Even as late as 2025, its quarterly PFOF revenue still reached hundreds of millions of dollars. This clearly demonstrates the enormous profits hidden behind this business model.
In traditional markets, market makers greatly prefer retail investors' orders. The reason is simple: retail orders are often considered "harmless," as they are usually based on emotions or immediate needs and do not contain accurate predictions about future price movements. Market makers can take these orders, secure a profit from the bid-ask spread, and avoid the risk of being on the opposite side of informed traders (such as institutional investors).
Based on this demand, brokers (such as Robinhood) bundle users' order flows and sell them in bulk to major market makers like Citadel, thereby receiving substantial rebates.
To some extent, the regulation of traditional financial markets has protected retail investors. The SEC's Regulation NMS (National Market System) mandates that even orders bundled for sale must be executed at a price no worse than the best available market price.
However, in the unregulated on-chain world, applications are exploiting information asymmetry to entice users into paying priority fees and tips that far exceed the actual on-chain requirements, and silently retaining these premiums. This behavior essentially imposes a highly profitable "hidden tax" on unsuspecting users.
Monetizing traffic
For applications that have access to a large number of user entry points, the methods of monetizing traffic are far more diverse than you might imagine.
Front-end applications and wallets can determine where a user's transaction goes, how it is executed, and even how quickly it is added to the blockchain. Behind every "checkpoint" in a transaction's lifecycle lies a potential opportunity to extract maximum value from users.
"Selling" users to market makers
Like Robinhood, applications on Solana can also sell "access" to market makers.
RFQ (Request for Quote) is a direct embodiment of this logic. Unlike traditional AMMs, RFQ allows users (or applications) to directly request quotes and execute trades with specific market makers. On Solana, aggregators like Jupiter have already integrated this model (JupiterZ). In this system, the application side can charge connection fees to these market makers, or more directly, package and sell bulk retail order flows. As on-chain spreads continue to narrow, the author anticipates that this "selling user volume" business model will become increasingly common.
In addition, a certain kind of interest alliance is also forming between DEXs and aggregators. Prop AMMs (proprietary market makers) and DEXs heavily rely on the traffic brought by aggregators, while aggregators have the full capability to charge these liquidity providers and return part of the profits to front-end applications in the form of "rebates."
For example, when the Phantom wallet routes a user's transaction to Jupiter, underlying liquidity providers (such as HumidiFi or Meteora) may pay Jupiter to secure the right to execute the transaction. After receiving this "passage fee," Jupiter then returns a portion of it to Phantom.
Although this hypothesis has not yet been publicly confirmed, the author believes that, driven by interests, such "implicit profit-sharing rules" within the industry chain are almost a natural phenomenon.
Blood-sucking market order
When a user clicks "Confirm" and signs the transaction in their wallet, this transaction is essentially a "market order" with a slippage parameter.
For the application side, there are two approaches to handling this order:
Benign approach: Sell the "backrun" (trailing arbitrage) opportunities generated by transactions to professional trading firms, and share the profits. A "backrun" refers to a situation where, after a user's buy order on DEX1 increases the token price on DEX1, arbitrage bots subsequently buy on DEX2 within the same block (without affecting the user's purchase price on DEX1), and then sell on DEX1.
Malicious strategy: Assist sandwichers (front-running bots) in attacking users and driving up users' transaction prices.
Even if a benign approach is taken, it does not necessarily mean that the application layer has good intentions. To maximize the value of "arbitrage following," the application layer has an incentive to deliberately slow down the speed at which transactions are added to the blockchain. Driven by profit motives, the application layer might also intentionally route users to liquidity pools with worse liquidity, thereby artificially creating larger price fluctuations and arbitrage opportunities.
It has been reported that some well-known front-end applications on Solana are performing the aforementioned actions.
Who took your tip?
If the aforementioned methods still require some technical expertise, then the backroom dealings in "transaction costs" could be described as "no pretense at all."
On Solana, the fees paid by users are actually divided into two parts:
- Priority Fee: This is a protocol-internal fee, paid directly to the validator.
- Transaction Tip: This is an amount of SOL sent to any address, typically paid to a "landing service" like Jito. The service then decides how much to allocate to validators and how much to return (Rebate) to the application side.
Why are on-ground service providers needed? When the Solana network becomes congested, communication becomes extremely complex, and regular transaction broadcasts are prone to failure. On-ground service providers act as a "VIP channel." They commit to successful transaction finalization on the blockchain by utilizing specially optimized pathways.
Solana's complex block builder market and fragmented routing system have given rise to this unique role, creating an excellent rent-seeking opportunity for application developers. Application developers often encourage users to pay high tips to "ensure passage," and then split this premium with the underlying service providers.
Transaction Traffic and Fee Landscape
Let's look at a set of data. During the week from December 1st to December 8th, 2025, the entire Solana network generated 450 million transactions.
Among them, Jito's launchpad service processed 80 million transactions, dominating the market (93.5% builder market share). Most of these transactions were related to swaps, oracle updates, and market-making operations.
In this vast traffic pool, users often pay high fees to "speed things up." But is all this money actually used for acceleration?
Not necessarily. The data shows that low-activity wallets (typically retail users) paid disproportionately high priority fees. Considering that the blocks at the time were not fully filled, these users were evidently overcharged.
The app exploits users' fear of "transaction failure" to encourage them to set excessively high tips. It then pockets this premium through agreements with on-the-ground service providers.
Negative Example Axiom
To more intuitively demonstrate this "harvesting" model, the author conducted an in-depth case study on Axiom, a top application on Solana.
Axiom generates the highest transaction fees on the entire network, not only because it has the most users, but also because it exploits its users the most.
The data shows that the median (p50) priority fee paid by Axiom users is as high as 1,005,000 lamports. In contrast, high-frequency trading wallets only pay approximately 5,000 to 6,000 lamports. This represents a 200-fold difference.
The same applies to tips.
Axiom users tip significantly more than the market average when using services like Nozomi and Zero Slot. The app takes advantage of users' extreme sensitivity to "speed," and without any negative feedback from users, it has effectively implemented a double-charging strategy.
The author bluntly speculates: "The majority of transaction fees paid by Axiom users ultimately end up back in the pockets of the Axiom team."
Regain Control over Pricing Costs
The serious misalignment between user incentives and app incentives is the root cause of the current chaos. Users are unaware of what constitutes reasonable fees, while app providers are content to maintain this confusion.
To break this stalemate, we need to address the fundamental market structure. Introducing Solana's Multiple Concurrent Proposers (MCP) and Priority Ordering mechanisms, expected around 2026, along with the widely proposed dynamic base fee mechanism, may be the key solution to the problem.
Multiple Concurrent Proposers
The current Solana single proposer model is vulnerable to temporary monopolies; applications only need to compromise the current leader to gain control over transaction inclusion for a short period. With the introduction of MCP (Multi-Cluster Proposer), each slot has multiple proposers working concurrently, significantly increasing the cost of attacks and monopolies, enhancing censorship resistance, and making it difficult for applications to block users by controlling a single node.
Priority Ordering Mechanism
By mandating at the protocol layer that transactions be sorted by priority fee, the randomness (Jitter) in ordering is eliminated. This reduces users' reliance on private acceleration channels like Jito, where they previously felt compelled to use such services just to "guarantee passage." For regular transactions, users no longer need to guess how much tip to offer; as long as they pay within the protocol, all network validators will prioritize processing based on deterministic rules.
Dynamic Base Fee
This is the most critical step. Solana is attempting to introduce a concept similar to Ethereum's dynamic base fee.
Users are no longer blindly tipping; instead, they explicitly instruct the protocol: "I am willing to pay up to X Lamports in fees to have this transaction recorded on the blockchain."
The protocol automatically sets prices based on the current level of congestion. When there is little traffic, it charges a low fee; only when congestion occurs does it charge a higher price. This mechanism reclaims the pricing authority from apps and intermediaries, returning it to a transparent protocol algorithm.
Meme has brought prosperity to Solana, but it has also left behind a problematic legacy and a hasty, profit-driven mindset. For Solana to truly realize the vision of ICM (Inclusive Compute Market), it cannot allow applications that control front-end traffic and protocols that manage infrastructure to collude and act recklessly.
As the saying goes, "clean the house before inviting guests." Only by upgrading the underlying technical architecture, using technical means to eliminate opportunities for rent-seeking, and developing a fair, transparent market structure that prioritizes user welfare can Solana truly gain the confidence to integrate with and compete against the traditional financial system.