If we ask which public chain ecosystem has been the most eye-catching since last year, I believe Solana must be the choice with the highest consensus: whether it is price/market value, ecological narrative, Meme, or DeFi, NFT, DePIN and other tracks, all directions are thriving, leaving new public chains such as Avalanche and NEAR far behind, and becoming an almost discontinued existence among smart contract public chains except Ethereum. In the final analysis, in 6 months, from US$20 to US$200, the market value returned to US$80 billion. In addition to the impact of the FTX bankruptcy incident that quickly advanced to the end, as a model for post-disaster reconstruction, some new variables behind Solana are also particularly worthy of attention. Especially since the beginning of this year, the new generation of Meme top streamers such as SILLY, DRAGON, WIF, BOME, and SLERF have begun to show a visible trend of shifting from Ethereum to Solana, which is enough to show that Solana has indeed taken a completely different step in terms of on-chain ecology and community traffic.
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The on-chain ecosystem is recovering significantly. In fact, the first wave of growth on the Solana chain came from the promotion of the Solana Foundation's Breakpoint annual meeting in 2023. Before October 2023, the number of daily paying users, which measures the activity of the Solana ecosystem, has been hovering between 80,000 and 100,000. The Breakpoint conference stimulated the first phase of growth from the end of October to November 2023, and then the JTO Airdrop and Coinbase's launch of BONK further promoted the growth of this data, causing it to soar more than 5 times to 500,000.
Meme has always been the observation dimension that best reflects the wealth effect of public chains. It can be said that since the beginning of this year, the new Solana+Meme combination has swept the entire crypto market. Whether it is BOME, which completed the entire life cycle of most crypto projects in three days, or SLERF, which became popular due to misoperation and destruction during pre-sales, or IQ50, which was launched by veteran artists following their start-ups, they all quickly set off a legendary model of "leaving addresses and sending money to raise funds" on the Solana chain through the early wealth-making effects of hundreds of times. Even ZachXBT statistics show that only 27 pre-sales on the Solana chain have raised a total of more than 655,000 SOL (with a market price of more than 130 million US dollars), which has also brought unprecedented traffic and attention to Solana.
I believe everyone has had this experience. At one time, there were countless passwords in the major WeChat and Telegram groups. Without asking for project details, a group of users could be quickly attracted to participate in the payment. For a time, people seemed to be back in the wave of last year's craze for wealth passwords. Along with this, since mid-March, the top three DEXs in terms of trading volume within 24 hours on the Solana chain - Raydium, Jupiter and Orca, once accounted for more than 50% of the total DEX trading share on the entire network, among which Raydium's trading volume exceeded US$2 billion, which is twice the trading volume of Uniswap V3 on Ethereum during the same period (US$1.1 billion). As of April 4, Coingecko statistics show that the top three DEXs in terms of trading volume on the entire network are Jupiter, Uniswap V3 and Orca, and Jupiter and Orca accounted for nearly a quarter of the total trading volume on the entire network in the past 24 hours.
In general, Solana, which has inherited the Meme craze and has produced a large number of subsequent hot spots, has once again established its own high-performance poor-to-wealth chain label recognition. Under the wave of Meme wealth creation myths, Solana ecology has shown a general rise. At present, whether it is DeFi, NFT or the popular DePIN track, there are many ecological sub-projects worthy of attention. It is very likely that in 2024, there will be phenomenal projects that break through large-scale adoption. SOL once broke through 200 USDT, setting a new high since December 2021.
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At the same time, what is less discussed in terms of technology is that despite the surge in transaction volume and active addresses on the chain, Solana has so far been able to smoothly handle this huge amount of traffic, and no network outages have occurred so far.
It should be noted that from January 2022 to February 2023, Solana experienced outages in 7 of the 13 months, and the longest outage lasted more than 24 hours. As can be seen in the figure below, since the new outage on February 25, 2023, until the most recent failure on January 6, 2024 (repaired in a few hours), the Solana network has set a record for the longest continuous state without network outages, with a total duration of more than 330 days.
Behind this are a number of technical updates that the Solana Foundation has launched since last year, which have greatly improved the availability and scalability of the Solana system. The first is the "Firedancer" test network that was launched at the end of last year. It can reach 1 million TPS during internal testing, and is expected to reach 100,000 TPS during actual operation, which is expected to increase Solana's throughput by 10 times, enough to meet the needs of high-frequency trading applications. At the same time, this technical update is also implemented on the Solana main chain. From a technical point of view, this will also make Solana another blockchain with multiple completely independent validator clients besides Ethereum.
Another technical innovation, State Compression, significantly reduces the cost of NFTs - reducing the cost of minting 100,000 NFTs on Solana to only $100, while it may cost $500,000 on Ethereum, which means that NFTs can be transformed from an application into an infrastructure for more on-chain use cases. In addition, in January 2024, the Solana Foundation released a new SPL Token standard Token Extension, which includes 19 different Token standards, allowing developers to build custom Token functions. This also opens up the Solana network to unlock more complex on-chain use cases - allowing developers to build custom Token functions, such as privacy transactions, transfer Hooks, non-transferable Tokens, interest-bearing assets, metadata, and more.
For example, developers can build a DeFi lending application that only allows wallet addresses with a Nomis score above 500 to use it (through transfer hooks); and users can deposit JitoSOL on the platform and receive an annualized return of 7.5% and points (through interest-bearing tokens). In fact, SOL's "real TPS" has hit a record high since the fourth quarter of 2023, which is also one of the most stable periods for Solana's network.
In addition to Wall Street's support ecosystem and technological progress, the resources brought by Lily Liu, chairman of the Solana Foundation, are also a key factor that cannot be ignored in the Solana ecosystem's ability to quickly get out of the shadow of FTX/Alameda's bankruptcy. In addition, the strong support of the powerful investment institutions behind Sonana has changed Solana's fundamentals. Among them, Lily graduated from Stanford and Harvard University in her early years. In the early stages of her career, she worked at Morgan Stanley, McKinsey, and KKR. At the same time, she was deeply immersed in the crypto industry for ten years - from CEX (Bitcoin China) to mining (21 Inc), and from platforms (Coinbase) to joining the public chain (Solana). So to some extent, Lily connected Sonala to a wider range of over-the-counter funds and traditional resources, which is also a competitive advantage that is difficult for other public chains to replicate.
In particular, it links the old members of the crypto circle and the traditional elites in Silicon Valley, and gives more people a reason to re-examine Solana, and the explicit and implicit variables brought to Solana cannot be ignored - "Her joining will make many people re-examine Solana and ask themselves if they were too arrogant before." For example, since December last year, Coinbase has launched Solana ecological tokens such as JTO, BONK, HONEY, and MOBILE one after another, which is a typical example. This also means that the new/old protocols and sub-projects of the Sonala ecosystem may also gradually benefit from the spillover effect of such financial resources. At the same time, it is precisely with the funds and resources brought by Wall Street as a backing that the Solana Foundation under Lily's leadership has invested heavily in hackathons and developer ecology, which should also be a unique label. At present, Solana hackathons are not only very well-known in the industry, but also have produced many star projects such as STEPN. For example, during the bear market last year, Solana dared to launch a hackathon event with a prize pool of up to one million US dollars, which shows the importance it attaches to independent developers, which is also an important guarantee for its vitality on the chain.
The crypto world is full of narratives, but the market's demand for narratives is everlasting, which means that if we divide it by month/year, the logic behind any major market trend can actually be traced. Starting from October 2023, Solana has indeed ushered in a completely different pace in terms of on-chain ecology, technological updates, and capital attention. Some of the hidden clues in the early stage will undoubtedly gradually emerge in 2024, which is worth looking forward to.
