In 2022 , as the popularity of the SBF and FTX platforms skyrocketed, Solana also became a popular public chain in the encryption industry. However, the subsequent collapse of FTX almost brought down the entire Solana ecosystem.
SOL price plummeted from $236 to $13 in a matter of weeks. Investment institutions advise startups not to choose Solana and instead build on the Ethereum Virtual Machine (EVM). Subsequently, some well-known projects were migrated from Solana to other chains. However, a year later, Solana rebounded and outperformed its peers, as the chart below shows.
People love to hear comeback stories, and today’s article explores the choices Solana made to successfully recover from the bear market trough in 2023, and the design differences that made it a top public chain.
Client diversity
Solana's founder Anatoly and team members have rich backgrounds in the traditional mobile communications industry. They have worked at Qualcomm as programmers for more than ten years and have witnessed firsthand the impact of Moore's Law (hardware capacity doubles every two years). Solana is built in a way that unlike Bitcoin and Ethereum, it does not limit node hardware requirements.
Bitcoin and Ethereum are relatively mature networks with more client diversity. But why is client diversity so important? Think of it this way, a decentralized network, you want all functions to be relatively decentralized, if more than 66% of the network uses a single node client, and that node issues the wrong update or chooses to synchronize regions in the wrong order blocks, will affect the functionality of the blockchain. There may be consensus issues over which block is approved first, and both Ethereum and Bitcoin have actively optimized for client diversity in the past.
Solana experienced three major network outages and several performance degradations in 2022, as well as an outage in 2023. These outages were primarily caused by consensus issues. While low transaction fees are good for users, they also make it easier to send large amounts of transactions or conduct denial-of-service (DDoS) attacks.
When a block is proposed, validators will receive the information package (in the block), independently verify its correctness, and mutually confirm the correctness to reach a consensus. However, when validators lag in processing information packets, consensus information is lost.
Firedancer has built a messaging framework that bypasses certain hubs and reduces network latency. Since Firedancer was built from scratch by a different team, it may not carry the same bugs as the Solana Labs client. Therefore, the same bug will not affect these clients at the same time. Ideally, the validator will execute one primary and one secondary client, with the secondary client acting as a backup.
A chain with a strong DeFi ecosystem needs to guarantee 100% uptime, so Solana requires a more powerful client infrastructure. The main causes of Solana network stalls are lack of congestion control and network processing delays. Several network upgrades have improved validator anomalies against transaction flooding, enabling better congestion control.
Solana acknowledged that client diversity is a work in progress. As with Ethereum and Bitcoin before, these things take time. One sign of improvement is the percentage of assets executed through the Jito-Solana client. While the Jito Solana client does not help in achieving redundancy, it shows that validators will execute different clients when available.
As more clients like Firedancer and Sig come online, we should see less reliance on Solana Labs clients in the future. The optimal ratio for individual clients is around 33%. Therefore, there is still work to be done.
cost model
A healthy fee market is a key factor in a thriving blockchain, as chains like Bitcoin and Ethereum have shown. In 2024, Bitcoin’s block reward will be halved from 6.25 BTC to 3.125 BTC per block. If we assume that Bitcoin producers require the same incentives, then to maintain existing incentive levels, the price would have to double, or fee revenue would have to make up for the loss of the reward halving. Thanks to Inscription, the increased fees give hope to block producers and the Bitcoin security budget.
Through EIP1559, Ethereum changed its monetary policy and ensured that the inflation of ETH remained under control through a new destruction mechanism. The currency system and dynamic fees have played an important role in stabilizing the chain and aligning stakeholder incentives, with other chains looking to achieve the same status.
Solana has no priority fees in the initial phase, and the fee per transaction is fixed at 5000 Lamports (in the Solana blockchain, Lamports are the smallest units, similar to wei in Ethereum or satoshis in Bitcoin). Solflare was the first wallet to implement priority fees on Solana in January 2023. Cost is crucial for the following reasons:
1) Resist spam attacks
2) Validator rewards
3) Improvements to the economic stability of the protocol. As expenses increase, inflation can decrease.
Like Ethereum's EIP1559, Solana burns 50% of fees, with the remaining 50% owned by validators. This standard was set in 2021 and has not changed.
On Ethereum, transactions wait in the memory pool before entering the block, and the validator will select the transaction with the highest fee for block packaging. Global memory pools are established by different validators propagating their respective memory pools to each other. This is where Maximum Extractable Value (MEV) comes into play.
Since the memory pool is visible to validators and MEV seekers, seekers can identify transactions that can be front-loaded and back-loaded for profit. Seekers are typically robots looking for MEV opportunities. For example, if someone buys Token A worth $1 million, a seeker can buy A before that transaction is completed and sell it immediately.
Unlike Ethereum, Solana is multi-threaded and can execute transactions in parallel. When signed transactions arrive at the leader, the leader verifies them and randomly distributes them into threads. Only when assigned to different threads local to the leader, they are sorted by priority fee (i.e. the transaction with the highest fee takes precedence).
Solana originally had no prioritization fees. But now, wallets like Solflare allow users to pay for priority. Prioritization fees create Solana's local or isolated fee market. Unlike Ethereum, Solana transactions must specify where they wish to read and write parts of the state from.
Solana’s validators know the state involved in a transaction before calculation, Ethereum validators only know this after starting calculation. Solana transactions require specific information that helps Solana determine which parts of the state are becoming hot. The total number of compute units (CU) used by any hotspot is limited to 25% (one of the four cores used for Solana multi-thread execution). This is done to prevent an account from being updated a certain number of times within a block.
Hotspots are specific smart contracts or accounts that suddenly experience large amounts of traffic. On the EVM network, heavy demand from a single application (such as Crypto Kitties) can cause transaction fees to rise across the entire network. On Solana, the number of CUs that individual smart contracts/applications (such as Tensor or Jupiter) can use per block is limited to 25%.
That is, transactions using any specific contract cannot occupy more than 25% of the block, which is 12 million CU. All transactions exceeding this limit must wait for the next block. So if usage of a standalone app increases dramatically, the network as a whole won't start paying more fees. Only transactions that interact with the app will see the fee increase. This is what the localization fee market looks like.
What happens if there are 4 or more hotspots? In this case, Solana looks like Ethereum. Gas wars may occur between competing hotspots, and transactions with the highest fees will be able to enter. Local fee markets appear to be a nifty solution to the general problem of skyrocketing fees.
How does it work in practice? There are still some issues with Solana’s fee market design:
First, the base fees currently incurred by transactions are the same, whether they are token transfers, exchanges or flash loans. This is obviously not reasonable enough. Transactions should incur fees based on the compute resources (CU) consumed, although this is already under consideration. CU represents block space, so paying a higher fee should get you more space.
Second, since there is no memory pool, validators will only schedule transactions based on fees after being assigned to different threads, so higher fee transactions will not always succeed. This can lead to the next problem.
Third, Solana does not have a memory pool like Ethereum, so a higher priority fee does not guarantee that a transaction will be included in a block. So, the best way for a searcher (someone looking for MEV) to extract MEV is to bombard the network with multiple transactions and hope that validators choose one of them. On Solana, this is relatively easy due to low transaction costs.
community atmosphere
Steve Ballmer once said, "The key to .net success is developers, developers, developers." This is the only metric that makes sense when building a new ecosystem. A powerful network of developers build applications, develop use cases, and ultimately turn them into real users. Whether it’s mobile, desktop, cloud services or blockchain, developers are the path to relevance.
So I'm curious about how many developers there are in the Solana ecosystem. However, it is important to note that much of the Solana ecosystem was initially hit hard due to the collapse of FTX.
Packy sarcastically mentioned in the 2022 article that SBF is one of the people who make Solana an interesting ecosystem. When FTX collapsed, the ecosystem lost one of its largest supporters. New tokens are no longer on the market, venture investors are no longer investing, and development talent may have flocked to other places to find resources.
According to recent Solana data, approximately 3,000 developers have been developing on Solana in the past year. This number considers developers who contribute to public repositories and does not include those who develop in private repositories on GitHub. Considering the recent surge in SOL prices, more developers may be switching to this ecosystem. As users flock to Solana (due to rising prices), this number will likely increase significantly.
If we compare this number to Electric Capital’s developer report, which states that there were over 19,000 developers in the blockchain ecosystem in October 2023, developers on Solana represent approximately 15% of the entire ecosystem .
Compared with the traditional Web2 ecosystem, Solana provides developers with lower costs and faster transactions, and provides users with a better experience. As the suite of consumer starter tools grows around Solana, more and more developers will build on it.
In order to build a sustainable ecosystem, it is crucial for developers to benefit. Solana provides resources through foundations, community hackathons, and platforms like Superteam Earn to developers who are serious about building on top of it. The team raised nearly $600 million from ecosystem hackathons. Additionally, through Airdrop for developers, Solana unlocks a new pool of talent who can build without the pressure of raising capital.
In 2022, Bonk allocated 5% of Airdrops to developers. Another 20% is allocated to existing NFT projects within the ecosystem, and 10% is allocated to artists and collectors. That 35% is now worth $450 million. Those token developers who held on may have realized about $500,000 in gains from Bonk's December surge, equivalent to a pre-seed round of financing.
The recent shift in sentiment toward Solana can be quantified by sales of the Saga phone. Although the phone was named "the worst phone of 2023," as the price of the Bonk increased, users who purchased the phone found that it paid for itself. Owners of the phone are eligible for Bonk's Airdrop, turning the phone into a free crypto-native phone. Since the number of phones is limited, similar to the Bored Ape NFT or other collectibles, traders are starting to realize the arbitrage opportunities and the value of future Airdrops, so they are rushing to buy the phones. Demand was at its peak, with unopened Saga phones selling for more than $5,000 on Solana.
This situation is indicative of a change in sentiment surrounding the Solana ecosystem, with Bonk being an example of a meme asset, and similar variants including WIF. However, Meme assets alone may not help the ecosystem grow. In fact, consumer demand for using products on Solana, such as earning points and potential Airdrops, is the main factor that changes sentiment. Two recent examples are Pyth and Jito.
Pyth Network provides an oracle service and increases Solana's liquidity by Airdrop Token to users. Jito will Airdrop a portion of the supply to users who stake SOL in Jito's validator client and use LST for DeFi activities. These Airdrop activities are more beneficial to small users and bring them substantial value gains.
Interestingly, Jito’s Airdrop plan adopts a tiered model, that is, from the first level to the tenth level, the number of JTOs received for each point gradually decreases, showing a decreasing trend. This means that users at lower tiers receive higher value points.
Jupiter is a DEX on Solana, and the Airdrop plan has been disclosed before Jito. Although people have realized that Jito will launch Token, the scale of Airdrop has been underestimated, which may be the reason why Airdrop has not been heavily utilized.
Now all the focus is on Solana, and everyone is trying to participate in the next JTO Airdrop. Some projects such as Tensor, Kamino, Marginfi, Zeta, Meteora, Parcl, etc. have announced their points plans and converted these points into their respective Tokens. Some argue that these points programs are a bad idea, but others argue that they can serve as loyalty points and a more transparent way to distribute tokens and unlock behaviors that add value to the product.
For example, Marginfi allocates one point per day to staking users, but four points per day to borrowing users. This system makes sense because the protocol requires borrowers. Nonetheless, detecting Sybil activity has become very challenging these days, but projects such as Marginfi and Zeta have a detection method, for example, if a wallet matches a money laundering transaction pattern on Zeta, its points will be set to zero.
These examples attract a large number of users to join the ecosystem. In our view, the construction of an ecosystem involves two forces that balance each other. On the one hand, you need to be able to build culture and excitement, and meme assets, points, and Airdrops solve that problem. On the other hand, you need to design a great product to attract people's curiosity and keep users using it. So while it's possible to explore various aspects of Solana further, it's more appropriate to focus on what developers have built over the past year.
ecosystem
The development of Internet products is always accompanied by improvements in bandwidth. In Web3 as well, Solana marks a moment when its high throughput and low transaction costs make it possible to build consumer-grade applications. Just like we saw in the Web2 era where the platform bore the server costs. On Solana, compressed NFTs allow developers to send a million NFTs for a few hundred dollars.
Currently, much of what’s on Solana is an extension of the broader cryptocurrency landscape, viewed as “X, cheaper and faster.” But building entirely new applications requires competing with users’ inherent behaviors, which requires a lot of resources that most startups are unwilling to challenge.
However, what I'm excited about Solana is that it has the potential to change the current landscape of the Internet. I'll go into more detail about how this works at the end of the article, but for now, let's take a look at Solana's current situation.
1) Trading platform
Considering Solana's relationship with FTX, the early ecosystem was mainly focused on DeFi. Mercurial was originally a stable asset exchange platform on Solana, similar to Curve on Ethereum. After the collapse of FTX, hackers stole more than $400 million worth of tokens from FTX, of which approximately $800,000 was Mercurial's governance token MER. This resulted in the developers parting ways with Alameda Research. As part of the resumption of development, Mercurial was abandoned and two new protocols were born: Jupiter and Meteora, respectively revenue aggregators and DEX aggregators.
Solana’s low fees make it easier for users to trade at a higher frequency, which can be easily seen in the numbers. Three charts illustrate the differences in transactions on Ethereum and Solana. Ethereum shows superior metrics in terms of transaction volume and value locked (TVL).
It’s important to note that Ethereum has a five-year head start and a healthy DeFi ecosystem with multiple underlying tokens worth billions of dollars. Therefore, the following indicators are somewhat flawed. When looking at charts, conclusions should be drawn by looking at all three charts rather than a single chart.
However, on both chains, the difference in TVL is much greater than the transaction volume. At some point, the TVL numbers become less important. The higher the volume to TVL ratio, the better the capital efficiency. Solana has clearly outperformed Ethereum in this regard recently.
One of the reasons for the recent increase in transaction volume is users' desire to obtain Airdrops. Jupiter announced an Airdrop plan, in which 50% of Tokens are reserved for the community, divided into four different phases, with the first phase likely to launch in early 2024.
While Airdrop may be what drives Solana activity, it must be understood that certain designs are not possible on Ethereum. For example, order book design is not possible on the Ethereum base layer. Protocols such as dYdX and Aevo have forked onto their own chains.
Solana's combination of speed and low fees means market makers can conduct high-frequency trading on-chain without having to resort to CEX or wait for superior second-layer solutions.
Many CEXs today barely touch the chain. Sometimes, when chain integration is difficult, they simply add a new token and disable deposits or withdrawals of that token. But CEX also has its advantages. Market makers (MM) still choose CEX as their main activity platform, not only because of the handling fees, but also because of the performance guarantee.
As they say, liquidity breeds liquidity. Traders flock to the platforms with the most market makers because they make it relatively easy to enter and exit large positions.
2) Borrowing and income aggregator
The on-chain borrowing market allows market participants to obtain asset returns. Additionally, they allow investors to convert from one asset to another without creating a taxable event. Marginfi is the highest-valued lending protocol on Solana, with more than $350 million in deposits and $80 million in borrowings locked.
Before FTX collapsed, Solend was the main lending protocol on Solana. In November 2021, its total locked value was almost close to $1 billion. In November 2022, when FTX went bankrupt, the Solana ecosystem Token price plummeted, causing positions in the DeFi protocol to be liquidated. Solend’s total locked value dropped from over $350 million to approximately $25 million in just one week.
As of December 26, 2023, the total locked value was just over $200 million, which has not yet returned to pre-FTX collapse levels. The drop in Solend’s locked value creates an opportunity for a new protocol to attract funding. Considering that Solend already has a Token, it is not enough to attract and retain users simply by relying on interest rates.
Marginfi seized this opportunity and announced the launch of “points”, which means that in addition to receiving interest, depositors and borrowers will also receive Airdrop at a later point in time. Marginfi launched points in the first week of July 2023. Since October 15, Marginfi's total locked value has grown from approximately US$30 million to approximately US$485 million in just two months, an increase of more than 10 times.
Kamino is the second largest borrowing platform on Solana, and its incentive mechanism shows the rapid growth of the platform. The protocol announced the upcoming credits on December 3, with the total locked value growing eightfold in three weeks to approximately $245 million.
3) Liquidity pledge
Staking is one of the core components of proof-of-stake (POS) chains. It enables stakers to earn from protocol inflation and fees and protects the security of the chain. Liquid staking is critical infrastructure because the chain should set a low threshold for staking and should not exclude users due to high fees.
Liquid staking allows investors to stake any amount without requiring deep technical understanding or execution of node software. Although Solana’s validators must stake SOL from the start, and Ethereum only started proof-of-stake last year, liquidity staking on Ethereum leads the industry. More than 383 million SOL are pledged, accounting for approximately 90% of the circulating supply.
Of these, a staggering 362 million or approximately 95% are natively pledged, meaning they are locked and do not utilize any staking derivatives. This means that users who stake through local SOL miss the opportunity to use liquid tokens for DeFi. If you stake SOL through a protocol like Marinade or Jito, you will receive mSOL or JitoSOL in return, which can be used in DeFi applications. As staking derivatives develop, one can expect users to gradually choose derivatives rather than incur the opportunity cost.
There are only about 20 million SOL in the liquid pledge market. Currently 24% of circulating ETH is pledged, but approximately 68% (31% LST and 37% platform) are pledged through liquid staking platforms and CEX. If 31% of SOL is also pledged through different LST, Solana's LST market can be estimated to be approximately 115 million SOL or approximately $11 billion.
Marinade is the first Solana liquid staking protocol born after winning third place in the 2021 Solana Hackathon. The protocol will be released on the mainnet in August 2021. The solution, similar to Lido, is simple and practical. When users stake SOL through Marinade's staking pool, users will receive Marinade SOL or mSOL, which can be used in Solana's DeFi applications.
mSOL accumulates the rewards earned by the Marinade staking pool and is adjusted relative to SOL every epoch (approximately 2 days). When users stake using the liquid staking option, they must pay a fee to the pool. Liquidity staking exposes users to the smart contract risks of the staking agreement.
Marinade also offers its users the option to stake SOL locally. When they do this, the user does not receive mSOL in return. When users exercise this option, they use the functionality of native Solana and Marinade simply acts as the interface. Users are the only ones who can withdraw their SOL at any time.
Users actually set up a Solana staking account and delegate the responsibility of managing the staking to Marinade. Staking accounts will receive staking rewards at the end of each period. Marinade does not charge any fees to users, and they will not face Marinade’s smart contract risks.
Marinade and Jito are the two major liquidity staking protocol providers on Solana. Marinade's total locked-in value is approximately 7.1 million SOL, and its market share is approximately 41%. Jito's total locked-up value is approximately 6.4 million SOL, and its market share is approximately 38%. Similar to Marinade's mSOL, Jito provides JitoSOL to users as a certificate to lock SOL in their staking contract. In addition to validator earnings, Jito also delivers MEV rewards to JitoSOL holders.
Liquid pledge tokens are very convenient for users, but they also have some disadvantages. One is that liquidity can be an issue. For example, mSOL went off anchor on December 12th. When a trader sold a large amount of mSOL, the price fell from 1.16 to 1.02. This can be quite harmful to a Token that is supposed to be "anchored". While arbitrageurs ensured that prices returned to peg levels, the incident highlighted the need to improve liquidity for liquid staking tokens.
Currently, there are more than 10 liquid staking tokens on Solana. When more liquid staking tokens are launched, the problem of low liquidity may become more serious. To solve this problem, Sanctum came up with a solution. Sanctum Infinity is a multi-liquid staking token pool that allows exchange between all liquid staking tokens in the pool. This can be thought of as the aggregation layer for Solana’s liquid staking token. The solution is expected to go live in the first quarter of 2024.
4) NFT ecosystem
The NFT ecosystem on Solana has grown rapidly over the past year. Initially, there was a lack of showable content, and some flagship projects such as DeGods and yOOts chose to migrate to other chains. Although Magic Eden has been the leading NFT marketplace on Solana, it has hedged its bets through multi-chaining. Leading NFT collectibles are vital to the community, so this gap must be filled.
New collectibles like Claynosaurz and Mad Lads fill this gap and create a strong sense of belonging in both communities by choosing to stay in Solana. What these two projects have in common is that they are a means to an end, not an end.
Mad Lads is a collection of former FTX engineers aiming to replace FTX with another platform called Backpack. This exchange platform should fill the gap left by FTX, while being more compliant with regulations, more transparent, and following the spirit of DeFi. Mad Lads has developed a Solana wallet that utilizes executable NFTs or xNFTs, blurring the lines between apps and NFTs.
Unlike traditional NFTs, xNFTs can execute code for collectibles stored on the server. xNFT allows users to interact with applications such as Jito Staking, Birdeye, Orca and Marginfi within the Backpack wallet.
Magic Eden started as the dominant NFT marketplace on Solana. It expanded support for Ethereum in August 2022, and eventually added other chains such as Polygon and Bitcoin (Inscriptions). While the Magic Eden extension suite supports other chains, Tensor focuses on Solana and provides additional features such as TradingView integration and market making orders. In addition to these features, Tensor has also launched a points activity similar to Blur, where traders will receive Tensor's governance tokens as rewards.
5) Infrastructure
I've been using Solana for over two years and have experienced the infrastructure changes first hand. Solana stopped producing blocks more than ten times in 2022, but only once in 2023. This kind of failure, while undesirable, is common for new chains trying cutting-edge technology. Even L2s like Arbitrum can experience these failures when traffic surges.
Various factors contribute to improving the infrastructure, from fee market operation and client diversity to RPC nodes. Companies like Helius Labs and Triton are helping app developers with:
– RPC nodes and webhooks to interact with the Solana network. Outsourcing this responsibility allows developers to focus more on solving core problems.
– Enhanced API helps developers save time in obtaining required information, such as transaction history, NFT information, Token metadata, etc.
Another infrastructure change is state compression. Solana uses Merkle trees and only stores part of the data, which greatly reduces storage costs. NFTs are one of the original applications of state compression. Helius Labs and Triton provide the necessary RPC node infrastructure and indexing services, while wallets such as Phantom and Solflare provide user-friendly interfaces.
The cost to mint 1 million NFTs on Solana is approximately $247, while on Polygon it is approximately $98,000, and on Ethereum it is approximately $65,000,000. DRiP is an NFT platform that delivers 3 million NFTs to different users every week instead of showing them ads. Using state compression technology, DRiP can achieve the same effect for about $250.
Several projects are underway to improve Solana's connectivity with other chains and mix the best elements of Solana with other chains. Eclipse uses Solana's virtual machine SVM for computing and Ethereum as its settlement layer. In contrast, Neon is building an EVM on Solana that can perform parallel processing. Nitro is building Cosmos L2.
5) DePIN
DePIN stands for Decentralized Physical Infrastructure Network, and the idea of leveraging decentralized infrastructure and incentivizing it by inserting tokens has been around for a long time. DePIN blurs the lines between consumer and commercial devices. Helium and Hivemapper are some examples of DePIN on Solana.
Helium's initial mission is to build a decentralized wireless infrastructure to support IoT devices. Helium's devices act as hotspots, and about 50 hotspots are enough to provide Internet access to a city. Anyone can host a Helium hotspot.
Helium has its own blockchain with over one million hotspots before migrating to Solana in April 2023. To support growth and further expand the suite, Helium outsources tasks such as infrastructure support to Solana to save costs and achieve better scalability.
Extended reading: Helium Mobile cracks down on “professional mining and selling”: you can only receive MOBILE token rewards after subscribing for eight days
Hivemapper is another example of a DePIN application built on Solana. It helps map the world by installing driving recorders and motivating participants with HONEY Token. To date, Hivemapper has mapped 100 million kilometers worth of roads, 6.6 million of which are unique.
Hivemapper leverages the power provided by web3 infrastructure by inspiring ordinary people to install dash cams and start mapping. This model allows services like Uber and Zomato to use Hivemapper in the same way as Google Maps in the future, while requiring fewer permissions.
summary
Technology adoption accelerates when the cost of interacting with a product decreases dramatically. We experienced this firsthand when cheap Nokia phones replaced landline connections in the early 2000s and people gradually switched to mobile phones. Moore's Law and the development of Android have made it possible for people around the world to access the Internet through mobile devices. In my opinion, Solana offers features that are perfect for appealing to the masses.
You can ignore the rest of this article and try receiving $1 in Solana's Phantom wallet to see what I mean. I remember when I first experienced it, the closest thing to speed and experience was what I saw when I was using PayPal in the early 2010s. Solana’s unit economics allow developers to pay for on-chain user interaction without leaving a gaping hole in their balance sheet. Solana’s unit economics make it possible to build consumer-scale applications beyond today’s crypto-native user space.
That doesn't mean products like MarginFi or Jupiter are irrelevant. They are critical infrastructure, however, to attract the first adopters, their needs need to be met, and replacing existing financial infrastructure is a difficult but worthwhile goal. But as I look ahead to the next ten years, unless the Facebooks and Substacks of our era are established, we're going to struggle to gain relevance outside of a small and ever-dwindling group of speculators.
Blockchain is financial infrastructure. In its current form, we are overly forcing transactions on users rather than exchanging value on the backend. What forms of value exchange can Solana’s blockchain enable (unknown to users)? These answers are beyond the scope of this article.
As with most price increases, failing to focus on the main thing (Build) and focusing too much on price will cause the network to lose its long-term advantage. As a result, Solana must slow down its efforts to compete with its EVM peers and pivot toward consumers. It requires a new breed of venture capital firms willing to invest in consumer encryption applications alongside founders who have built in Web2 in the past. In a market stubbornly vying for a share of the 10 million active on-chain users, this approach of finding other directions could put Solana on an entirely different trajectory.
In a highly competitive market, Solana finds itself in a position of relative strength. Whether this will translate into meaningful entrenchment and sustained momentum is unclear. But for now, a few things are clear: the SVM approach has advantages when developing the web, developers are building cool stuff in the ecosystem, and the community cares.
None of these things happen overnight. Solana goes through hell and back. But please note that this does not mean that we do not need to wait and see where it goes.
