How can Solana, which almost died, make a comeback?

In 2022, as the popularity of SBF and FTX platforms skyrocketed, Solana also became a hot public chain in the crypto industry, but the subsequent collapse of FTX almost brought down the entire Solana ecosystem.

The price of SOL plummeted from $236 to $13 in a few weeks. Investment institutions advised startups not to choose Solana and to build on the Ethereum Virtual Machine (EVM) instead. Subsequently, some well-known projects migrated from Solana to other chains. However, a year later, as shown in the figure below, Solana rebounded and surpassed its peers.

Price increase trend of top tokens from the end of 2022 to 2023

People love to hear comeback stories, and this article explores the choices Solana made to successfully recover from the bear market lows in 2023, and the design differences that made it a leading public chain.

01Client Diversity

Solana's founder Anatoly and team members have rich backgrounds in the traditional mobile communications industry. They worked as programmers at Qualcomm for more than ten years and witnessed the impact of Moore's Law (hardware capacity doubles every two years). Solana is built differently from Bitcoin and Ethereum, and it does not limit the requirements of node hardware.

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 sends out wrong updates or chooses to sync blocks in the wrong order, it will affect the functionality of the blockchain. There may be consensus issues on which block is approved first, and both Ethereum and Bitcoin have actively optimized client diversity in the past.

Consensus client and execution client, source: https://clientdiversity.org/methodology/

Solana experienced three major network outages and several performance degradations in 2022, and one 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 attack by sending large amounts of transactions or conducting denial of service (DDoS) attacks.

When a block is proposed, validators receive the information packet (in the block), independently verify its correctness, and confirm the correctness with each other to reach consensus. However, when validators lag behind in processing the information packet, consensus information is lost.

Firedancer has created a messaging framework that bypasses certain hubs and reduces latency on the network. 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 both clients at the same time. Ideally, validators will run a primary and a secondary client, with the secondary acting as a backup.

A chain with a strong DeFi ecosystem needs to guarantee 100% uptime, so Solana needs a more powerful client infrastructure. The main reason for the Solana network pause is the lack of congestion control and network processing delays. Several network upgrades have improved the validator's anomaly to the transaction flood and achieved better congestion control.

Solana acknowledges that client diversity is a work in progress. As with Ethereum and Bitcoin in the past, these things take time. One sign of improvement is the percentage of assets running through the Jito-Solana client. While the Jito Solana client does not help in achieving redundancy, it shows that validators will run different clients when available.

As more clients like Firedancer and Sig come online, we should see less reliance on the Solana Labs client in the future. The best ratio for individual clients is around 33%. So there is still work to be done.

Percentage of stake run through the Jito-Solana client over time

02 Cost Model

A healthy fee market is a key factor for a thriving blockchain, as chains like Bitcoin and Ethereum have shown. In 2024, Bitcoin’s block reward will halve 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 must double or fee revenue must make up for the loss of the halved reward. Due to inscriptions, increased fees bring hope to block producers and the Bitcoin security budget.

The percentage of inscription casting cost is about 20%

Through EIP1559, Ethereum changed its monetary policy, ensuring that ETH's inflation remains under control by adding a burn mechanism. The monetary system and dynamic fees play an important role in stabilizing the chain and aligning stakeholder incentives, and other chains also hope to achieve the same status.

Solana will have no priority fees in its initial phase, and the fee for each transaction is fixed at 5000 Lamports (Lamports is the smallest unit in the Solana blockchain, similar to wei in Ethereum or satoshis in Bitcoin). Solflare is the first wallet to implement priority fees on Solana in January 2023. Fees are critical for the following reasons:

1) Protect against spam attacks

2) Validator Rewards

3) Improvements to the economic stability of the protocol. As fees increase, inflation can be reduced.

Like Ethereum's EIP1559, Solana burns 50% of the fees, and the remaining 50% goes to the validators. This standard was set in 2021 and has not changed to date.

Base fees are destroyed, and priority fees go to validators. Source: Umbra Research

On Ethereum, transactions wait in the memory pool before entering a block, and validators will select the transactions that pay the highest fee for block packaging. The global memory pool is created by different validators broadcasting their respective memory pools to each other. This is where the maximum extractable value (MEV) is generated.

Since the mempool is visible to validators and MEV seekers, seekers can identify trades that can be pre- and post-traded for profit. Seekers are often bots that look for MEV opportunities. For example, if someone buys a million dollars worth of token A, a seeker can buy A before that trade 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 assigns them to threads. Only when assigned to different threads local to the leader are they sorted by priority fee (i.e. transactions with the highest fee go first).

Different transaction processes between Ethereum and Solana

Solana originally had no priority fees. But now, wallets like Solflare allow users to pay priority fees. Priority fees give rise to Solana's local or isolated fee market. Unlike Ethereum, Solana transactions must specify where they wish to read and write a portion of the state.

Solana's validators know the state involved in the transaction before calculation, while Ethereum validators only know this after they start calculation. Solana transactions need to specify specific information that helps Solana determine which part of the state is becoming a hot spot. The total number of compute units (CUs) used by any hot spot is limited to 25% (one of the four cores used for Solana's multi-threaded execution). This is done to prevent an account from being updated more than once in a block.

A hotspot is a specific smart contract or account that suddenly sees a lot of traffic. On the EVM network, a large demand for a single application (such as Crypto Kitties) can cause transaction fees to rise across the entire network. On Solana, the number of CUs that can be used per block by individual smart contracts/applications (such as Tensor or Jupiter) is limited to 25%.

That is, transactions using any particular contract cannot take up more than 25% of a block, or 12 million CU. All transactions above this limit must wait for the next block. So if usage of a standalone application increases dramatically, the entire network won't start paying more in fees. Only transactions that interact with that application will see an increase in fees. This is what a localized fee market looks like.

Different applications, even if a gas war occurs, it will not affect other applications

What happens if there are 4 or more hotspots? In this case, Solana looks like Ethereum. There could be a gas war between competing hotspots, and the transactions with the highest fees will get in. Local fee markets seem like a beautiful solution to the general problem of fee spikes.

How does this work in practice? There are still some issues with Solana’s fee market design:

First, currently the base fees for transactions are the same, whether it is a token transfer, exchange, or flash loan. This is obviously not reasonable. Transactions should incur fees based on the computational resources (CU) consumed, although this is already under consideration. CU represents block space, so paying higher fees should be able to obtain more space.

Secondly, since there is no memory pool, validators will only schedule transactions based on fees after assigning them to different threads, so transactions with higher fees will not always succeed. This may lead to the next problem.

Third, Solana does not have a mempool like Ethereum, so higher priority fees do not guarantee that the transaction will be included in the block . Therefore, the best way for seekers (people looking for MEV) to extract MEV is to bombard the network with multiple transactions and hope that the validator chooses one of them. On Solana, this is relatively easy to do due to the low transaction costs.

03Community Atmosphere

Steve Ballmer once said, "The key to .net success is developers, developers, developers." When building a new ecosystem, this is the only metric that makes sense. A strong network of developers builds applications, which in turn develops use cases, which ultimately convert into real users. Whether it's mobile, desktop, cloud services or blockchain, developers are the path to relevance.

Therefore, I am 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 FTX debacle.

Packy sarcastically mentioned in his 2022 article that SBF was one of the people who made Solana an interesting ecosystem. When FTX collapsed, the ecosystem lost one of its biggest supporters. New tokens are no longer listed, venture capitalists are no longer investing, and development talent may have flocked to other places to find resources.

Solana Monthly Active Developers in 2023

According to recent Solana data, approximately 3,000 developers have been developing on Solana over the past year. This number takes into account developers who contribute to public repositories and does not include people who develop in private repositories on GitHub. Given the recent surge in SOL prices, more developers may turn to the ecosystem. As users flock to Solana (due to price increases), this number may increase significantly.

Comparison of the number of developers of major public chains in January and October in the past three years, source: https://www.developerreport.com/

If we compare this number to Electric Capital’s Developer Report, which states that there are over 19,000 developers in the blockchain ecosystem in October 2023, developers on Solana represent approximately 15% of the entire ecosystem.

Compared to the traditional Web2 ecosystem, Solana provides developers with lower costs and faster transactions, and provides users with a better experience. As the consumer onboarding tool kit around Solana develops, more and more developers will build on it.

In order to build a sustainable ecosystem, it is critical that developers benefit. Solana provides resources to developers who are serious about building on it through foundations, community hackathons, and platforms like Superteam Earn. The team has raised nearly $600 million from the ecosystem’s hackathons. In addition, through Airdrops for developers, Solana has unleashed a new wave of talent who can build without the pressure of raising funds.

In 2022, Bonk allocated 5% of the Airdrop to developers. Another 20% was allocated to existing NFT projects within the ecosystem, and 10% was allocated to artists and collectors. This 35% is now worth $450 million. Those developers who held on to this token may have realized a profit of about $500,000 in Bonk's December surge, equivalent to a pre-seed round of financing.

Search for Saga Phone trends on Google Trends

The recent shift in sentiment towards Solana can be quantified by the sales of the Saga phone. Despite being named the “worst phone of 2023,” users who purchased the phone found it paid for itself as the price of Bonk rose. Owners of the phone were eligible for a Bonk Airdrop, turning the phone into a free crypto-native phone. Since the phone was limited in quantity, similar to Bored Ape NFTs or other collectibles, traders began to realize the arbitrage opportunity and the value of future Airdrops, so they rushed to buy the phone. Demand peaked, with unopened Saga phones selling for over $5,000 on Solana.

This situation shows that the sentiment around the Solana ecosystem has changed. Bonk is an example of a meme asset, and similar variants include WIF. However, relying solely on meme assets 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 in changing sentiment. Two recent examples are Pyth and Jito.

Pyth Network provides oracle services on one hand and increases Solana's liquidity by Airdropping tokens to users. Jito Airdrops 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.

Total JTO allocated to different tiers

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 the lower the level of users, the higher the value of the points they receive.

Jupiter is a DEX on Solana that has disclosed its Airdrop plan before Jito. Although people have realized that Jito will launch a token, the scale of the Airdrop has been underestimated, which may be the reason why the Airdrop has not been widely utilized.

Now everyone is focused 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 programs and converted these points into their respective tokens. Some people think that these points programs are not a good idea, but there are also opposing views that they can serve as loyalty points and a more transparent way to distribute tokens, and can unlock behaviors that increase the value of 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 needs borrowers. Nevertheless, it has become very challenging to detect Sybil activity now, but projects such as Marginfi and Zeta have a way to detect it. For example, if a wallet matches a wash transaction pattern on Zeta, its points will be set to zero.

These examples have attracted a large number of users to join the ecosystem. In our view, ecosystem building involves two forces that balance each other. On the one hand, you need to be able to build culture and passion, and meme assets, points, and Airdrop solve this problem. On the other hand, you need to design excellent products to attract people's curiosity and retain users. Therefore, although various aspects of Solana can be further explored, it is more important to focus on the products that developers have built in the past year.

04Ecosystem​

Solana’s on-chain ecosystem (incomplete version)

The development of Internet products is always accompanied by improvements in bandwidth. In Web3, Solana marks a moment where its high throughput and low transaction costs make it possible to make consumer-grade applications. Just like we saw platforms bear server costs in the Web2 era. On Solana, compressed NFTs allow developers to send a million NFTs for a few hundred dollars.

Right now, much of what’s on Solana is an extension of the broader cryptocurrency landscape, seen as “X, cheaper and faster.” But building entirely new applications requires fighting against the inherent behavior of users, which requires a lot of resources that most startups are not willing to challenge.

However, what excites me 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 is achieved at the end of the article, but for now, let’s take a look at what Solana is like today.

1) Trading platform

Given Solana's relationship with FTX, the early ecosystem was 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 about $800,000 was Mercurial's governance token MER. This led to 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, which are yield aggregators and DEX aggregators, respectively.

Solana’s low fees make it easier for users to transact at a higher frequency, which can be easily seen in the numbers. Three charts tell the difference between transactions on Ethereum and Solana. In terms of transaction volume and locked value (TVL), Ethereum shows superior metrics.

It is important to note that Ethereum has a five-year head start and a healthy DeFi ecosystem with multiple underlying tokens valued at billions of dollars. Therefore, the metrics below are somewhat flawed. When observing the charts, conclusions should be drawn by looking at all three charts rather than a single chart.

Comparison of weekly Ethereum and Solana transaction volumes
Ethereum and Solana TVL comparison

However, the difference in TVL on both chains is much greater than the transaction volume. At some point, the TVL number doesn’t matter that much. The higher the transaction volume to TVL ratio, the better the capital efficiency. Recently, Solana has clearly outperformed Ethereum in this regard.

Ethereum and Solana transaction volume to TVL ratio

One of the reasons for the recent increase in trading volume is that users want to get Airdrop. Jupiter announced an Airdrop plan, in which 50% of the tokens are reserved for the community, divided into four different phases, and the first phase may be launched in early 2024.

While the Airdrop may be what is driving the activity on Solana, it is important to understand that certain designs are not possible on Ethereum. For example, the order book design is not possible on the Ethereum base layer. Protocols such as dYdX and Aevo have already forked to their own chains.

Solana’s combination of speed and low fees means that market makers can perform high-frequency trading on-chain without having to resort to CEXs or wait for superior layer-2 solutions.

Many CEXs today barely touch the chain. Sometimes, when chain integration is difficult, they just add a token and prohibit deposits or withdrawals of that token. But CEX also has its advantages, and market makers (MM) still choose CEX as their main activity platform, not only because of the handling fees, but also because of performance guarantees.

As they say, liquidity breeds liquidity. Traders flock to platforms with the most market makers because they make it relatively easy to enter and exit large positions.

2) Lending and yield aggregator

On-chain lending markets allow market participants to earn returns on assets. In addition, they allow investors to convert from one asset to another without generating a taxable event. Marginfi is the highest value lending protocol on Solana, locking in over $350 million in deposits and $80 million in loans.

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 price of Solana ecosystem tokens plummeted, causing positions in DeFi protocols to be liquidated. Solend's total locked value fell from more than $350 million to about $25 million in just one week.

As of December 26, 2023, the total locked value is just over $200 million, and has not yet recovered to the level before FTX collapsed. Solend's declining locked value creates an opportunity for a new protocol to attract funds. Considering that Solend already has a token, it is not enough to attract and retain users by interest rates alone.

Marginfi seized this opportunity and announced the launch of “Points”, which means that depositors and borrowers will receive Airdrops at a later point in time in addition to interest. Marginfi launched Points in the first week of July 2023. Since October 15, the total locked value of Marginfi has grown from about $30 million to about $485 million in just two months, an increase of more than 10 times.

The total TVL of the lending protocol on Solana

Kamino is the second largest lending platform on Solana, and its incentive mechanism shows the rapid growth of the platform. The protocol announced the upcoming points on December 3, and the total locked value increased 8 times in three weeks to about $245 million.

3) Liquidity Staking

Staking is one of the core components of a proof-of-stake (POS) chain. It enables stakers to earn revenue from protocol inflation and fees and protects the security of the chain. Liquid staking is critical infrastructure because chains should have low barriers to staking and should not exclude users due to high fees.

Liquid staking allows investors to stake any amount without deep technical understanding or running node software. Although Solana validators must stake SOL from the beginning, and Ethereum did not start proof of stake until last year, liquid staking on Ethereum leads the industry. More than 383 million SOL are staked, accounting for about 90% of the circulating supply.

Of this, a staggering 362 million or about 95% is natively staked, meaning it is locked and not taking advantage of any staked derivatives. This means that users who stake via native SOL are missing out on the opportunity to use liquid tokens for DeFi. If you stake SOL via protocols 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 opportunity costs.

SOL Staking (Liquidity and Passivity)

The liquid staking market only has about 20 million SOL. Currently 24% of circulating ETH is staked, but about 68% (31% LST and 37% platform) is staked through liquid staking platforms and CEX. If 31% of SOL is also staked through different LSTs, Solana's LST market can be estimated to be about 115 million SOL or about $11 billion.

Marinade is the first Solana liquid staking protocol born out of the 3rd place finish in the 2021 Solana Hackathon. The protocol was launched on the mainnet in August 2021. The solution, similar to Lido, is simple and functional. When users stake SOL through Marinade’s staking pool, they 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 period (approximately 2 days). When users stake using the liquid staking option, they must pay a fee to the pool. Liquid staking exposes users to the smart contract risk of the staking protocol.

Marinade also offers its users the option to stake SOL natively. When they do this, users do not receive mSOL in return. When users exercise this option, they use the functionality of native Solana and Marinade simply acts as an interface. Users are the only ones who can withdraw their SOL at any time.

Users actually create a Solana staking account and delegate the responsibility of managing their stake to Marinade. Staking accounts receive staking rewards at the end of each epoch. Marinade does not charge any fees to users, and they are not exposed to Marinade’s smart contract risk.

Total TVL of liquidity staked on Solanas

Marinade and Jito are the two largest providers of liquid staking protocols on Solana. Marinade has a total locked value of approximately 7.1 million SOL, with a market share of approximately 41%. Jito has a total locked value of approximately 6.4 million SOL, with a market share of approximately 38%. Similar to Marinade's mSOL, Jito provides JitoSOL to users as a voucher for locking SOL in its staking contract. In addition to validator earnings, Jito also passes on MEV rewards to JitoSOL holders.

Liquid staking tokens are very convenient for users, but they also have some disadvantages. One of them is that liquidity can become an issue. For example, mSOL experienced a depegging on December 12. When a trader dumped a large amount of mSOL, the price fell from 1.16 to 1.02. This can be quite detrimental for a token that is supposed to be "pegged". Although arbitrageurs ensured that the price returned to the peg level, the incident highlighted the need to improve the liquidity of liquid staking tokens.

mSOL was de-anchored on December 12

Currently, there are more than 10 liquid staked tokens on Solana. When more liquid staked tokens are launched, the problem of low liquidity may become more serious. To solve this problem, Sanctum has proposed a solution. Sanctum Infinity is a multi-liquid staked token pool that allows swaps between all liquid staked tokens in the pool. This can be regarded as an aggregation layer for Solana's liquid staked tokens. The solution is expected to be launched in the first quarter of 2024.

4) NFT Ecosystem

The NFT ecosystem on Solana has grown rapidly over the past year. In the beginning, there was a lack of content to show, and some flagship projects like DeGods and yOOts chose to migrate to other chains. Although Magic Eden has been the leading NFT market on Solana, it hedged by going multi-chain. Leading NFT collectibles are vital to the community, so this gap must be filled.

New collectibles like Claynosaurz and Mad Lads filled this gap and created a strong sense of belonging in both communities by choosing to stay on Solana . What both projects have in common is that they are a means to an end, not an end.

Mad Lads is a collectible formed by former FTX engineers that aims to replace FTX with another platform called Backpack. The exchange should fill the gap left by FTX while being more compliant with regulations, more transparent, and in the spirit of DeFi. Mad Lads has developed a Solana wallet that utilizes executable NFTs, or xNFTs, blurring the line between applications and NFTs.

Unlike traditional NFTs, collectibles stored on servers, xNFTs can execute code. xNFTs allow users to interact with applications such as Jito Staking, Birdeye, Orca, and Marginfi within the Backpack wallet.

Magic Eden was initially the dominant NFT market on Solana. It expanded support for Ethereum in August 2022 and eventually added other chains such as Polygon and Bitcoin (Inscriptions). While Magic Eden expanded support for other chains, Tensor focused on Solana and provided additional features such as TradingView integration and market making orders. In addition to these features, Tensor also launched a points event similar to Blur, where traders will receive Tensor's governance token as a reward.

Weekly volume of NFT markets on Solana

5) Infrastructure

I have been using Solana for over two years and have experienced the infrastructure changes firsthand. Solana stopped producing blocks over ten times in 2022, but only once in 2023. Such failures, while undesirable, are common for new chains trying cutting-edge technology. Even L2s like Arbitrum experience these failures when traffic surges.

Various factors contribute to improving infrastructure, from the functioning of fee markets and client diversity to RPC nodes. Companies like Helius Labs and Triton are helping application developers with services such as:

- RPC nodes and webhooks for interacting with the Solana network. Outsourcing this responsibility allows developers to focus more on solving core problems.

- Enhanced API to help developers save time in obtaining required data, such as transaction history, NFT data, Token metadata, etc.

Another infrastructure change is state compression, where Solana uses Merkle trees and stores only part of the data, greatly reducing storage costs. NFT is 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 users with a friendly interface.

The cost of minting 1 million NFTs on Solana is about $247, while on Polygon it is about $98,000, and on Ethereum it is about $65,000,000. DRiP is an NFT platform that sends 3 million NFTs to different users every week instead of showing them ads. Through state compression technology, DRiP can achieve the same effect for about $250.

Some projects are improving Solana's connectivity with other chains and mixing the best components of Solana and other chains . Eclipse uses Solana's virtual machine SVM for computing and Ethereum as its settlement layer. In contrast, Neon is building EVM on Solana, which can perform parallel processing. Nitro is building Cosmos L2.

5) DePIN

DePIN stands for Decentralized Physical Infrastructure Network. The idea of ​​leveraging decentralized infrastructure and incentivizing it through the insertion of tokens has been around for a long time. DePIN blurs the line between consumer and commercial devices. Helium and Hivemapper are some examples of DePIN on Solana.

Helium's original mission was to create a decentralized wireless infrastructure to support IoT devices. Helium's devices act as hotspots, and about 50 hotspots are enough to provide internet connectivity to a city. Anyone can host a Helium hotspot.

Helium Mobile’s daily prepaid subscriber additions

Helium has its own blockchain with over a million hotspots before migrating to Solana in April 2023. To support growth and further expansion, Helium will outsource tasks such as infrastructure support to Solana to save costs and achieve better scalability.

Hivemapper is another example of a DePIN application built on Solana. It helps map the world by installing dashcams, incentivizing participants with HONEY Tokens. So far, Hivemapper has mapped 100 million kilometers worth of roads, of which 6.6 million kilometers are unique.

Source: Hivemapper

Hivemapper leverages the power provided by web3 infrastructure by incentivizing regular people to install dashcams and start mapping. This model enables services like Uber and Zomato to use Hivemapper in the future, just like using Google Maps, but with fewer permissions required.

05 Summary

When the cost of interacting with a product drops dramatically, technology adoption accelerates. 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 growth of Android have made it possible for people around the world to access the internet through mobile devices. In my opinion, the features Solana offers are well suited to attract the masses.

You can ignore the rest of this article and try to receive $1 in Solana’s Phantom wallet to see what I mean. I remember my first experience, and the closest speed and experience was what I saw when I used PayPal in the early 2010s. Solana’s unit economics make it possible for developers to pay for on-chain user interactions without leaving a big hole in their balance sheet. Solana’s unit economics make it possible to build consumer-scale applications beyond today’s crypto-native user space.

This doesn’t mean that products like MarginFi or Jupiter are irrelevant. They are critical infrastructure, however, to attract the first users, their needs need to be met, and replacing the existing financial infrastructure is a difficult but worthwhile goal. But as I look out over the next decade, unless the Facebook and Substack of our era are built, we will struggle to gain relevance beyond a dwindling small group of speculators.

Blockchain is financial infrastructure. In its current form, we overemphasize transactions for users rather than value exchange on the backend . What forms of value exchange can Solana’s blockchain enable (without the user’s knowledge)? Those answers are beyond the scope of this article.

As with most price increases, a focus on price instead of the main thing (Build) can cause the network to lose long-term advantage. Therefore, Solana must slow down its pace of competing with its EVM peers and turn to consumers. It needs a new group of VCs willing to invest in consumer crypto applications alongside founders who have built in Web2 in the past. This approach of looking for other directions could put Solana on a completely different trajectory as the market stubbornly fights for a share of 10 million active on-chain users.

In a competitive market, Solana finds itself in a relatively strong position. Whether this will translate into meaningful monetization and sustained momentum is unclear. But for now, the following is clear: the SVM approach has advantages when developing the network, developers are building cool things in the ecosystem, and the community cares about everything.

None of this happened overnight. Solana has suffered and returned. But please note that this does not mean that where it goes won’t be something to wait and see.