chandan Web3 Research

Navigating the Solana Ecosystem: Key Trends, and Highlights

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chandan
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This article explores topics like network security, client diversity, network activity, Block space, Solana holding, developer activity, stablecoins, and NFTs.

Network Security:

  • Solana relies on validators to secure the network, rewarding them with newly issued tokens every epoch (roughly 2-3.5 days).

  • Currently, validators receive around 2.5 million tokens per month, which translates to 30 million tokens annually (6.8% of the circulating supply). High issuance can create sell pressure, but it helps compensate for the high cost of operating nodes.

  • As of February 2024, a significant portion of Solana's circulating supply (384 million tokens, or 67%) is staked across 2,421 validators. It's important to note that this number reflects nodes, not individual operators.

    Client Diversity:

  • Until recently, only one validator client existed on Solana, developed by Solana Labs.

  • In August 2022, Jito Labs released a second independent client, promoting diversification within the network.

Network Stability:

  • On February 6th, 2024, Solana Mainnet Beta experienced a five-hour outage, marking the sixth major incident since its launch.

  • The network's stability remains a concern, requiring further improvement.

Censorship Resistance:

  • Information regarding Solana's censorship resistance is currently unclear.

Solana Network Activity: A Snapshot

This section summarizes key metrics related to Solana's network activity:

Block Space:

  • Each block on Solana can handle up to 48 million compute units.

  • On average, blocks are filled to 72% capacity, utilizing around 35 million units.

Developer Activity:

Solana's full-time developer count dipped in 2023, reaching 700, which represents a 38% decrease from 2022. This trend aligns with similar downturns in other blockchain ecosystems.

Active Addresses:

While the number of active addresses remained relatively flat throughout 2023 at around 100,000, there was a noticeable increase towards the end of the year.

Number of Transactions:

Daily user transactions stayed consistent in 2023, averaging 20 million per day. Due to Solana's low gas fees, many of these transactions might be associated with front-running and MEV (Miner Extractable Value) activities.

NFTs:

  • NFT trading volume on Solana saw a similar pattern to active addresses, remaining flat for most of the year before picking up towards the end.

  • Interestingly, the NFT marketplace Tensor captured an impressive market share of over 80% compared to Magic Eden in early December.

Gas Fees:

The average transaction fee remained low throughout 2023, hovering around $0.0002. However, it increased to an average of $0.006 towards the end, likely due to rising network activity.

Solana's DeFi Landscape: Highlights & Recent Growth

Stablecoins:

While the stablecoin market cap shrank in late 2022, it stabilized at $1.5 billion in 2023 and shows promising signs of growth so far in 2024.

Dex Volume:

Decentralized exchange (DEX) volume remained flat through 2022 and 2023 but started picking up towards the end of last year.

DePIN Applications:

  • Solana is making its mark as a hub for Decentralized Infrastructure & Public Interest Network (DePIN) applications, hosting projects like Helium, Hivemapper, Render, Teleport, GenesysGo, and more.

Key Highlights:

  • Render Migration: This decentralized compute network successfully shifted its core infrastructure to Solana, enabling new features like real-time streaming and composability.

  • Helium Mobile $20 Phone Plan: This offering provides unlimited data, talk, and text, creating a unique value proposition in the mobile space.

  • Hivemapper Updates: This project is building a decentralized global map, offering map data licensing and the Scout toolkit for real-time location monitoring.

  • Teleport iOS App Launch: This decentralized rideshare protocol is gearing up for operation in cities with sufficient driver and rider participation.

  • Io.net Public Beta: This decentralized GPU aggregator launched its beta, aiming to cater to machine learning needs with its network of GPUs.

  • IoTeX Integration: This sensor network platform integrated its W3bstream SDKs with Solana, facilitating seamless connection between IoT devices and on-chain contracts.

  • Nosana's AI Pivot: This decentralized GPU network shifted its focus to AI inference, currently operating in private beta with promising results.

Final Thoughts:

  • The Solana Foundation's Breakpoint conference served as a catalyst for growth, featuring launches and announcements from prominent teams.

  • Recent events like JTO's airdrop and BONK's listing on Coinbase further fueled on-chain activity in December.

  • Solana's DePIN ecosystem is thriving and holds immense potential for further expansion.

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