An Overview of Solana Ecosystem
With the development of the FTX event and XRP being recognized as a non-security, Solana, a public blockchain deeply tied to FTX and its governance token SOL, acknowledged as a security by the SEC in lawsuits against Coinbase and Binance, has once again attracted market attention. This article will review the current state of Solana from the perspectives of on-chain data and ecosystem projects.
Summary
According to on-chain data, Solana’s Total Value Locked (TVL) has increased by approximately 47% since January, second only to Arbitrum, Optimism, and Mixin among the top-ranking public chains and layer-two networks in terms of TVL growth. Post the FTX debacle, there were two transaction peaks linked to BTC NFT, SMB NFT, and the overall market. Solana maintains an average of around 20 million on-chain transactions per day in July, relatively stable. Development activity is heavily influenced by part-time developers, resulting in overall low levels of activity.
Currently, the liquidity staking sector dominates the ecosystem, with Marinade leading with a 46% market share of Solana. The remaining liquidity staking protocols have seen their TVL increase over the past month, driven by the rise in the price of the SOL token. The capital utilization rates of the two major on-chain lending protocols are approximately 16% and 21%, significantly lower than Ethereum. Native on-chain DEX operations are relatively conservative, with no significant highlights. The NFT sector overall shows a trend of declining transaction volume, with recent transactions concentrated in SMB. In general, while there are some old protocols in the Solana ecosystem with new initiatives, there are no major splashes, and there is no sign of a reversal in the activity of the ecosystem.
On-Chain Data
1. TVL
As of July 23rd, Solana’s TVL is 359.9M, ranking 10th among all public chains and layer-two networks. Compared to its peak, TVL has fallen by over 95%. Before the FTX debacle, TVL had fallen by over 70%. Its historical low of TVL is around 244M (January 2023), a 47% increase to date, placing it behind Arbitrum, Optimism, and Mixin in terms of growth rate among the top 10 public chains and layer-two networks.
2. Transaction Volume
Following the FTX debacle, transaction volume remained low for nearly two months, after which there were two spikes in transaction volume from March 21st to May 15th and around June 19th, with daily transactions exceeding 25 million. The current daily transaction volume fluctuates around 20 million. Transaction volume from March to May was significantly influenced by BTC NFT transactions, while the June 19th spike might have been driven by the overall market.
The leading DEXs on Solana in terms of TVL are Orca and Raydium. Transaction data shows a noticeable increase in DEX transaction volume in the week of the FTX debacle, followed by a sluggish month. Transaction volume began to recover at the start of 2023, and currently maintains a relatively stable state.
3. Development Activity
After the FTX debacle, Solana’s development activity rose in March, with monthly active developers reaching 2,732. As of June 1st, active developers decreased to 1,475, a nearly 50% decline. The number of code submissions has shown a similar trend. March saw the peak of code submissions for the year, followed by a rapid decline. The significant fluctuation in development activity in 2023 can be attributed mainly to the volatility among part-time developers, with the number of full-time developers decreasing only slightly. Overall development activity has declined since March.
* Developers who commit code for more than 10 days a month are considered full-time, and only those who commit original code are counted in the number of developers.
4. Users
The number of newly created Solana wallet addresses saw a rapid increase from late April to May, with a growth of 3 million within a month. The number of active addresses significantly increased in May, far exceeding other periods. The primary reason was the launch of the Bitcoin NFT market by Magie Eden, a Solana chain NFT market, in March, during the active trading period of Ordinals NFT, Magic Eden became one of the major trading platforms.
Ecosystem Projects
A total of 98 dapps are tracked on Defillama. Among these, 19 Dapps have a TVL of over 10 million dollars and are mainly distributed in the three major sectors of liquidity staking, lending, and decentralized exchanges.
Marinade Finance is the largest liquidity staking protocol on Solana, with a TVL of 159M, accounting for approximately 43% of the Solana market share. This protocol allows users to stake SOL and receive mSOL, which serves as an underlying asset in defi protocols like Solend. Currently, mSOL has been listed on centralized exchanges such as Coinbase and Kraken, but the primary trading still occurs in decentralized exchanges. Aside from Marinade Finance, the TVL of liquidity staking protocols has risen, mainly driven by the price increase of SOL tokens.
Solend is an established decentralized lending protocol on Solana, launched in 2021. Solend launched the first stage of the v2 version in April, reopening mSOL staking liquidity mining, and started supporting users to convert the SOL tokens pledged in the protocol to mSOL to earn additional benefits from June 2. Since June, its TVL has risen from 28M to 44M dollars, and the current TVL is 55.28M. The fund utilization rate on Solend is 16.19%.
Marginfi, a new lending protocol launched in 2023, has seen its TVL growth rate reach nearly 600% in the past month, with the current TVL at 17.93M. This protocol secured 3 million dollars in financing in 2022, jointly led by Multicoin and Pantera. The protocol has not yet issued tokens and launched a point system on July 3, through which users can accumulate points by depositing, borrowing, and referring, which is likely the main reason for the significant increase in its TVL in the past month. The lending rate on Marginfi is 21.7%. Aave v3 on the Ethereum chain has a TVL of 2.11B and a fund utilization rate of nearly 35%. Compared with Ethereum, Solana chain’s capacity and leverage are lower.
Currently, the trading on Solana mainly takes place on Raydium, Orca, and Jupiter Aggregator. Raydium is the earliest AMM DEX on Solana, maintaining a TVL of 28M after the FTX explosion, with an average recovery. On the other hand, Orca’s TVL bounced back from a low of 30M to 38M, becoming the largest DEX on Solana. Overall, the operation of DEX on Solana is relatively conservative and ordinary.
The NFT transaction volume on the Solana chain is second only to Bitcoin and Ethereum, with a 30-day turnover increase of 75%, primarily due to the high popularity of the SMB series released in June. However, the overall daily turnover is on a shrinking trend.
From a trading category perspective, the overlap rate of Solana’s highest NFT series in history and the projects with high trading volume in the recent 30 days is low. Recent NFT trading hotspots are focused on Smart Monkey Business (SMB). SMB is an algorithm-generated pixel monkey NFT series released in June 2021 and August of the same year for Gen1 and Gen2 series, respectively. The team issued SMB Barrel Raffle lottery tickets and forged SMB Gen3 at the end of June 2023. The monthly SMB series transaction volume accounted for more than 90% of the Solana NFT market share. Aside from the SMB series, the project with a trading volume of over 2M in the past month is Bodoggos, an NFT series launched by Nifty protocol and @EasyEatsBodega. Regardless of the SMB series or Bodoggos, daily trading volume has been continuously shrinking after launch. The short-term activity of individual projects did not stimulate the overall Solana NFT market.
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