Solana stands out as the most notable success story in the current crypto cycle, despite past criticisms for its heavy reliance on marketing, technical instabilities, and a perceived lack of real value. Making an impressive return to the crypto scene's forefront, Solana has seen its native token, $SOL, stabilize around the $100 mark since last year's end—a price last observed just before the 2022 market downturn—and its on-chain activity has surged. This might suggest Solana has overcome its earlier challenges. Yet, questions linger about whether its past issues have truly been resolved.

Yesterday’s network outage, which lasted approximately five hours, has given many the sense of a déjà-vu. Indeed, Solana used to have downtimes and congestion quite often, with 22 incidents reported in 2022 alone. However, nearly a year has passed without such issues, and with founder Anatoliy Yakovenko's commitments to technical improvements, the community seem to have moved past these concerns. Was it too early?

Also, Solana's recent activity boosts have been tied to the memecoin mania, which is notoriously unreliable, as well as some high-profile airdrops, like the one organized by Jupiter, a DEX (decentralized exchange) aggregator. It can be said that much of Solana’s activity was generated by speculation. This is not bad in itself, but it is crucial for the blockchain's longevity that this momentum is sustained with more dependable projects.

Memecoins and airdrops

With an average of around 1.3 million weekly active addresses, Solana is undoubtedly a popular blockchain. In the category of high-throughput and low-fee blockchains and layer-2s, it is bested only by zkSync, a new chain that now registers 1.5 million weekly active addresses (source: dune). A week ago, Solana even saw an all-time daily high of new wallets being used to sign transactions - over 879,000 (source: hellomoon).

DeFi trade numbers are also impressive. Despite representing only 3.75% of the total value locked (67% is commanded by Ethereum), Solana’s weekly DEX volume is not far from the DeFi leader: $5.7 billion vs Ethereum’s $7.1 billion (source: DeFiLlama). Furthermore, the instances when Solana’s trading volume flips Ethereum in a 24-hour window are multiplying. After a busy trading day in December, mostly pushed by the new memecoins like $BONK, last Wednesday’s surge was caused by the Jupiter airdrop.

It is worth mentioning that $BONK has lost 93% of its value since its highest point (that’s what most memecoins do), and the Jupiter airdrop caused a treasury controversy. The latter was made all the more visible by its size: with over $700 million worth at its peak on the first day, the airdrop has been the biggest so far in 2024, giving away 1 billion $JUP to the users who helped test the DEX.

New projects

However, Jupiter is not the only DeFi protocol on Solana, and memecoins are not the only tradeable token. Other important Dapps include the liquid staking protocols Jito ($151 million weekly volume) and Marinade Finance ($104 million), or lending-borrowing platform Solend ($67 million), source: dappradar.

Solana’s NFT marketplaces contribute to the chain’s activity as well: Tensor, Magic Eden, and Solanart collectively generate approximately $35 million weekly volume (source: theblock)

Perhaps more importantly, ambitious new projects are being launched too. The new gaming studio, backed by Delphi Digital’s crypto VC arm and some key web3 influencers such as Cozomo Medici (alter ego of none other than Snoop Dogg), is making the crypto space talk. This week, it launched early access to the “Solana Hunger Games”, an AR (Augmented Reality) mobile phone game, where players will be hunting treasures and getting rewards. The game’s X page quickly gathered over 140k followers, and their site even crashed after receiving over 2 million views within the first day.

All in all, it might be too early to say that Solana is falling back into its old habits. Its engineers have pinpointed and addressed the cause of the recent outage, releasing an updated version of the validator software. The on-chain activity seems to be maintained by more than just fleeting excitement. And last but not least, the marketing efforts – some said Solana is excessively relying on - are also bearing their fruit. New interesting projects choose the blockchain, contributing to its growing network effect.

However, the recent events are a reminder to not get carried away and monitor the chain’s activity closely, always staying prepared for a black swan event.

Written by D.Center