The Phoenix Nirvana of Solana: Resilience Amidst Adversity

Overview

With the use of smart contracts, Solana is an open-source blockchain that promises to deliver extremely high throughput and speed for demanding applications like decentralized finance and gaming. Although the current blockchains, like as Ethereum, have made great efforts to educate their users, they continue to face a number of difficulties when trying to onboard new users. Among the difficulties are:

● High Cost: Most retail customers cannot afford the transaction fees on the Ethereum mainnet. They must pay a few dollars for every purchase.

● Slow Speed: Blockchains such as Ethereum can only handle hundreds of users because they generate blocks every 12 seconds and take several minutes to reach transaction finality.

● Decentralization and Security: While certain layer 2 blockchains improve performance and efficiency, they compromise security and decentralization, which leaves room for manipulation and other possible threats

Benefits of Solana

In contrast to previous EVM-compatible blockchains, Solana has a unique architecture to tackle the above described difficulties and provide significant benefits over its rivals.

Efficiency and throughput

Similar to centralized systems, Solana can provide extremely high performance. With an average transaction cost of about $0.00025, Solana transactions are remarkably cheap and quick—up to 65k TPS and confirmation in just a few seconds. Actually, Ethereum only processes 15–30 transactions per second, whereas Visa processes 1,500–2000 transactions per second.

Decentralization

So far, more than 3,400 validators spread over six continents have staked a total of over 380M $SOL on the network. These validators are essential to preserving the resilience, decentralization, and security of networks. Solana's resilience is enhanced by a wide range of validator operators, guaranteeing a reliable and internationally reachable network.

Source:https://medium.com/@jamesan52491706/features-of-solana-7ac2cc3f5c56

These unique features make Solana stand out among dozens of new scaling solutions and become the 3rd largest blockchain ecosystem in the world, following Bitcoin and Ethereum. 

History of Solana

Solana's success, meanwhile, did not come easily. In 2018, Raj Gokal and Anatoly Yakovenko launched Solana for the first time. Anatoly, formerly of Qualcomm and Dropbox, developed Proof of History (PoH), a unique distributed system timekeeping technique. This novel strategy established the groundwork for Solana's high-capacity blockchain. After the team's formal 2020 launch, Solana has grown to be a major force in the cryptocurrency world.

Fundraising in Solana

Throughout its cryptocurrency journey, Solana has managed to acquire remarkable investment from its prelaunch.

Exclusive and Advance (Prior to 2020)

Through private sales and presales, Solana Labs raised nearly $20 million between April 2018 and July 2019. In these funding rounds, there were both public auction sales and private sales.

ICOs & Seed Rounds (2020–2021)

In March 2020, Solana completed a $1.8 million seed financing. Shortly after, in April 2020, the company held an initial coin offering (ICO), launching at a $0.95 price point.

Current Round (2021–present)

A remarkable $314 million in funding was obtained by Solana in June 2021 from prominent investors, including Andreessen Horowitz and Polychain. In August 2021, a subsequent unannounced corporate round was concluded.

The way Solana has raised money demonstrates the growing interest of cryptocurrency investors. Furthermore, Solana and its ecosystem are dedicated to innovation and keep growing.

Reached Milestones

Over the course of its four-year existence, Solana has accomplished several significant milestones, such as the creation of user-friendly wallets like Phantom and Solflare wallet and the successful mainnet beta launch.

• Resistance against FTX's collapse and restoration of its community and ecosystem
• Pioneer of memecoin and celebrity coin season

These accomplishments highlight the community's vitality and the power of the development team.  

Metrics for Solana Blockchain

The year of Solana's return is 2023. The price of $SOL has increased nine times in the last six months since October 2023. More significantly, as thousands of additional users entered this brand-new environment, Solana's onchain activities were investigated. Right now, Solana has been successfully processing more than 90% of the ~260M daily transactions (more than 3000 TPS) that have been processed during the last week. Every day, about 170k blocks are produced, with an average block time of 0.4 to 0.5 seconds.

Source: https://solscan.io/analytics

The number of active Onchain wallets surged to more than 880k as interest in the Solana ecosystem grew. Notably, Solana network prices increased dramatically as a result of the increasing onchain activity, rising from 1500 $SOL at the beginning of 2024 to 6500 $SOL at present. The priority fee ratio has increased to 97%, indicating that users are prepared to pay higher priority fees in order to expedite their transactions.

Source: https://solscan.io/analytics

Among the legitimate blockchains with native USDC issuance is Solana. With $2.39 billion USDC in circulation as of right now, Solana represents 6.86 percent of the total USDC supply available on all blockchains.

The Solana blockchain is secured via a staking mechanism, making it one of the biggest staking blockchains globally. Out of the 580 million tokens in total supply, over 380 million have been staked on the network so far by about 440k different wallets worldwide. At the current price of $SOL, the total value of staking assets exceeds $53 billion.

Electric Capital's developer reports for 2024 state that Solana's developer ecosystem has expanded by more than 600% since the beginning of 2021 and has now surpassed 2800 active developers each month.

Tokenomics and Emission of Solana

The whole supply of $SOL as of July 11, 2024, is 580 million. Of them, 463M $SOL are in circulation on the market and 116M $SOL are dispersed or retained as locked SOL by Solana Foundation/Labs.

In contrast to other blockchains, Solana has an infinite supply. Rather, it adapts dynamically to validator performance and network activity. The parameters of the network determine the inflation rate in Solana. At the moment, it is about 5.168% yearly.

Concurrently, a portion of the transaction fees paid in $SOL are burned, lowering the total amount of tokens available. Deflationary mechanism contributes to the preservation of scarcity and may eventually raise the value of SOL.

Currently, 5k $SOL is awarded to validators and approximately 87k $SOL are generated every day as a staking reward. Burning 4k–5k $SOL lowers the total amount of tokens in circulation.

Notable Player in the Solana Ecosystem

The Solana ecosystem has gained prominence in the cryptocurrency market with the spike in the price of $SOL. Solana's weekly DEX volume exceeded $14 billion last week, surpassing Ethereum's weekly on-chain trading volume. Regarding NFTs, Solana also outperforms all other chains in terms of user adoption on the 24-hour NFT blockchain.

Raydium

On Solana, Raydium is a decentralized exchange (DEX) that integrates order book capabilities with automated market maker (AMM) functionality. Raydium gained popularity fast as a result of the emergence of memecoins, and it is now the most widely used DEX for trading memecoins. With a $1.1 billion 24-hour trading volume, Raydium currently accounts for more than 60% of Solana's onchain volume. Raydium prints approximately $2.5 million in trading fees per day, of which 88% are given to its liquidity providers and 12% are given to its stakers. Raydium charges a set 0.25% cost for each token swap.

Jito

Jito is Solana's liquid staking service, which pays holders MEV (maximum extractable value) rewards. Users can convert their Solana tokens for a liquid stake pool token (JitoSOL) by staking them in the Jito Stake Pool. According to the most recent data, the Jito's Total Value Locked (TVL) is roughly 12M $SOL ($1.6B at the current $SOL price), and its JitoSOL holders are earning a respectable 7.41% annual percentage yield.

Moreover, as Solana onchain operations flourish, MEV tips on Jito are rising. Jito harvested around 31k $SOL as its MEC tip in the last week, bringing its MEV tip's remarkable annual income to 1.6M $SOL.

Pump.fun

A native launchpad platform called Pump.fun is dedicated to the creation and exchange of memecoins on the Solana. It makes the process of creating and exchanging new tokens easier for both novice and seasoned users to navigate.

With the rise in popularity of memecoins and celebrity coins on Solana, Pump.fun has become increasingly popular. In the time since Pump.fun launched in January 2024, more than 1.2 million tokens have been used. In addition, the platform has made over 392K $SOL (about $55 million at the current price) from the memecoin craze, making it a profitable venture even in the face of market volatility.

The Solana ecosystem's comeback is marked by these indigenous initiatives. Furthermore, other noteworthy initiatives like Render Network, Jupiter, and Helium highlight the creativity and diversity of the Solana community. 

The Catalysts Are Here

In the first half of 2024, Solana outpaced the majority of significant tokens; nevertheless, if we look forward, even more catalysts are in store for the remaining half of the year.

Flamedancer

Firedancer is an autonomous client validator for the Solana blockchain, created by Jump Crypto. It seeks to improve the effectiveness and security of the network. The Firedancer client demonstrated its ability to perform more than one million transactions per second during an early demonstration aired at Breakpoint 2022. 

Firedancer, which is crucial to the Solana network's construction and transaction processing, is anticipated to represent a significant turning point in the company's history. The development of Firedancer appears to be proceeding smoothly, despite the fact that the launch date has not yet been set. Jump Crypto engineer CantelopePeel claims that the Firedancer client has constructed its first approved block on the Solana testnet.

Blinks

Solana Actions, which transforms blockchain transactions into shareable, metadata-rich links, has Blinks as a component. It implies that a Solana transaction can be started by any platform or website that has the ability to show a URL. For example, Send it NFT purchases can now be made straight from within the X client by X users.

Blinks reduce the barrier to cryptocurrency adoption by making it simpler for users to engage with blockchain without having to leave their current application or webpage. Blinks, a Solana native invention, provides access to the platform for the upcoming phase of user onboarding within the Solana ecosystem.

Solana Layer2 

Through the delegation of part of the transaction processing to secondary layers, Solana Layer2 solutions seek to improve the scalability and efficiency of the Solana blockchain.

Using the HyperGrid technology, Sonic is the first Solana Layer 2 for sovereign games. Sonic wants to give the Solana Virtual Machine (SVM) horizontal scaling.

Designed to improve AI data processing on Solana, Grass is another noteworthy Layer 2 on Solana. In order to prevent data pollution and promote open-source AI, it captures metadata to confirm the sources of data.

The growing Solana Layer2s aid in managing more network traffic and enhance user experience in general. Importantly, new Solana Layer2s are anticipated to emerge and help bootstrap the Solana community as more people enter the Solana ecosystem.

Conclusion

Memecoins and celebrity coins, in addition to the previously described catalysts, continuously bring in fresh investment and blood to the Solana ecosystem. Without a doubt, the combination of these factors could set up Solana for future growth for the remainder of 2024.

Looking back, when FTX failed, Solana was about to go into a death spiral. However, the Solana development community and environment held strong. Numerous users and developers persisted in creating and innovating on the platform, aiding in Solana's comeback and achieving phoenix nirvana.

As they say, you become stronger from what doesn't kill you. Solana has proven to be resilient and has room to expand in the long run. Let's watch to see how things work out.