Author: Frank, PANews
As Solana's on-chain data is catching up with Ethereum, the topic of Solana surpassing Ethereum is gradually heating up. At the same time, the discussion about Solana's real prosperity has also attracted a lot of attention on social media. Recently, many KOLs have published articles to prove that Solana's data prosperity is not real. In summary, the controversy about Solana on social media is concentrated on the following points. 1. The proliferation of robots. 2. Inflated transaction volume data. 3. MEV problem. 4. Financial loss problem. 5. The issue of additional issuance of SOL tokens.
Based on our long-term attention to the Solana ecosystem, we have also conducted some data investigations on the true and false prosperity of Solana.
Robots are rampant, nearly 70% of transactions come from robots
Regarding the problem of the proliferation of robots on the Solana chain. Recently, many KOLs have stated on social media that Solana's on-chain transactions are full of robots. Researcher Dan Smith released data on July 29 showing that Solana's weekly transaction fees and MEV revenue exceeded Ethereum for the first time.
If you frequently trade MEME coins, you will find that this situation is very serious on pump.fun. Open a token trading page on pump.fun at random, and you will find the following figure (the exclamation mark at the end of the list is the robot transaction), and the robot's transactions have occupied the majority of transactions.
But it is not easy to identify robot transactions and data, and there is a lack of official publication of such data.
Flip Research believes that this ratio is as high as 93%. “Given the abnormally high transaction-to-user ratio and the number of wash transactions/wash on the chain, it seems that the vast majority of transactions are unnatural. On the main Ethereum L2, the highest daily transaction-to-user ratio is 15.0 times that on Blast (the platform also has low fees and users are all using Blast S2). As a rough comparison, if we assume that the real SOL transaction and user ratio is similar to Blast, this would mean that more than 93% of transactions and, by extension, fees on Solana are unnatural.”
But this data may not be correct. PANews randomly found 10 relatively active tokens from Pump.fun and analyzed the recent 1,000 transactions of these tokens. The algorithm is set up to make machine judgments in two aspects: buying and selling in a short period of time (less than 10 seconds) or repeated transactions of the same address and the same amount in the transaction. The results of the analysis found that among the total 8,268 transactions of these 10 tokens, 80.85% of the transactions came from robot transactions, and the transaction volume of real users was less than 20%. The tokens with the highest proportion of robots accounted for 99.5%, and each robot traded 159 times on average in this range, while the average value of real users was 1.99.
But this does not mean that this is the case for all trading pairs on Solana. PANews then analyzed the most recent 10,000 transactions of the 10 tokens with higher market capitalization, such as $WIF, JUP, POPCAT, BOME, MEW, etc. Among these mature tokens, we found that the proportion of robots has dropped significantly, accounting for 50.73%. The higher proportions are $WIF (81.6%), POPCAT (87.5%), and MEW (88%), all of which are MEME coins. The robot transaction ratio of JUP (Jupiter governance token) is 51%, and the robot ratio of KAMA is only 27.3%.
Tokens that have not completed the liquidity curve are still traded on Pump.fun, while tokens that have completed the liquidity curve will be listed on Raydium. Therefore, the above two comparison methods can also be seen as a microcosm of the comparison between the newly listed Pump.fun tokens and the completed liquidity curve DEX tokens such as Raydium. From the current distribution ratio of token trading volume, the number of pump.fun transactions accounts for about 53% of the Solana DEX ratio (data on August 8). According to this ratio, 66% of Solana's daily trading volume is robot trading. From this point of view, real users currently prefer tokens with higher market value and stable prices rather than new listings.
PANews then analyzed the trading data of the top three tokens by market value on Pump.fun when they were initially created and found that two months ago, the proportion of robots on Pump.fun was only about 35%, and the actual number of user transactions and the number of transactions were much higher than at this stage.
The average number of transactions per day by real users is about 16, which is not much different from Ethereum L2.
What is the average daily transaction volume of users on the Solana chain? Flip Research pointed out in an article that the daily transaction volume of each Solana user is as high as 217 times, which is much higher than other public chains.
In fact, Solana’s transactions are divided into voting transactions and non-voting transactions. The data source of Flip Research, tokenterminal, uses the sum of voting transactions and non-voting transactions, while normal user transactions are mainly concentrated in non-voting transactions. The data magnitude of the two usually differs by about 10 times.
According to data on August 6, there were 34.8 million non-voting transactions, 987,000 active users, and an average of 35 transactions per user.
In addition, according to PANews estimates, 13% of the current active addresses are robot addresses, and 86% are real users.
According to the transaction volume of 34.26 million on August 8, DAU of 822,000 addresses, the actual number of user transactions was about 11.3058 million, the number of real users was about 706,900, and the average number of transactions by real users was about 16. This data is much higher than Ethereum's approximately 3.37 transactions and Base's approximately 6.18 transactions, but is similar to Arbitrum's approximately 12.39 transactions, and lower than Blas' 30.8 transactions (data for August 6). From this perspective, excluding robot transactions, the gap between Solana's actual user activity and other Ethereum L2s is not obvious.
MEME data has declined severely
Another data also indirectly illustrates the superficial prosperity on Solana. Judging from the number of tokens issued daily, the number of new SPL tokens issued by Solana has not seen a sharp decline, and it still maintains at around 20,000 tokens issued per day. But from the details of the data, at the beginning of July, a total of 71,000 tokens were issued on pump.fun, and 5,187 tokens were listed on Raydium that week (pump.fun will automatically list on Raydium after meeting liquidity). By the week of August 5, pump.fun had issued a total of 55,000 tokens, while Raydium only had 1,850 new tokens listed during the same period. This data shows that the number of tokens issued on Pump.fun has not declined too much, but the proportion that can be successfully listed on Raydium is getting lower and lower. At present, the highest is no more than 3%, while in early July, this data was about 7.3%. On August 12, according to Dune panel data, Pump.fun issued 11,796 Meme tokens in the past 24 hours, and only 157 of them were finally listed on Raydium, accounting for only 1.33%.
In addition, the data of New Token Accounts on the Solana chain has also seen a sharp decline recently. On July 20, the data was 12.24 million, and on August 8, it dropped to 6.67 million, a decrease of nearly half. This data can be understood as the total number of all newly created token holding addresses on that day. The number of new tokens created by Solana every day has not decreased, but the total number of addresses holding the tokens is decreasing, indicating that the average number of holders of each new token has dropped significantly. As robots seize the trading pool, real users are leaving the new MEME coin.
Validators become beneficiaries of fake transactions
Meanwhile, Solana validators are making a fortune from robot trading. Dan Smith revealed that on July 29, the total fees generated were $5.5 million, the highest amount in the past three months. 58% of the value came from MEV tips and 37% from priority transaction fees. He believes: "MEV will only be carried out when it is profitable, that is, as long as retailers continue to chase MEME, MEV will be carried out. Once MEME starts to cool down, MEV fee income will also collapse."
PANews made a rough calculation on a website that specializes in counting sandwich attacks, and found that there are about 16 to 20 sandwich attacks identified in one minute. This translates to at least 23,000 sandwich attacks per day. It was previously reported that the most notorious address grabbed more than $30 million in two months, and now there seem to be more sandwich attackers than before. (Related reading: Solana's largest sandwich attacker made $570,000 a day by "grabbing" $30 million in two months, which aroused public anger). To deal with this situation, 82% of transactions currently add priority fees (to avoid sandwich attacks), but this increases the transaction costs for ordinary users.
No evidence of financial losses
In addition, the issue of financial losses and inflation rate was raised by KOL Bear Biscuit.eth, who said: Solana has been losing money, and financial data shows that it increases from $143 million in the second quarter of 2023 to $956 million in the second quarter of 2024. Regarding this issue, another KOL Riyue Xiaochu further interpreted, "This is not an increase in losses. But this is just an illusion of data after being denominated in US dollars. "The average price of SOL in Q2 of 2023 was around US$25. The price in Q4 was relatively large due to the pull. Calculated at an average price of US$50, this year's Q2 is basically US$160. Roughly calculated, Sol issues 6 million more per quarter. So simply multiply it, 2023 Q2 is $150 million, Q4 is $300 million, and this year's Q2 is $960 million. "
In addition, PANews found in its investigation that the Solana Foundation has not actually disclosed its current holdings and financial data. The only source of this financial data on the Internet is Coin98 Analytics, but the company has not disclosed the source of this data.
Regarding the issue of additional issuance of SOL tokens, Riyue Xiaochu explained that the data from Messari cited by Bear Biscuits.eth refers to new flows, which may be tokens unlocked by the foundation and usually do not flow to the market.
Regarding SOL's inflation, according to data from solanacompass, the current inflation rate of SOL is 5.1%, and there is no inflation rate of 15%.
Discussions about Solana may continue. Overall, the state of the Solana ecosystem is not as severe as some people believe. According to The Funding, some crypto fund managers are increasing their holdings in Solana. Syncracy Capital co-founder Ryan Watkins believes: "Now, Solana is comparable to Ethereum in most meaningful indicators, but its valuation is only 1/5 of Ethereum."
However, from a subtle point of view, Solana is still in crisis, especially the MEME coin ecosystem that once pushed Solana to the altar is experiencing a serious decline. In addition, the entire industry is still looking for new hot spots. The Solana ecosystem is playing out a dark forest hunting show around ordinary retail investors, but when the beneficiaries start to exhaust all the resources, is it the end of prosperity?
