Author: Xinwei, Ian Wu

TL;DR

  • The Solana ecosystem is on the brink of a full-scale breakout, maintaining strong growth despite challenges such as the bankruptcy of FTX. There is a significant increase in Total Value Locked (TVL) and DeFi Velocity, showing a very high rate of liquidity utilization. Daily transaction volume is steadily rising, far exceeding other public chains.

  • Frequent actions by the Solana Foundation: Steady progress in network stability and decentralization, hosting the Hyperdrive Hackathon to support ecosystem projects, and a strategic focus on the Asia-Pacific market.

  • Ecosystem highlights: Visa launches USDC settlement function on Solana, MakerDAO considers integrating Solana SVM into its system, and the integration of Solana Pay with Shopify.

  • Diverse ecosystem projects: The largest-ever Solana airdrop season is about to begin, with star projects in DeFi, LSD, Meme, Inscription, NFT, and DePIN sectors attracting market attention.

Introduction

After Ethereum’s transition from POW to POS, centralization issues have come to the fore. Competition between Layer2s is becoming more intense, further fragmenting liquidity, with little to commend at the application level.

In the Bitcoin ecosystem, the BRC20 protocol led a variety of inscription protocols to trigger community FOMO, reaching a climax after ORDI was listed on Binance, but has started to correct amidst criticism of “no applications, only Memes.”

After the FTX bankruptcy, Solana’s $SOL plummeted to a low of $8, a drop of over 95%. However, after enduring heavy blows, the Solana ecosystem and community have still maintained positive development in the last two years. The ecosystem has more than one million users and over 2000 developers, with new projects constantly emerging from DeFi to NFT. Jump Crypto’s second node validator for Solana, Firedancer, has also officially entered the test network.

With the recovery of BTC prices, $SOL has skyrocketed by over 200% in two months. The current premium of Grayscale Solana Trust is about 800%, and the performance of GSOL indicates institutional investors’ optimism about Solana.

The out-of-circle effect caused by last bull market’s Stepn is still vivid. As the negative news settles, the next blockbuster application in the Solana ecosystem is bound to ignite the market.

Overview

Since the beginning of 2023, Solana’s Total Value Locked (TVL) has shown significant growth, now reaching $650M, an increase of over 200%.

Ian Wu’s Analysis on Solana and $SOL: “With the recent launch of new assets on the platform, the $SOL plays a central role. $SOL is not only the staking coin in the entire ecosystem, but also the margin and underlying asset in transactions, acting as the key native cryptocurrency of the entire platform.

Furthermore, as $SOL is used to purchase assets like NFTs for participation in on-chain activities and interactions, and for locking purposes, a large amount of $SOL is being locked up in the market, thereby reducing its circulation. This locking effect of $SOL is expected to promote its price increase, creating a positive growth spiral. With the issuance and listing of new assets in the Solana ecosystem, the token lock-up volume of $SOL will gradually increase. This will not only dilute the previously surged profit-taking and selling pressure but also stimulate more holders to stake $SOL due to the positive impact of new assets. Therefore, in the future, the amount of SOL staked in Solana’s nodes and the Total Value Locked (TVL) will become important indicators closely monitored by analysts and investors for $SOL.”

https://defillama.com/chain/Solana

DeFi Velocity (TVL Utilization Rate):

  • DeFi Velocity, i.e., transaction volume/TVL, is a key indicator for measuring the activity level and adoption rate of blockchain, more informative than just observing TVL.

  • In the recent week, Solana’s 7-day DeFi Velocity ratio reached 3.17. This means that every $1 of liquidity can generate about $3.17 in weekly transaction volume. Compared with other chains like Arbitrum, Binance, Base, Optimism, and Ethereum, Solana has shown the highest TVL utilization rate in the past seven days.

Daily Transaction Volume:

  • Since 2023, Solana’s daily transaction volume has shown a steady trend, particularly with an increase in the number of voting transactions.

  • Transactions mainly fall into two categories: voting and non-voting. Voting transactions primarily involve validators’ voting accounts.

Comparison of Average Daily Transaction Volume over Six Months with Other Ecosystems:

Despite challenges such as network disruptions and the FTX/Alameda crash, Solana has maintained normal operations, showcasing its adaptability and resilience. The growing TVL, robust DeFi development, and stable transaction data collectively demonstrate its potential as an active economic hub.

Ecosystem Highlights

  • In September 2023, Visa chose to launch its USDC settlement function on Solana, marking a significant integration between public blockchain and traditional financial entities for payment infrastructures and other applications.

  • In the same month, MakerDAO’s founder considered integrating Solana SVM into Maker’s new native chain as part of its “Endgame” upgrade plan, expected to span 2 to 3 years in five stages.

  • In August 2023, Solana Pay achieved integration with Shopify.

Foundation

Personnel Changes

On April 19, 2022, the Solana Foundation announced leadership changes in its five-member board. Anatoly Yakovenko, co-founder of Solana Labs, stepped down as chairman of the Solana Foundation’s board to focus on launching new applications at Solana Labs, effective from December 2021. To ensure high-quality leadership continuity and welcome the next chapter for the Solana Foundation, Leopold Schabel, a leader at Jump Crypto and co-founder of Certus One, a blockchain consulting firm providing validation services for Solana’s ecosystem and other proof-of-stake networks, was appointed to the board.

New Financial Strategy

The Solana Foundation announced a new funding strategy, including convertible grants and investments. These flexible funding options are designed to meet the needs of diverse projects within the Solana ecosystem, ranging from early development to mature enterprises seeking financial support. The foundation’s convertible grant program provides financial aid to early-stage projects, focusing on development, research, and innovation. These grants are distributed to projects with the potential to significantly impact the Solana ecosystem. For established projects or startups showing a successful path, the Solana Foundation offers investment support to expand their operations and bring innovations to the market.

Retrospective Public Goods Funding (RPGF) Program

The Solana Foundation and OpenBlock Labs innovatively introduced a retrospective funding model to support public goods and open-source projects within the Solana ecosystem. RPGF aims to provide sustainable income for creators behind widely used public goods resources in the community. Unlike traditional forward-looking funding, RPGF incentivizes and rewards past contributions that benefit the broader ecosystem. The first round of RPGF received an enthusiastic response, attracting over 100 project applications, of which about 36 received funding. This process not only rewarded past contributions but also set a precedent for community-led support of public goods.

Hackathons

The Solana Foundation recently successfully held its eighth hackathon event, “Hyperdrive,” an online competition focused on attracting high-impact projects to the Solana ecosystem. The event brought together founders and developers from around the world, with over 7,000 participants submitting 907 projects, making it the largest scale in Solana’s hackathon history. The event covered multiple domains, including infrastructure, mobile consumer apps, payments, decentralized autonomous organizations (DAOs), and artificial intelligence, and received support from notable companies like AWS, Ironforge, UXD, and Magic Eden. Dan Albert, the executive director of the Solana Foundation, stated that nearly 1,000 teams from these events would play a significant role in various fields like AI, finance and payments, physical infrastructure networks, gaming and entertainment, mobile consumer apps, crypto infrastructure, DAOs, and network states, shaping future development trends.

Future Plans

Technically, the Solana Foundation is focusing on several key technical innovations, expected to show results by the end of the year or early next year.

  1. FireDancer on Mainnet: FireDancer is an independent Solana validator designed to enhance the network’s robustness and performance. It is a system capable of reaching 1 million TPS in internal testing, although it may achieve 100,000 TPS in actual operation, sufficient for high-frequency trading applications. The goal is to maintain an independent tech stack, diversifying the blockchain network’s supply chain and reducing exposure to single points of failure. FireDancer employs a deep defense strategy, isolating its components into independent processes, and implementing strict communication protocols to minimize potential vulnerabilities. The development team integrates strong security procedures into its lifecycle, identifying and mitigating security vulnerabilities through ongoing collaboration between security and engineering teams, and using fuzz testing and code reviews. The goal is to launch FireDancer on the Solana mainnet and upgrade security measures, such as external audits and introducing a bug bounty program.

  2. Asynchronous Execution/No Bank Leader: In Solana’s no-bank-leader model, the leader does minimal work, enough to produce effective blocks. This design reduces the memory operations required by leaders before bank execution by threefold. Leaders’ responsibilities include verifying signatures in transactions, ensuring fee accounts have sufficient balance, and managing balance caches.

  3. Quorum Subcommittee: Solana’s quorum structure is crucial for its security and performance. The network uses quadratic message overhead to ensure classic Byzantine fault tolerance consensus. Solana’s design allows the network to maintain high throughput and low fees while ensuring a high level of security. The size of the quorum and the implementation of voting are key to Solana’s design, ensuring security and performance.

  4. Dynamic Storage Pricing and Old State Compression: Solana introduced a state compression solution, significantly reducing the cost of on-chain storage. This technology relies on Merkle trees to compress the verifiability of data trees into a hash. This compression-friendly structure allows developers to store minimal data on-chain and directly update it in the Solana ledger, greatly reducing data storage costs while maintaining the base layer’s security and decentralization.

  5. Dynamic Base Fees: In Solana, transaction fees are currently not dependent on the resources consumed by the transaction. Instead, fees are determined by the number of signatures that need to be validated. Rates (e.g., lamports per signature) may vary from block to block. However, transaction fees can still be definitively calculated before creating and signing a transaction.

Focus

Currently, the Solana Foundation is focusing on strengthening and expanding its influence in the Asia-Pacific region, especially after last year’s FTX event. The foundation decided to increase investment in the Chinese-speaking area and the Asia-Pacific market. Recognizing the importance of the Asia-Pacific market in both the labor market (developer market) and the capital market, the foundation is working to establish a more balanced and comprehensive development in the region.

The Solana Breakpoint event is scheduled to take place from September 19 to 21, 2024, in Singapore, highlighting the significance of the Asia-Pacific region in Solana’s strategy. Moreover, the foundation is expanding its influence in India and Europe, particularly in Germany and the UK.

Recent Hot Projects

Mad Lads & Backpack

  • Mad Lads is an NFT project created by Coral, a Solana framework development company, and launched by Armani Ferrante and Tristan Yver. This project marks a significant innovation in blockchain technology and the NFT domain by Coral. Mad Lads was exclusively launched through Backpack, a versatile wallet application created by Coral. This choice not only demonstrated Coral’s confidence in its product but also highlighted the advanced technology and market potential of Backpack.

  • The main feature of Backpack is that it is built around “Executable NFTs” (xNFTs). These xNFTs are essentially non-fungible tokens embedded with executable programming scripts, making them operable Web3 application platforms. This innovation allows Mad Lads to be more than just a digital collectible; it is a platform capable of running code and enabling more complex interactions, greatly enhancing the functionality and appeal of NFTs. The xNFT series opens up new avenues for program distribution. Game developers can mint entire games as limited-edition xNFTs. A DeFi protocol can distribute early access to a new frontend based on wallet addresses. A two-factor authentication code can be generated as an NFT and automatically updated in cycles. As explained on Solana’s website, these are the possibilities available to xNFT users, adding that artists can create beautiful immersive 3D experiences that cannot be replicated and can run directly in the wallet. The possibilities are nearly limitless.

The success of Mad Lads is attributed to several key factors. Firstly, its innovative xNFT concept brought new vitality to the NFT market. This new type of NFT is not just a digital asset but also has the capability to execute built-in code, offering users more interactivity and practicality. Secondly, Mad Lads’ market performance was very eye-catching. In the first 24 hours, its sales exceeded $8.16 million, surpassing the concurrent Bored Ape Yacht Club. This significant sales achievement was largely due to its uniqueness and high market expectations. Additionally, the floor price of Mad Lads increased by 200% within two weeks, reaching 160 SOL, making it one of the most valuable in the Solana NFT series, highly recognized by the market.

In terms of technology and marketing strategy, the Backpack development team has also demonstrated its originality and ability to cope with challenges. During the re-release of Mad Lads, to prevent market manipulation by bots, the team created two minting portals, effectively distinguishing between real users and bots. This strategy not only effectively prevented malicious actions but also sparked widespread interest and discussion among legitimate users, enhancing community interest and participation in the project.

After the Solana ecosystem lost its well-known NFT projects DeGods and y00ts, which moved to Ethereum and Polygon respectively, a gap was left in the Solana community. The timing of Mad Lads’ launch closely followed the departure of these projects from Solana, providing a perfect opportunity for Mad Lads’ success. We believe that Mad Lads has the potential to become the Bored Ape Yacht Club (BAYC) of Solana.

Nevertheless, with the collapse of FTX, the entire Solana ecosystem faced severe challenges, and part of the Backpack team’s funds were trapped in FTX. In this difficult situation, the Backpack team not only successfully maintained operations but also began to seek new directions for development. The success of Mad Lads is seen as a rebirth for the Solana community, working to mitigate the damage caused by the association with FTX and the ensuing narrative. Backpack is currently undergoing public testing, and the long-term goal is to open it up to the community, allowing anyone to build on it.

In September 2022, Coral raised $20 million in funding, led by FTX Ventures and Jump Crypto, with strategic investors including Multicoin Capital participating.

In October 2023, Backpack announced the launch of a ‘regulated’ trading platform named Backpack Exchange, demonstrating the team’s ongoing commitment to innovation and adapting to market changes.

The stories of Mad Lads and Backpack are about innovation, market adaptability, and seeking new opportunities in adversity. This case fully exemplifies the resilience and innovative capacity of the Solana ecosystem.

Jupiter

Jupiter is one of the largest aggregate exchanges on the Solana chain, and since its inception in 2021, it has become a key protocol in the Solana ecosystem. As the first trade aggregator on Solana, Jupiter aims to offer the best rates to users by integrating all major liquidity markets on the blockchain. To enhance user experience, Jupiter continually optimizes and updates its platform, integrating more mainstream DEXs on the Solana chain, such as Orca, Raydium, and Serum.

Jupiter has also done extensive work in terms of user experience. In addition to integrating mainstream liquidity pools, it provides real-time updated exchange rates and direct access to integrated DEX project websites. For instance, in the process of exchanging SOL for USDC, Jupiter matches multiple trade routes for users, selecting the best path and price, saving users time and money. Additionally, each transaction on Jupiter is highly transparent, including transaction speed, price impact rate, and the minimum amount users will receive post-transaction, facilitating asset planning.

In terms of financing and token plans, Jupiter has also made significant progress. It is preparing to launch its native token, JUP, and announced at the Solana Breakpoint conference that 40% of JUP tokens will be distributed to the Jupiter Exchange community via airdrop, with approximately 955,000 users eligible. Another 20% of the tokens will be distributed through token sales, with the remaining 40% reserved for internal personnel and strategic reserves. As a community-centric initiative, Jupiter announced a retrospective token airdrop plan, with 4 billion out of the 10 billion Jupiter tokens (40%) set to be distributed.

Pyth Network

Pyth Network is hailed as a game-changer in the DeFi oracle space, primarily utilizing the power of top exchanges, market makers, and financial service providers to aggregate and distribute price data for smart contract applications. As an innovative decentralized oracle, Pyth can gather financial market data from over 90 sources (including major exchanges and market makers like CBOE, Binance, OKX, Bybit) and distribute this data across more than 40 blockchains.

Pyth consists of three core parts: data providers (mainly exchanges), the Pyth protocol (aiming to aggregate data from different providers, creating a unified price and confidence interval for each price source every 400 milliseconds), and data users (end-users, such as applications on blockchains supported by Pyth, integrating the aggregated price sources into their smart contract logic).

Pyth Network has raised funds through three rounds of financing, with the latest round completed on January 7, 2022. The token debuted at a market value of $468 million, with 90,000 wallets receiving airdrops. The initial trading price of PYTH tokens was about $0.32, with a circulating supply of 1.5 billion, and the remaining 85% of the total supply is locked for 6 to 42 months.

Moreover, Pyth Network supports over 230 applications, including decentralized exchanges (DEXs), lending protocols, and derivatives platforms. Its infrastructure enables over 65 million updates daily, enhancing the precision and security of smart contract operations.

Jito

Jito launched a referral program at the end of August and a points system in mid-September. Similar to Blaze, Jito increased its attractiveness to users by rewarding JitoSOL holders and enhancing their points in DeFi. The value of SOL locked in Jito increased by 320% over the quarter, reaching 6.67 million SOL. About 35% of JitoSOL was locked in the protocol at the end of the quarter, compared to just 13% at the beginning.

Jito’s uniqueness lies in its ability for users to earn MEV (Maximal Extractable Value) profits. Jito’s staking pool delegates users’ SOL to validator nodes supporting MEV, with MEV rewards distributed as additional APY to the staking pool. Anatoly Yakovenko, CEO of Solana Labs, has also positively appraised Jito.

Jito Labs has raised a total of $12 million in two rounds of funding. The latest round, a Series A, took place on August 11, 2022, led by Multicoin Capital and Framework Ventures.

As of November 30, 2023, Jito reached a new high in TVL of $400M, with 6.67M SOL staked, consistently trending upwards since its launch. Jito is the first staking product on Solana to include MEV rewards.

On November 28, the Jito Foundation announced the launch of the JTO governance token, marking a significant step in the development of the Jito network. The JTO token will give community members direct influence over Jito network decisions and direction.

In governance, the launch of JTO allows token holders to make key decisions, shaping the future of the Jito network so that it continues to develop and thrive according to the needs of its users and the broader Solana ecosystem. These decisions and initiatives might include:

  • Setting fees for the JitoSOL staking pool

  • Updating delegation strategies by controlling parameters of the StakeNet project

  • Managing JTO tokens held by the DAO and fees generated by JitoSOL

  • Contributing to the continuous development and improvement of the Jito protocol and products

In terms of tokenomics, JTO has a total supply of 1 billion, with 10% allocated for airdrops, 24.3% directly controlled by token holders through DAO governance on Realms, 25% for ecosystem development, 16.2% allocated to investors (fully locked for one year, unlocked over three years), and 24.5% allocated to core contributors, i.e., founders of Jito and early contributors to the ecosystem (fully locked for one year, unlocked over three years).

The total airdrop amount is 10%, or 100 million JTO tokens. Of these, the foundation will immediately distribute 90 million JTO tokens, with another 10 million unlocking over the next year, all from the 342.857143 million tokens allocated for community growth.

Eligibility for the JTO token airdrop is determined by the user’s contributions to the development and growth of the Jito network. This includes long-term JitoSOL holders, users who use JitoSOL in various DeFi protocols, Solana validators running the Jito-Solana MEV client, and searchers actively using Jito network MEV products.

This airdrop is based on past behavior, with a snapshot of eligibility activities taken on November 25, 2023. As part of this airdrop, the previously announced points program has ended, and points are no longer updated.

BONK

BONK, the first Meme token in the Solana ecosystem, has recently made a significant impact on the market. It initially gained attention through a massive airdrop to the Solana community during Christmas 2022. The token was designed to counter “Alameda-style” tokenomics and restore confidence in the Solana ecosystem and SOL holders following the FTX event. Now, nearly a year later, BONK is active again, not only drawing comparisons to SHIB but also sparking speculation about its potential listing on mainstream trading platforms.

On November 22, Binance introduced leveraged contracts for BONK, offering 1–50x leverage on perpetual contracts denominated in USD. This demonstrates support for this Meme coin. BONK, built on the Solana blockchain and akin to the well-known Shiba, is a new MEME Coin targeted at the general public. 50% of the project’s total token supply has been airdropped to Solana’s Degen and DeFi traders, NFT artists, and developers. This large-scale airdrop distribution has injected more liquidity into the Solana ecosystem.

The BONK team started planning the project on December 9, 2022, and actively called for interaction with other projects in the Solana ecosystem. They conducted a massive airdrop targeting the Solana ecosystem for Christmas. As its anniversary approaches, accompanied by a resurgence in Solana’s value, BONK and related ecosystem tokens have experienced a valuation recovery. However, despite BONK’s explosive growth over the past month, its market capitalization as a meme coin is relatively high, with an increase of over 12 times in just one month.

Orca

Orca is a significant decentralized exchange (DEX) in the Solana ecosystem, recognized for its user-friendly interface and efficient trading experience. As the only DEX on Solana with a pure Automated Market Maker (AMM) function, Orca also has its liquidity pools, offering a simple and composable trading experience, ideal for next-generation DeFi applications.

Described as the most user-friendly DEX on Solana with pure AMM functions and a user-friendly trading interface, Orca enables efficient capital utilization for asset exchange, liquidity provision, and yield earning. Orca emphasizes offering the best swap experience to users, including minimal trading fees and low latency, while ensuring fair pricing.

In terms of technical innovation, Orca continues to innovate according to its development roadmap. For example, it began testing Whirlpools, a concentrated liquidity AMM similar to Uniswap V3, officially launching it on April 25, 2021, marking a significant step in improving capital efficiency.

Furthermore, Orca raised $18 million in its Series A funding in 2021, led by Polychain, Placeholder, and Three Arrows Capital. Sino Global, Collab+Currency, Coinbase Ventures, and Solana Capital also participated in this round. These funds are being used to enhance Orca as a capital-efficient and user-friendly DEX. This investment will help Orca further develop its platform, ensuring competitiveness and innovation in the rapidly evolving DeFi space.

As for its market cap, Orca’s token (ORCA) is priced at $3.27, with a market cap of approximately $143.8 million, a fully diluted valuation of about $326.8 million, a total value locked (TVL) of $85.12 million, and a circulating supply of approximately 43.99 million ORCA tokens. Orca is a key player in the Solana ecosystem due to its technological sophistication, focus on user experience, and strong financial backing.

Drift Protocol

As a derivatives exchange on Solana, Drift Protocol’s total trading volume recently exceeded $1 billion. At the end of the quarter, its TVL grew to $17.3 million, a year-on-year increase of 87%, and an annual growth of 976%.

Drift Protocol has become a disruptor in the decentralized derivatives market on Solana. Drift chose Solana due to its low-latency block times and high bandwidth, enabling minimal trading fees and rapid settlements. In November 2021, Drift launched its V1 version, introducing the concept of a Dynamic Automated Market Maker (DAMM), providing guaranteed liquidity and a superior trading experience, with nearly $10 billion in trading volume in six months. The V1 version introduced limit order functionality and Maker Orders, allowing users to become market makers. In December 2022, Drift launched its V2 version, enhancing liquidity through “Liquidity Trio” and becoming a comprehensive decentralized exchange. V2 introduced robust security measures, was successful, with over $100 million in trades, and a TVL of $10 million. As of September 2023, Drift’s cumulative trading volume reached $1 billion, with a TVL of $19 million. Drift integrates Pyth’s oracle data, offering a diverse market, including SOL, BTC, ETH, etc., ensuring data quality and a low-latency user experience. Pyth’s confidence interval feature also helps Drift promptly detect market fluctuations and unusual price distributions, protecting users and funds.

On October 26, 2021, Drift raised $3.8 million in a seed round, with investors including Multicoin Capital, Jump Capital, Not3Lau Capital, etc.

Zeta Markets

Zeta Markets is a comprehensive cross-margin derivative protocol based on the Solana blockchain. It specializes in offering various trading options, including options trading, regular futures, and perpetual futures, integrated on one platform since November 4, 2022.

As a low-collateral derivatives platform, Zeta Markets features a fully on-chain risk engine and a Central Limit Order Book (CLOB), making it a user-friendly platform for traders interested in leveraged trading in a decentralized environment.

On October 27, Zeta Markets announced the launch of Z-Score (the first step in token launch), allowing users to earn Z-Score points based on their trading activity on Zeta, with 1 Z-SCORE point for every $1 traded. Additionally, a 24-hour profit and loss ranking will determine the reward multiplier. The first season of Z-Score will continue until December 20.

Zeta Markets announced in December 2021 that it had completed an $8.5 million financing round led by Jump Capital, with Race Capital, Electric Capital, DACM, Airtree Ventures, Amber Group, Wintermute, Sino Global Capital, Genesis Block Ventures, QCP Capital, Alameda Research, Solana Capital, MGNR, 3kVC, Orthogonal Trading, LedgerPrime, and SkyVision Capital participating.

Hivemapper

Hivemapper is a blockchain-based map network that launched its global network in 2022. It collects and creates map coverage through dedicated dashcams, storing data on a Solana-based blockchain network. Drivers can now start using Hivemapper-provided dashcams, earning the company’s cryptocurrency HONEY as a reward for contributing to street-level imagery and increasing the decentralized map of the places they visit.

The Hivemapper project started in 2015 and recently completed an $18 million Series A funding round on April 5, 2022, led by Multicoin Capital. Hivemapper’s native token HONEY is used to reward contributors for fresh, updated map information, while map consumers burn HONEY tokens to access the API. Burned tokens are reminted, increasing the token amount for contributors. As a Solana ecosystem token, HONEY has a total of 10 billion, but less than 200 million have been mined due to an incentive-based mining mechanism. In the future, the project plans to control the release pace of token mining to stabilize and grow token value.

The initial token distribution was as follows:

  • 40% allocated to contributors as a reward for participating in building the Hivemapper network.

  • 20% allocated to investors, providing initial capital for launching the Hivemapper network.

  • 20% allocated to employees of Hivemapper Inc. for building the technology and operating systems required to run the Hivemapper network.

  • 15% allocated to Hivemapper Inc. for R&D and operational support of the Hivemapper network.

  • 5% allocated to the Hivemapper Foundation to promote the ongoing management and success of the Hivemapper network.

The token’s redistribution mechanism ensures that the number of tokens received by contributors is not limited to 4 billion HONEY. To use data from the network (such as through the map image API), HONEY tokens must be burned in exchange for map points. The net number of burned tokens will be reminted and distributed to contributors based on a net emission model. As more data is consumed,more HONEY is burned, and more tokens are redistributed to contributors.

Inscriptions on Solana

On Solana, there are two inscription projects of note — Sols and Lamp. Sols inscriptions, created by the SPL-20, similar to the Bitcoin Ordinals protocol, have a total of 21,000. Despite the complex minting process, they have been highly sought after due to their innovativeness and multi-stage effectiveness filtering. As of November 28, Sols had a trading volume of 114,000 SOL on the NFT platform Magic Eden, with a floor price of nearly 6.3 SOL. On the other hand, Lamp inscriptions also caused a stir on Solana, with the smallest unit, Lamport, similar to Bitcoin’s Satoshi. Lamp’s floor price is 0.1 SOL, with a total trading volume of over 12,000 SOL and more than 5,400 holding addresses.

Sols quietly launched on the OKX Web3 wallet trading market on November 22, and trading has been opened, leading to a surge in Sols, with the floor price of each inscription rising from about 5.3 SOL to approximately 12.5 SOL.

The heat of the Solana inscription may be related to the strong rise in the price of SOL. With the launch of BRC-20 and the popularity of inscriptions within the Bitcoin ecosystem, the market has been ignited, leading to a significant FOMO effect and liquidity spillover. The inscription market attracts wide participation due to its fairness and independence from pre-mining or VC funding.

Particularly, the emergence of Lamp inscriptions, proposed by Twitter user @babla11001 and following the SPL-20 format, has a total supply of 210,000. The inscription process, involving steps like uploading images, setting transfer rules, engraving NFTs, and verification, garnered significant attention. Due to high website traffic, pages for minting, engraving, and verification often crashed, making participation highly competitive and luck-based.

NFT

Magic Eden, a major NFT marketplace on Solana, recently announced support for Solana’s Compressed NFTs (cNFTs), aiming to provide an economical and scalable option for digital collectible enthusiasts.

Unlike traditional Solana NFTs, cNFTs are compressed and stored off-chain. This method supports mass production due to significantly lower minting costs.

Technical Upgrades: Solana introduced state compression technology in Q2, an efficient way to store data on the chain. This technology, involving hashing data into a Merkle tree and uploading its root hash, has been successfully applied in the cNFT standard created by Metaplex. For example, the cost of minting 1 million cNFTs ranges from 5.3 to 63.7 SOL, much lower than the 24,000 SOL for uncompressed NFTs.

Market Dynamics: By Q3, nearly 45 million cNFTs had been minted, a 316% increase year-on-year.

Magic Eden believes cNFTs are ideal for mass-produced collectibles in industries like gaming, music, events, and metaverse. Reducing NFT production costs could increase NFT adoption, serving as an ideal entry point for NFT newcomers. Lower costs also reduce the financial risk of NFT collection.

cNFT minting, benefiting from Solana’s state compression feature, costs about $110, allowing for up to 1 million NFTs to be minted, much lower than Ethereum costs.

Solana significantly reduces NFT minting costs with solutions like state compression and isolated fee markets.

Source: @flipsidecrypto

For instance, the cost of minting 1 million NFTs on Solana decreased from $253,000 to $113 with state compression, compared to $33.6 million and $32.8 million on Ethereum and Polygon, respectively.

  • DRiP: Dominated the cNFT market share in Q3 (87.5%), collaborating with artists to mint large numbers of free NFT artworks. In mid-August, DRiP announced a $3 million seed round led by Placeholder.

  • Dialect: A Web3 messaging app utilizing cNFTs, launched a web app in early September, becoming one of the largest NFT collections on the chain.

Other Projects:

  • Mad Lads: Utilizes the executable NFT (xNFT) standard, representing a new token standard that tokenizes code. xNFTs represent dApps and can be accessed directly from user wallets.

  • Crossmint: Provides infrastructure for developers to build NFT applications.

After major projects like DeGods and y00ts left Solana, Magic Eden opted for multi-chain support, including Ethereum and Bitcoin. Despite setbacks, Solana’s NFT ecosystem is recovering and showing new vitality.

Tensor

Tensor, a professional NFT trading platform based on Solana, offers fast data processing, batch operations, and advanced order types. In the recent month, Tensor surpassed Magic Eden as the leader in the Solana NFT market.

Data Source: The Block

Solana Monkey Business (SMB)

SMB, a veteran project on Solana, launched its third generation, SMB Gen3, becoming a top brand in Solana NFTs. SMB also introduced the NFT DAO Monke Dao and investment portfolio Monke Ventures.

Recent NFT trading hotspots focus on Smart Monkey Business (SMB), an algorithmically generated pixel monkey NFT project, dominating Solana NFT market transactions.

LSD

Comparison of Ethereum and Solana:

Solana’s potential for growth with only 3–4% of SOL in liquid staking compared to Ethereum’s nearly $20.22B.

Risk and Reward Comparison: At similar risk levels, Solana offers almost double the staking returns compared to Ethereum.

Current State of Liquid Staking:

  • 295.7M SOL is staked on the network, but liquid staking derivatives are not widely used yet.

  • During the FTX event, TVL of liquid staking fell from a peak of 12.8M SOL to a low of 5M SOL but later recovered to pre-FTX levels of around 12M+ SOL.

The recently launched Jito staking service has accumulated over $44.86M (2.3M SOL) in TVL since its launch at the end of last November. Growth in cross liquid staking derivatives (LSD) and DeFi use cases is also significant.

Marinade Finance dominates the Solana liquid staking market, with over 5.47M SOL staked, followed by Lido and Jito. Emerging liquid staking protocols like Marinade, Socean, Lido, BlazeStake, and Jito are offering various reward programs to attract SOL staking.

Marinade Finance

As the highest TVL project in the Solana ecosystem, Marinade Finance is a liquid staking platform focused on simplifying the Solana staking process. Its main feature is “liquid staking,” allowing users to convert staked assets into liquidity without waiting for the unlocking period.

In mid-September, Marinade launched a rewards program to catch up with new protocols. Despite a slight decline in TVL on SOL throughout the quarter, a rebound occurred after September 20th. Additionally, Marinade Native, a native staking product launched at the end of July, complements Marinade’s liquid staking services. It’s an automated staking platform, allocating staking to over 100 quality validators without performance fees and smart contract risks.

Marinade recently launched the Marinade Native program, allowing users to delegate staking rights seamlessly while retaining withdrawal rights. Moreover, Marinade announced the Marinade Earn rewards program, running from October 1, 2023, to January 1, 2024. Participants will earn 1 MNDE/SOL during this period. There’s also a referral system where referees earn an additional 1 MNDE/SOL through unique links.

Marinade, a veteran DeFi protocol launched in 2021, had over $1.5 billion in TVL at its peak. Although it has declined from its peak, it remains the top TVL project in the Solana ecosystem. Its token, mSOL, has good liquidity and is listed on major exchanges like Coinbase and Kraken.

BlazeStake

BlazeStake, a new liquid staking protocol launched in 2023, aims to promote decentralization of Solana nodes. Stakers can choose between standard delegation pools or any validator to stake SOL and earn liquid staking returns with bSOL.

Blaze has hinted at airdrops to bSOL holders since last year. In August, it launched a points system and its TokenBLZE, airdropping based on user points. Blaze’s SOL locked value grew by 1,234% during the quarter, reaching 678,560 SOL (valued at $40 million as of November 30, 2023).

DeFi

Several emerging Solana DeFi protocols have grown significantly in recent quarters, defining themselves as “Solana DeFi 2.0.” This term represents a commitment to avoiding predatory and low-liquidity token economic models seen in previous cycles. Most of these protocols have not yet launched their native tokens.

MarginFi

Leading this trend, the lending protocol MarginFi launched a points system on July 3, rewarding users for deposits, loans, and referrals. Its TVL grew 743% annually, ranking sixth in Solana DeFi TVL at $22 million. At the end of the quarter, MarginFi also launched its liquid staking token, LST.

Cypher

The Perps trading platform Cypher launched a points system in mid-July. In early August, Cypher suffered an attack of around $1 million. To help users recover losses, it accelerated its CYPH IDO. Over 50% of CYPH was distributed to the community during the IDO and airdrop.

Solend

In early August, the lending platform Solend launched a points program. Unlike using points for potential airdrops, Solend combined points with its already issued SLND token. The first season’s points program lasted about three months, with a minimum reward pool of 100,000 SLND (valued at $54,000). Driven by the points program, Solend’s TVL grew 43% annually to $57 million.

Raydium

Once the first AMM-style decentralized exchange platform in the Solana ecosystem and a core project of Solana Summer, Raydium faced setbacks due to the FTX bankruptcy and threats to the Serum protocol, with which Raydium shared liquidity. Raydium’s recovery has been slightly slower compared to Orca.

Phoenix

Phoenix, a decentralized limit order book supporting spot markets on Solana, recently completed a $3.3 million funding round. Before officially launching at the end of August, Phoenix had a test launch. Since its launch, Phoenix has performed well in certain trading pairs, with a TVL of $378,000 at the end of the quarter.

Squads Protocol

Squads Protocol, a newly launched comprehensive multi-signature platform, has protected $6 million in assets and $9.5 million in total transaction volume.

Kamino Finance

Kamino Finance, an automated liquidity solution, earns revenue through market-making. In Q3, Kamino’s trading volume exceeded $1 billion, generating $1.25 million in revenue for depositors.

DePIN

DePIN, or Decentralized Physical Infrastructure Network, is leveraging Solana’s efficient technology to cover various sectors from mapping to energy and logistics, providing opportunities similar to the modern gig economy. According to Kuleen Nimkar, head of DePIN at the Solana Foundation, people can earn extra income by contributing hardware to the DePIN protocol.

Helium

Helium network, using Solana’s state compression technology, mints network hotspots in NFT form, thus reducing costs. Helium, a decentralized wireless hotspot network and a pioneer in the DePIN field, dates back to 2013 and initially operated as a Layer 1 network. On April 20, 2023, Helium announced its migration to the Solana network (per HIP 70). Developers prefer Solana for its large ecosystem, integrating numerous developers, apps, and teams, with cost and speed advantages over other chains.

Helium’s native token, HNT, is not pre-mined, with a total supply cap of 223 million. In Helium, the only way to pay for data transmission fees is through data credits (DC) obtained by burning HNT, priced in dollars, non-transferable, and only usable by the original owner.

Following HIP-52 implementation, hotspot network deployment no longer earns HNT rewards, but through IOT and MOBILE protocol tokens for Helium IoT and Mobile networks, respectively. The multi-token model allows each wireless network to govern independently, facilitating better DAO decisions. Each subnetwork manages its Proof-of-Coverage rules, data pricing, and hotspot mining reward distribution.

The IOT and MOBILE tokens earned from deploying or covering the network can be exchanged for HNT, providing a value foundation for network tokens. Currently, Helium has a market cap of around $420 million, making it the largest DePIN project in the Solana ecosystem.

Teleport

With the emergence of decentralized maps, decentralized ride-sharing apps like Teleport have emerged, now available in the Apple Store. Teleport is a permissionless ride-sharing app co-owned and managed by drivers, passengers, and developers. On October 27, 2022, Teleport completed a $9 million seed round led by Foundation Capital and Road Capital.

Founder Paul Bohm notes that existing ride-sharing giants like Uber dominate the shared transportation industry. To address this, Teleport built the shared transportation protocol TRIP, aiming to benefit drivers, passengers, and local economies while achieving autonomy. This protocol will first be applied on the Teleport platform, with participants in the network’s operation and development earning TRIP rewards, some of which may appear in NFT form. TRIP rewards also represent participation and voting rights in the network. The project has not yet released tokens, with the latest information available on its website and Twitter.

Tekkon

Tekkon, a Japanese project, encourages users to photograph local infrastructure or report damages to earn token rewards, simultaneously helping improve the local environment. Launched by Whole Earth Foundation, a non-profit founded by Takashi Kato, previously creator of Fracta Inc., a software company identifying weak points in urban water supply networks.

In the Philippines, Tekkon is warmly received due to token incentives, forming a group known as infrastructure hunters. According to Bloomberg, Tekkon has over 128,000 active users, 90,000 from the Philippines, uploading about 30,000 photos daily.

Whole Earth Coin (WEC) Whole Earth Coin (WEC) is a reward token by Tekkon, which can be exchanged for cash on Line Pay in Japan. The initial issuance of WEC is 300 million tokens, with no upper limit. The token is used for various purposes, including rewarding users and in-app operations. Tekkon plans to enhance the functionality of the token in multiple ways, establishing a more complete and sustainable ecosystem.

Render Network

Render Network has extended its services from the Polygon to the Solana blockchain, allowing individuals to contribute idle GPU power to assist in the rendering of motion graphics and visual effects.

Conclusion

Solana has addressed key challenges through a series of technical innovations. The Breakpoint 2023 conference was held in Amsterdam, attracting over 3,000 developers, investors, traders, corporate leaders, and artists, among others, to discuss ecosystem innovations and future plans for the network. For instance, the launch of the Firedancer validator client is set to increase validator diversity, which is key for Solana’s long-term resilience and decentralization.

The economic activity on Solana is diversifying. Render Network has successfully migrated from Ethereum to the Solana blockchain, introducing new features like real-time streaming and dynamic NFTs, benefiting from Solana’s rapid transaction speed, low cost, and expansive network architecture.

Solana’s decentralization efforts have received crucial support and enhancement. For example, Nikolay Vlasov, a Senior Solutions Architect at Amazon Web Services, announced at Breakpoint that Solana nodes can now be rapidly deployed on AWS, facilitating a global user expansion experience.

Solana has demonstrated its commitment to technological cooperation and innovation. James Tromans, Web3 Lead at Google Cloud, announced that Google Cloud’s BigQuery has now incorporated Solana data, enabling developers, enterprises, and users to query detailed Solana data. This integration highlights Google’s existing infrastructure, making it an ideal company to bring developers into the blockchain space.

Top Solana protocols plan to distribute tokens to their most active on-chain users through airdrops. The subsequent circulation of newly acquired tokens on Solana and the resulting TVL infusion will help enhance the valuation of the entire Solana ecosystem.

With the growth of TVL, DeFi project airdrops, and the maturation of liquidity staking markets, DeFi and LSD products on Solana may attract significant capital. NFT projects, particularly those that integrate with the metaverse and gaming domains, providing unique user experiences and innovations (like xNFT), may become investment hotspots.

In the long run, with a focus on the Asia-Pacific market and global expansion plans, Solana could become one of the world’s leading public blockchain ecosystems, attracting more international users and developers. Solana’s technical innovations, such as high TPS and low latency, will position it as a leader in high-performance blockchain applications, like large-scale gaming and complex DeFi applications. The success of the DePIN project may lead a new trend in blockchain applications, integrating blockchain technology with various real-world scenarios, bringing innovation to traditional industries.

MT Capital

Transforming Visions into Value, We Empower the Next Generation of Crypto Innovations.

MT Capital’s vision is to emerge as a globally leading investment firm, focused on backing early-stage technology ventures that generate substantial value. We are not just investors, we are the driving force behind founding teams. We believe that the bond and trust built between a fund and its portfolio companies are essential to mutual success.

Website: https://mt.capital

Twitter: https://twitter.com/MTCapital_US

Reference

https://www.theblockbeats.info/news/43689

https://news.marsshare.cc/20231008181622409769.html

https://foresightnews.pro/article/detail/44826

https://www.theblockbeats.info/news/47648

https://www.hellobtc.com/kp/du/10/4746.html

https://solana.com/news/solana-hyperdrive-hackathon-winners

https://pro.nansen.ai/multichain/avalanche

https://foresightnews.pro/article/detail/47546

https://www.chain-times.cn/news/10273

https://www.techflowpost.com/article/detail_11817.html

https://blockcast.it/2023/07/17/solana-after-the-ftx-collapse/

https://foresightnews.pro/article/detail/46393

https://www.odaily.news/post/5191309

https://www.techflowpost.com/article/detail_14702.html