Solana’s monthly active address count has soared past 100 million, marking a new all-time high for the network, according to blockchain data platform Artemis Terminal.

This represents a big jump from the 509,000 monthly active addresses recorded by Artemis at the beginning of 2024.

However, supporting metrics indicate that most active wallets on Solana aren’t holding any Solana (SOL), with skeptics attributing this explosive growth to bots artificially inflating metrics — a critique that often accompanies Solana’s success stories.

According to Solana data provider Hello Moon, over 86 million users held 0 SOL in their wallets over the past month, around 15.5 million users held less than 1 SOL, and approximately 1.5 million users held less than 10 SOL.

The number of Solana’s active users is up in the past month but most are zero-balance accounts. Source: Hello Moon

“Most Solana addresses have a lifetime value of sub-$10 which hints at something not entirely legitimate or organic, despite the ecosystem being indeed very active and the token doing very well,” Justin d’Anethan, head of APAC business development at market maker Keyrock, told Cointelegraph.

Dan Hughes, founder of decentralized finance platform Radix DLT, suggests interactions with centralized exchanges (CEX) or DeFi applications as a possible reason why there are many zero-balance active wallets.

“When you send to a CEX, you have a proxy address which the exchange generates,” he said, adding that some DeFi services may also use intermediate addresses.

“You send your tokens to that address and the exchange immediately moves those tokens to a hot wallet, recording whose tokens they are in the back end.”

Solana’s increase in active wallets coincides with a recovery in the rate of new tokens being issued on the network, as well as a rise in new accounts.

The daily addition of SPL tokens to the network had slowed throughout September but picked up towards the end of the month. Since Sept. 26, the network has seen at least 17,000 new tokens created daily, Solscan data shows.

The number of new accounts on the network has also rebounded. On Oct. 8, Solana saw over 10 million new accounts, more than double the number on Oct. 7.

Debates over the legitimacy of Solana’s metrics

Solana’s performance is frequently criticized by those who claim the network is flooded with bots artificially inflating numbers by interacting with each other.

“It’s very easy and cheap on Solana to make it appear like there are many active users when there aren’t, by just washing funds constantly between new addresses, or doing many small interactions with services which use proxy addresses,” Hughes said.

Observers react to Solana’s active user growth. Source: SolanaFloor, bobasfk

In an earlier interview with Cointelegraph Magazine, Austin Federa, head of strategy at the Solana Foundation, argued that bot transactions, while of lower economic value compared to human transactions, are still transactions nonetheless.

“But that is the point of a network like Solana — there’s a lot of stuff that’s not economically viable and not economically possible in the Ethereum ecosystem today,” Federa said. 

Solana is marketed as an efficient blockchain, offering fast transactions with low fees compared to its rival.

In late September, average transaction fees on Solana more than doubled but remained low at around $0.02, according to data from Dune Analytics. This is roughly 0.67% of Ethereum’s median gas fee of $3.

Non-vote transaction fees represent user transaction fees without validators. Source: Dune Analytics

As of Oct. 9, Solana is the third-largest blockchain for DeFi, with a total value locked (TVL) of $5.41 billion, according to DefiLlama.

For comparison, Ethereum — leading the DeFi industry — had a TVL of $44.7 billion on the same day, while Tron ranked second with $7.4 billion.

Solana’s double-edged sword

Solana’s efficiency has arguably been a double-edged sword, as some argue that the network’s low fees and high transaction throughput create an attractive and often profitable environment for bots, which may inflate the network’s activity beyond actual human interactions.

However, this doesn’t necessarily mean that bots bring no value to the network.

“Bots pay fees, just to be clear,” Federa said.

Solana’s fee mechanism is vital in managing its long-term inflation goals. 

The network’s inflation, generated by emissions to validators, decreases over time, while 50% of the fees earned are burned to manage it.

Solana’s revenue in fees has also recovered with rising active wallets. Source: Token Terminal

In theory, if network demand continues to grow, inflation should decrease over time as more fees are burned and emission rates drop.

With the recent increase in active wallets and the number of new SPL tokens, network fees have also risen, according to Token Terminal data.

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