Solana’s “House of Cards”: SOL’s False Prosperity and Potential Collapse Risks!
My timeline has been filled with $SOL nonsense lately, mixed with memecoin subterfuge. I'm starting to believe that the memecoin super cycle is real and Solana will replace Ethereum as the major L1. But then I started digging into the data, and the results were alarming to say the least…
First let’s take a look at the bull market situation, compared to ETH plus L2s, there are four different things to say on the indicator:
1. High percentage of user base
2. Fees will increase accordingly
3.DEX trading volume is high
4. The proportion of stablecoin trading volume has increased significantly
On paper, SOL’s numbers look good, with over 1.3 million daily active users (DAU), compared to 376,300 for ETH. However, when we added the number of trades to the mix, I noticed something strange. For example, on Friday, July 26, ETH’s transaction volume was 1.1 million, while DAU was 3.763 million, for an average daily transaction volume of approximately 2.92 per user. However, SOL has a transaction volume of 282.2 million and DAU of 1.3 million, averaging a whopping 217 transactions per user per day. I think this is perhaps due to lower fees, the ability to trade more, compound positions more frequently, increased arbitrage bot activity, etc.
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ETH is either on par with or ahead of SOL. Considering the DAU difference, coupled with all the hype surrounding the SOL memecoin trend, this is not what I expected.
As always, people selling picks and shovels profited from the Solana memecoin craze, while speculators got wiped out, often without their knowledge. Often quoted SOL metrics are grossly overstated. Additionally, the vast majority of organic users are losing on-chain funds to bad actors at a rapid rate. We are currently in a frenzy phase where retail inflows are still outpacing outflows from these established players. Many indicators collapse quickly once users become exhausted from continued losses. SOL also faces some fundamental headwinds that will come to the fore once market sentiment shifts
