Solana sparked fears of a transaction slowdown after an outflow of users from Pump.fun. Data shows the network is working at ordinary levels despite a recent slide in fee generation.
Solana remains one of the busiest networks, both in terms of token transfers and NFT activities. The chain saw an outflow of fees at one point due to slower Pump.fun activity. However, the activity has not fallen off a cliff, merely returned to its average for the year.
Solana itself still shows positive numbers and previous doom charts may be due to incomplete reporting. The Solana market has enough momentum to not grind to a halt immediately, as there are other activities besides meme token trading.
Pump.fun still launches thousands of tokens each day, while generating at least $300K in fees even on less busy days.
Daily active users on Pump.fun also moved down from 56K per day to around 33K per day. The number of token-issuing wallets also went down from 15K during the year’s peak in June to around 3K creators in early September. One of the reasons for the outflow may be the newly launched SunFun meme token hub on the TRON network.
The token platform also led to skepticism about a ‘meme supercycle,’ as most tokens on the platform do not return value or retain new users. Meme tokens will now have to prove they can retain the trend or cause the crypto market to roll over to new types of assets and narratives.
braindamaged CT person: omg solana at all time lows
the actual numbers: https://t.co/Jz6hdAPZ24 pic.twitter.com/8Ph3lOsxxi
— mert | helius.dev (@0xMert_) September 1, 2024
Solana keeps a high user count
The Solana platform still produces more than $4M in weekly fees, close to its usual range. The chain saw an inflow of daily active users in the past couple of weeks, to a peak of over 3M daily interactions with wallets.
More users did not directly translate into more transactions, as not all wallets have the same activity levels. Solana trading is tied to bot activity, and is still the dominant chain for DEXs trading and sniping bots. Around two-thirds of all bot activity is still happening on Solana.
In August, Solana gained ground on Ethereum, which experienced a more significant slowdown in bot activity and fees. This gave Solana a 72% market share of bot activity with increased competition compared to Binance Smart Chain (BSC).
Average transaction fees, however, have been sliding in August, reaching $0.002, for around 270M daily transactions, based on TokenTerminal data. This profile reveals Solana may be returning to basic activity, while abandoning fee-intensive transactions.
JitoSOL loses on priority fees and tips
The leading validator JitoSOL is an indicator on aggressive Solana trading. The validator receives both priority fees and tips, to ensure a transaction is properly composed and included in a block. During peak market periods, JitoSOL transactions peaked at more than $3M in 24 hours. Since that peak, the daily fee generation decreased to around $327K.
Part of the slide-in fees come from diminished MEV bot rewards, which are key to composing blocks for token sniping. Bot rewards peaked in July, coinciding with the last boom of Pump.fun activity and Raydium trading. MEV tips fell by around 30% in the past weeks.
In the past days, Solana also returned as the leader in fee generation, while in the past months, JitoSOL drew more fees than the entire network. The data shows a shift in Solana’s activity, as the network may be rolling over to other use cases following the meme token boom.
The activity of JitoSOL had a winning streak in the summer of 2024. The higher fees translated into more value for JTO token stakers. Additionally, JitoSOL announced its attempt to build liquid staking and liquid re-staking services.
Decreased MEV usage and tips may affect those plans, though JitoSOL retains its position as a top Solana validator. JitoSOL started increasing its MEV tips in Q2 after shutting down its transparent mempool.
Solana does not have a visible pending transaction pool, and MEV payments are the only viable way to compose transactions and ensure block inclusion. The Solana Foundation tried to prevent sniping and the most aggressive sandwich attacks but ended up creating the need for high-fee transactions.
After the most recent market correction, SOL traded at $128.79, crashing after a period of stability above $150.
JTO is close to its yearly lows of $2.11 after ongoing daily losses. The JTO market price reflects lowered activity, and is down close to 50% from its July peak.
Cryptopolitan reporting by Hristina Vasileva
