Ethereum killer Solana is strong again, will it succeed this time around?

“In 2024, the “" Ethereum killer "” Solana broke ground.”In the week of July 22, Solana's main chain surpassed rival Ethereum's total weekly fees for the first time, with revenue of around $25 million, while Ethereum's revenue was $21 million. Total expenses topped $5.5 million on July 28, a nearly three-month high. And just after the crypto market plummeted across the board on Black Monday this week, as the market regained its sanity, Solana's price surged more than 35% in less than 48 hours, surpassing Bitcoin.

Source: Blockworks Research

It can be said that after experiencing the ups and downs of the previous two years, Solana and its ecosystem once again became the focus of the market. This time, the momentum is about to overtake Ethereum.However, many previous projects known as the “Ethereum Killer” ended up failing. Can Solana succeed in the end? Today, let's review the birth and rise of Solana and take stock of the latest development status of the Solana ecosystem. Maybe we can find some telltale signs...

01

The birth of Solana

Solana was born from its founder's thoughts on the blockchain trilemma.Bitcoin was born in 2009, and in 2013, Solana founder Anatoly Yakovenko became an early Bitcoin user and began to focus on the impossible triangle of blockchain. At the time, blockchain Gas was expensive, and the network was very slow.
So Anatoly decided to build a faster blockchain infrastructure himself. Accidentally working overtime one night, Anatoly realized that the passage of time itself could become a data structure, forming ordered transactions and events on the blockchain. He immediately climbed up and wrote down the original Solana code. This idea was also a key idea that enabled it to run at lightning speed, and later became an important advantage of Solana compared to Bitcoin and Ethereum.
So, in 2016, Anatoly left Qualcomm, where he had been working for 13 yearsIn 2017, I joined two of my previous Qualcomm colleagues to found Solana, and Solana was born!
However, at the beginning of Solana's birth, it was not called Solana, but a prototype blockchain called Silk. Then, in March 2017, the Silk project was renamed Solana.It was named Solana because the birthplace of this idea was Solana Beach (Solana Beach),Located in northern San Diego, California, this town is where several of Solana's partners lived and surfed during their time at work.

Then from 2017 to 2020, Anatoly led the gradual improvement of Solana's technical infrastructure.It has greatly improved in terms of improving transaction throughput and network performance, and has attracted a certain amount of attention and interest in the community.
However, at the beginning of its establishment, the team also faced many development difficulties.Because most of this team came from a mediocre background, and they were in a bear market at the time, they weren't very optimistic about their business prospects. After the white paper was published in January 2018, there were many financing difficulties, and it is considered that its technical security is questionable. Before getting on Binance LaunchPad, only Binance Labs and Coinbase Ventures invested in them, probably less than $1 million in total.

Solana only began to attract tens of millions to hundreds of millions of dollars in investment when market conditions began to improve in 2019. At the same time, the team is also conducting internal testing and technical verification to focus on preparing for the official launch of the main network.
At this stage, the team also actively engaged with the developer community and blockchain enthusiasts to gather feedback and improve its technology and ecosystem.As a result, in July 2020, Solana's main network was officially launched. Since then, it has made up for Ethereum's flaws due to its fast transactions and low processing fees, and has been hailed as the “Ethereum killer”.

02
Dormant growth in a bear market

Between the launch of the main network in 2020 and 2022, Solana began to flourish and became one of the most popular fans in the crypto world at the time. It also attracted the attention of SBF, a major figure in the industry at the time.At the time, FTX was also one of the largest crypto CEXs in the world. SBF, as the founder of FTX, said, “I am optimistic that Solana will surpass Ethereum and become the next Bitcoin.”
FTX once fueled its rise. The first rapid development point was July 2020, when it chose Solana as the blockchain of choice for building DEX Serum.Additionally, it helped Solana raise around $3 billion to inspire developers and grow the Solana ecosystem. Arguably, FTX has invested not only in Solana, but also in many projects built on it, which has attracted a large number of users, especially the rapidly growing DeFi and NFT ecosystem.
From summer 2020 to the end of 2021, DeFi hit a record high. Moreover, in just over a year, the price of SOL soared from 0.51 U to 259.9 U, an increase of 510 times.Although SOL began at the conceptual stage at the end of 2017, it was only launched in 2020. As a result, level 1 and 2 participants all experienced a period of lack of optimism relatively late. This in turn helped it filter out the valuation bubble and became a source of value.
This was Solana's first popular cycle. Solana used its advantages to combine the prosperity of the market cycle, the support of crypto giants, and enterprises to form the Matthew effect, successfully completing the leap from 0 to 1.
However, Solana's rapid rise has also been accompanied by problems, such as decentralists' accusation of predatory token economics, high verification requirements, and venture capital allocation, which they believe is unfair to retail investors.Also, especially between 2021 and 2022, the Solana network experienced multiple outages, causing serious difficulties, damaging the reputation of the Solana network, which aims to pursue “high performance”，It is often criticized by the community.

However, compared to the heavy pressure FTX brings, this is not worth mentioning.DeFi experienced its first sharp decline in 2022, and in November 2022, the collapse of FTX directly brought down Solana.After the collapse of FTX, a large amount of SOL holdings was liquidated, causing Solana to face asset shrinkage, capital outflow, and market sell-off pressure. SOL plummeted by about 75% in a few days, to a minimum of about $10, and the total locked value on the chain fell to around $200 million and continued to be maintained.

Source: Coinmarketcap

And this difficult situation lasted for a year.During this period, the Solana on-chain application was also affected by capital outflows and multiple hacking attacks.Including more than 8,000 Phantom wallet assets being emptied, CEX Mango lost up to $116 million, etc. Also, for most of 2022 to 2023, the entire crypto industry has been hit hard, and the market's external environmental advantages have subsided.
The bear market is more like a great opportunity for Solana than a blow. In particular, the Solana community has been actively working to solve the two major challenges facing the Solana blockchain: network disruptions and decentralization, followed by several column upgrades, which greatly improved the stability of the network and opened up new areas of development.
In December 2023, the Airdrop story of the Solana ecosystem project brought hope. The ecosystem began to recover, and the hedging volume rose from around $300 million to nearly $1 billion in two months.

Source: DeFilLama

At the time, it was reported on the Internet that Solana was not simply brought up by retail investors, but because Wall Street wanted to restart FTX, and Solana was FTX's biggest asset, so driving the rise of Solana would help raise FTX's valuation and promote the restart. Therefore, Solana only began to recover at the end of 2023, and the truth of the news is uncertain.

03Development Status

But anyway, the Solana community is looking forward to this year.Moreover, with the improvement of ecological performance, Solana has become one of the mainstays of encryption. Its functions are constantly being improved, and ecological applications are also fully explosively advancing.

According to public statistics, as of April 28, 2024, it has been formed to cover DeFi, tools, infrastructure,The ecosystem mainly focuses on eight major fields: NFTs, games, wallets, dApp applications, and development. The segments involved include nearly 15 segments such as DEX, derivatives, transaction analysis and visualization, borrowing, synthetic assets, and stablecoins, and this number continues to grow almost every week, and on the basis of the original, this year it involves expanding tracks such as DePin and AI.

It can be said that in the entire L0/L1/L2 public chain competition, Solana is second only to Ethereum. In every circuit we can think of, with the exception of ZK and L2, Solana has developed good results, and with its performance advantages, Solana can also handle some features that cannot be developed on Ethereum.
Next, let's take a closer look at some of the thriving tracks in the Solana ecosystem:

1) Memecoin

Everyone knows that the Meme Circuit is an important track in the market this year. Other articlesIs Memecoin: Base Ready to Challenge Solana's Throne?I've written several meme waves of quotes brought about by Pepe, BRC20, and Solana Ecosystems, respectively.
The rise of Memecoin also brought a wave of traffic to Solana,From “dogwifhat” to “Bonk” to “Slerf,” Memecoin on Solana has also sparked unprecedented hype and excitement. Driven by a surge in internal capital from Airdrop such as Jito, Jupiter, Kamino, Parcl, and Tensor, Memecoin's market capitalization reached 1 billion US dollars in a week. According to a data report from node service provider Syndica, up to 92% of transactions previously on DEX Raydium on the Solana chain came from Memecoin.
Memecoin on Solana became a hot topic during the second quarter when the crypto market was sluggish and most token prices dropped. Low transaction costs combined with the advent of Pump.fun lowered the threshold for issuing tokens, making Solana the most active casino on the chain.Memecoin on Solana also outperformed Memecoin on Ethereum. Arguably one of the key factors that made Solana the darling of this cycle was its Memecoin campaign.

2) DeFi

Solana is currently the fourth largest DeFi ecosystem, with a total TVL of around $5 billion.The layout covers many segments such as DEX, derivatives, oracles, insurance, prediction markets, stablecoins, IDO platforms, trading and liquidity, earnings and aggregators, synthetic assets, and borrowing.
Among them, DEX trading volume continues to grow,Jupiter is Solana's key liquidity aggregator, providing the best route between the widest range of tokens and any token pair, making Kamino the largest DeFi protocol on Solana. As of the second quarter, about 63% of the SOL supply was pledged. Marinade is Solana's first native liquid staking solution. The leading staking agreement is Jito, and Sanctum LST's market share increased significantly in the second quarter.

Source:DeFillama (as of August 9, 2024)

3) Web3 games

With 400 ms block times and lightning-fast confirmation speeds, Solana is perfect for game developers. Game developers can build games using Javascript, Canvas, or Flutter, or use one of the Solana game SDKs to develop two major game engines: UnitySDK and UnrealSDK.
Stepn, the leading play-to-earn game on Solana, also announced a $30 million airdrop in April this year.
Additionally, Solana's “The Hunger Games” (modeled after the hit book and movie series “The Hunger Games”) quickly garnered over 100,000 followers on Twitter in the first quarter and garnered over 2 million page views within the first 24 hours, causing its website to crash.

4) Payment infrastructure

According to a recent study by Alliance Bernstein,Solana has become the most popular stablecoin transfer network, particularly for cross-border payments.
In March of this year, Solana processed around $1.4 trillion in stablecoin transfers. According to Artemis's report, Solana dominates the 43% market share in stablecoin transfer value, far surpassing Ethereum.
It's fair to say PayFi has arrived, and compared to traditional payment methods, the Helio Solana Pay plugin on Shopify saved Solana Labs over $1 million in Chapter2 sales expenses. Now it's more versatile: users can pay with their favorite token, which can be instantly converted into the merchant's preferred currency via Jupiter.
As of the second quarter of 2024, Solana's native payment infrastructure companies include Stripe crypto payments, Solana Pay Shopify plug-in payments, etc.Notably, the Solana Pay Shopify plugin has helped Solana Labs save over $1 million in fees, and it supports USDC payments on Solana, Ethereum, and Polygon.
Other developments include Decaf's on/offramp launch, Code's launch on Google Play, Phantom's integration with Meso for onramp, Brazilian digital bank Nubank's support for Solana, and integration of XPOS with Solana.

5) DePin

Solana is a perfect fit for DePIN (Decentralized Physical Infrastructure Network) projects due to its low transaction costs, high throughput speed, and scalability. It is currently becoming the hub for DePin apps,Hosted cloud computing project iot.net, wireless network Helium, map Hivemapper, decentralized computing rendering, communication Teleport, and storage GenesysGO.
In addition to this, Solana also involves mobile phones. Its first Web3 phone, the Saga phone, which went on sale in May 2023, was snatched up in the US market.On January 17, 2024, Solana Mobile plans to launch its second smartphone, SAGA CHAPTER 2. The new phone will be equipped with a crypto wallet, custom Android software, and a crypto app store. Compared to the first Solana phone, the Saga, the price is probably lower, and the pre-order deposit is $450. Delivery is expected in the first half of 2025.
In addition to this, Solana's current remarkable track record on some racetracks include:

RWA:Maple Finance
NFTs:Magiceden
Hardware & Memes:Sage & Bonk
Inscriptions:Nos-20 (Neon)
Wallets:Backpack/Atomic Wallet/Exodus/Phantom Wallet

04小结

Overall, the story of Solana's growth can be boiled down to one sentence: moving forward through twists and turns. CoinGecko data,Solana became CoinGecko's most popular blockchain in 2024, which means Solana's influence in the industry is increasing.