State of Solana Q2 2024

Key Insights

Ecosystem Analysis

DeFi

Solana’s DeFi TVL fell by 9% QoQ to $4.5 billion, ranking it fourth among networks. However, DeFi TVL denominated in SOL grew by 26% QoQ, indicating the USD-denominated drop may have been driven more by token price depreciation than capital outflow.

DEX volume reduced slightly compared to peak activity in March but maintained elevated levels. Average daily spot DEX volume grew by 32% QoQ to $1.6 billion. DEX activity has continued to be driven by memecoin trading, with WIF, MEW, POPCAT, and GME among the top 10 tokens by Q2 token pair trading volume

Solana’s stablecoin market cap grew by 8% QoQ to $3.1 billion, ranking it 6th among networks.

Solana’s liquid staking rate (the percent of staked SOL that is liquid-staked) increased by 22% QoQ to 6.4%. With 65% of eligible SOL supply staked, the liquid staking rate needs to continue growing to enable an ecosystem built on yield-bearing SOL.

NFT volume declined after renewed activity at the end of 2023 and into 2024. The average daily NFT volume fell by 56% QoQ to $3.4 million. NFT marketplace trends reversed this quarter, with Magic Eden reclaiming the majority share of organic volume

Blinks are sharable links that convert Solana Actions into metadata-rich URLs. These links allow supported clients, such as browser extension wallets or bots, to display enhanced capabilities, enabling immediate transaction previews in wallets or expanded interactive buttons. At the moment, only blinks from registered partners

Along with other applications, DRiP’s UX was harmed by the network congestion in early April. In mid-April, it released

After an enduring bear market, Solana ecosystem funding is picking back up. Forty-seven projects building primarily on Solana announced funding rounds in Q2, a two-year high. The projects raised a combined $113 million, a 19% QoQ decrease. From Q4’23 to Q2’24, Solana projects raised $309 million, compared to $39 million in the three quarters previous.

Network activity, measured by non-vote transactions and fee payers, maintained elevated levels throughout Q2’24 after its growth in Q4’23 and Q1’24. Average daily fee payers increased by 51% QoQ to 900,000, and average daily new fee payers grew by 114% QoQ to 247,000. Average daily non-vote transactions remained flat QoQ at 70 million.

The increase in network activity drove up transaction fees, though Solana still remained cheaper than most other ecosystems with meaningful activity. The average transaction fee increased by 47% QoQ to 0.00014 SOL ($0.022). The median transaction fee increased by 35% QoQ to 0.00001 SOL ($0.0016).

Staked SOL decreased by 5% in Q4’23 and then 7% in Q1’24, largely driven by the FTX Estate unstaking

The Nakamoto coefficient is the minimum number of nodes needed to break liveness. The metric can also be measured across other dimensions important to the resilience of a validator network, including distribution of stake by location, hosting provider, and clients.

SOL’s market cap fell by 25% QoQ to $68 billion, following the broader market cooloff. It remained ranked 5th among all tokens in market cap, only behind BTC, ETH, USDT, and BNB. Solana’s Total Economic Value, which measures all transaction fees and MEV to validators, increased by 41% QoQ in SOL terms to 967,000 ($151 million). Of this, 56% came from transaction fees, with the rest coming from MEV tips.

Solana continued to be one of the major hubs of crypto activity in Q2. Its Total Economic Value (transaction fees and MEV) grew by 53% QoQ to $151 million, driven by retail DEX trading. Pump.fun, a gamified token launch platform, collected $48 million in total Q2 fees and was one of the most widely discussed applications across crypto.

However, the heightened activity led to network congestion issues at the end of Q1 into Q2. An update leveraging Stake-Weighted Quality of Service alleviated the issue in mid-April, and an upgrade to Solana’s transaction scheduler in mid-June further improved its transaction processing capabilities. Several ecosystem teams also unveiled solutions to help Solana scale while keeping users on the L1, including ZK compression by Light Protocol and Helius and the MagicBlock Engine by MagicBlock.

While Solana has been the preferred network for retail users, it is also gaining institutional adoption, especially for payments use cases. PayPal expanded PYUSD to Solana, leveraging token extensions such as confidential transfers, and Stripe announced it would support payments on Solana.

At the end of the quarter, Dialect and the Solana Foundation launched Solana Actions and Blockchain Links (Blinks), aiming to transform how users interact with the blockchain. The solution enables users to preview and execute transactions directly in various digital environments, starting with Twitter.

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