Emerging from the darkest moment of the FTX collapse, did Solana reclaim everything it lost in just one year?

In the world of digital currencies, the close relationship between FTX and Solana is well known. However, after the collapse of FTX, Solana also fell into the abyss, with the price of the SOL token plummeting to around $8. But surprisingly, a year later, Solana did not fall and demonstrated remarkable resilience. Solana has shown through its actions what it means that "what doesn't kill you makes you stronger."

1. On-chain data performance rebounds, confidence in Solana gradually restores across the industry

Solana is known for its efficient capital utilization in the current blockchain space. Among them, "DeFi Velocity" is an important metric that represents the ratio of "trading volume on DEX within 24 hours to the blockchain's TVL." The high or low of this value can reflect the activity level of the DeFi ecosystem.

Recent data shows that Solana's DeFi Velocity ratio has been 0.71 over the past seven days. This means that for every $1 of liquidity, the weekly trading volume is approximately $0.71. This ratio significantly exceeds that of other well-known blockchains such as Arbitrum, Binance, Base, Optimism, and Ethereum.

Over the past year, Solana has maintained the highest daily active transaction count, surpassing other public chains and L2 solutions.

Solana's TVL was severely impacted by the FTX collapse but has shown signs of recovery this year, having doubled compared to the beginning of the year.

Additionally, Solana's staking rate has reached 71%, with a total staked market value of $11.5 billion. This makes Solana the second-highest blockchain by staked market value, second only to Ethereum.

2. Some technical breakthroughs are commendable, and Solana's on-chain performance has been effectively enhanced

The Solana blockchain has welcomed its next-generation independent validator client—Firedancer. This client, meticulously designed by the Jump Crypto team, aims to optimize Solana's existing validator client. Firedancer brings enhancements in concurrent transaction processing, support for sharding, and a series of other optimization features, greatly improving Solana's overall performance and stability. In fact, the introduction of Firedancer has not only increased Solana's adoption rate but also attracted the attention and recognition of major traditional payment service providers like Visa and Shopify.

On April 6 this year, Solana officially announced the introduction of state compression functionality. This technology achieves more economical NFT creation by improving the Merkle tree on the Solana blockchain. This innovation has driven the rapid development of the Solana NFT ecosystem, with nearly 45 million compressed NFTs (cNFTs) minted in the third quarter alone, representing a quarter-over-quarter growth of 316%. Among them, NFTs minted by DRiP, a free collectible distribution platform, dominated at 87.5%, followed by Dialect and Helium.

It is worth mentioning that on April 18, the Helium network decided to migrate from its original L1 to the Solana blockchain. During this migration, nearly 1 million hotspots on the network will be converted into NFTs, marking the largest NFT minting activity on Solana to date. To achieve this goal, Helium adopted Solana's NFT compression technology, which significantly reduces the amount of data storage on-chain. This approach greatly lowers the cost of minting Helium NFTs, expected to be only $110, compared to a staggering $254,000 without using compression technology.

3. Continuously optimizing underlying network performance, Solana further solidifies its core advantages in the industry

In the past, Solana faced criticism for its downtime issues. However, this year, this problem has seen significant improvement. According to the Solana Foundation's report in the second quarter, the Solana network experienced downtime only once during the software upgrade in February. Moreover, Solana has optimized its software upgrade process to ensure that downtime does not occur in the future.

Solana is renowned for its exceptional throughput, capable of processing up to 400 user-generated transactions per second (TPS) on average. During high-traffic periods, this number can even surge to over 2000 TPS. In contrast, Ethereum's average TPS is only 12, while Bitcoin is around 7 TPS. Firedancer enables effective handling of transactions between two or more parties. Unlike other chains that use a single-threaded model (like Ethereum), Solana employs a multi-threaded approach, allowing for parallel execution of transactions. This means that while other blockchains like Bitcoin and Ethereum process transactions sequentially, Solana can handle multiple transactions simultaneously, ensuring network fluidity.

Solana's transaction fees are not only low, typically below $0.001, but also very stable. In contrast, fees for Bitcoin and Ethereum can fluctuate due to network transaction demands. This instability can pose challenges for payment companies, as unpredictable fees may lead to a decline in consumer experience.

Average transaction fees on Solana
Solana's unique localized fee market is a first in the blockchain space. This design ensures that congestion in one account does not affect other accounts. For example, if one account becomes busy due to increased demand for a certain asset (like an NFT), only that account's fees will rise, while the fees for other accounts remain stable. This method provides a responsive fee market based on demand, ensuring the stability of transaction costs.

The confirmation time of transactions is crucial for payments. Although Ethereum's average TPS is about 12, users may need to wait several minutes for transaction confirmation due to network congestion and smart contract requirements. In contrast, Solana's target slot time is only 400 milliseconds, with actual ranges typically between 500 and 600 milliseconds.

4. Expanding high-quality partnerships, Solana radiates new collaborative potential

In March this year, Render Network, a company providing decentralized 3D rendering solutions, announced its migration from Polygon to the Solana network, receiving widespread support from users. Solana's high TPS and low latency provide the possibility of decentralization for Render Network's core rendering processes. To further advance this collaboration, Render Network is funding the development of an open-source Rust GPU cross-compiler tool for the RNDR SDK, which will enable developers to better utilize Solana's smart contract VM and Render Network's GPU nodes.

In August this year, Solana Pay partnered with e-commerce giant Shopify to provide payment solutions for millions of businesses on its platform. Considering Shopify's 10% share of the U.S. e-commerce market and its $444 billion value in global economic activity, this partnership is undoubtedly significant. Traditional credit card processing fees can cost businesses between 1.5% to 3.5% per transaction, but using Solana Pay incurs almost no fees. The cost of each transaction on the Solana blockchain is only $0.00025, which is negligible.

Poster of Solana and Visa collaboration

In September, global payment giant Visa announced that it would include Solana in its stablecoin testing program. Visa stated that Solana's technical advantages, such as high throughput parallel processing, low-cost localized fee market, and high resilience, make it a blockchain platform with strong payment value. These advantages are the main reasons Visa decided to expand its stablecoin settlement pilot to the Solana network.

Also in September, Rune Christensen, the founder of MakerDAO, indicated that he is considering using a Solana-supported codebase as Maker's new native chain. He believes that Solana, as a network designed for high-speed performance, with its "technical quality," "resilience after the FTX collapse," and already operational instances, makes it a codebase worth further exploration.

Looking back, Solana has experienced ups and downs in the world of digital currencies, but its demonstrated resilience and continuous technological advancements prove its irreplaceability in the blockchain space. From the turmoil with FTX to collaborations with major institutions, Solana has not only emerged from the ruins but has also showcased its immense potential and value to the world. In today's rapidly evolving technological landscape, Solana's future remains full of infinite possibilities, and we look forward to Solana bringing more innovations and breakthroughs to the blockchain world.