What gives Solana the ability to make a comeback after being surrounded by difficulties?

Written by: SAURABH, JOEL JOHN, SIDDHARTH

Compiled by: Huo Huo

In 2022, as the topics surrounding SBF and the FTX platform surged, Solana also became a hot public chain in the crypto industry. However, the subsequent collapse of FTX nearly brought down the entire Solana ecosystem.

The price of SOL plummeted from $236 to $13 within weeks. Investment institutions advised startups not to choose Solana and instead build on the Ethereum Virtual Machine (EVM). Subsequently, some well-known projects migrated from Solana to other chains. However, a year later, as shown in the figure below, Solana rebounded and surpassed its peers.

Price increase trend of top tokens from the end of 2022 to the beginning of 2023

People love to hear stories of comebacks. Today, this article explores the choices that led to Solana's successful recovery from the bear market low in 2023 and the design differences that made it a leading public chain.

Client Diversity

Solana's founder Anatoly and team members have extensive backgrounds in the traditional mobile communications industry. They worked as programmers at Qualcomm for over a decade, witnessing the impact of Moore's Law (hardware capacity doubling every two years). Solana is built differently from Bitcoin and Ethereum, as it does not impose restrictions on node hardware requirements.

Bitcoin and Ethereum are relatively mature networks with more client diversity. But why is client diversity so important? Think of it this way: in a decentralized network, you want all functions to be relatively decentralized. If more than 66% of the network uses a single-node client, and that node issues incorrect updates or chooses to synchronize blocks in the wrong order, it can affect the functionality of the blockchain. There may be consensus issues regarding which block is approved first, and both Ethereum and Bitcoin have actively optimized client diversity in the past.

Consensus clients and execution clients, source: https://clientdiversity.org/methodology/

Solana experienced three major network outages and several performance declines in 2022, with one more outage occurring in 2023. These downtimes were primarily caused by consensus issues. While low transaction fees benefit users, they also make it easier to send a large number of transactions or conduct denial-of-service (DDoS) attacks.

When a block is proposed, validators receive packets (in the block), independently verify their correctness, and confirm correctness with each other to reach consensus. However, when validators lag in processing packets, consensus information can be lost.

Firedancer has created a messaging framework that bypasses certain centers, reducing network latency. Since Firedancer is built from scratch by a different team, it may not carry the same bugs as the Solana Labs client. Therefore, the same bugs will not affect these clients simultaneously. Ideally, validators will run one primary and one secondary client, with the secondary client serving as a backup.

A chain with a strong DeFi ecosystem needs to ensure 100% uptime, so Solana requires a more robust client infrastructure. The main reasons for Solana network stalls are the lack of congestion control and network processing delays. Several network upgrades have improved validators' handling of transaction surges, achieving better congestion control.

Solana acknowledges that client diversity is a work in progress. Like past Ethereum and Bitcoin, these things take time. One sign of improvement is the percentage of assets running through the Jito-Solana client. While the Jito Solana client does not help with redundancy, it indicates that validators will run different clients when available.

As more clients like Firedancer and Sig come online, we should see a reduced reliance on Solana Labs clients in the future. The optimal ratio for individual clients is about 33%. Therefore, there is still work to be done.

Percentage of staked assets running through the Jito-Solana client over time

Fee Model

A healthy fee market is a key factor for a thriving blockchain, as demonstrated by chains like Bitcoin and Ethereum. In 2024, Bitcoin's block reward will be halved from 6.25 BTC to 3.125 BTC per block. If we assume that Bitcoin producers require the same incentives, then to maintain the current incentive level, the price must double, or fee income must compensate for the loss from the halved rewards. The increased fees from inscriptions have brought hope to block producers and Bitcoin's security budget.

Percentage of fees from inscription minting is around 20%

Through EIP1559, Ethereum changed its monetary policy by adding a burn mechanism to ensure that ETH inflation remains under control. The monetary system and dynamic fees play a significant role in stabilizing chains and adjusting stakeholder incentives, and other chains aspire to achieve the same status.

In its initial phase, Solana did not prioritize fees, with a fixed fee of 5000 Lamports per transaction (in the Solana blockchain, Lamports are the smallest unit, similar to wei in Ethereum or satoshis in Bitcoin). Solflare was the first wallet to implement priority fees on Solana in January 2023. Fees are crucial for the following reasons:

1) To fend off spam attacks

2) To reward validators

3) To improve the economic stability of the protocol. As fees increase, inflation can decrease.

Like Ethereum's EIP1559, Solana burns 50% of the fees, with the remaining 50% going to validators. This standard was set in 2021 and has not changed since.

Base fee burn, priority fees go to validators. Source: Umbra Research

On Ethereum, transactions wait in the mempool before entering a block, and validators select the transactions with the highest fees for block packaging. The global mempool is created by different validators propagating their respective mempools to each other. This is where maximum extractable value (MEV) arises.

Since the mempool is visible to validators and MEV seekers, seekers can identify transactions that can be front-run or back-run for profit. Seekers are typically bots looking for MEV opportunities. For example, if someone buys $1 million worth of token A, a seeker can buy A before that transaction completes and sell it immediately.

Unlike Ethereum, Solana is multithreaded and can execute transactions in parallel. When signed transactions reach the leader, the leader validates them and randomly assigns them to threads. They are only prioritized by fee (i.e., the highest fee transactions are prioritized) when assigned to different threads locally by the leader.

Different transaction processes on Ethereum and Solana

Solana originally did not have priority fees. However, now wallets like Solflare allow users to pay priority fees. Priority fees have created a local or isolated fee market for Solana. Unlike Ethereum, Solana transactions must specify where they want to read from and write to a part of the state.

Solana's validators know the state involved in the transaction before computation, while Ethereum validators only know this after computation begins. Solana transactions require specific information that helps Solana determine which part of the state is becoming a hotspot. The total number of compute units (CUs) used by any hotspot is limited to within 25% (one of the four cores used for Solana's multithreaded execution). This is to prevent updating a particular account multiple times within a block.

Hotspots are specific smart contracts or accounts that suddenly experience a large amount of traffic. On EVM networks, high demand for a single application (like Crypto Kitties) can lead to increased transaction fees across the entire network. On Solana, the number of CUs that individual smart contracts/applications (like Tensor or Jupiter) can use per block is limited to 25%.

This means that transactions using any specific contract cannot occupy more than 25% of the block, which is 12 million CUs. All transactions exceeding this limit must wait for the next block. Therefore, if the usage of a standalone application surges, the entire network will not start paying higher fees. Only transactions interacting with that application will see an increase in fees. This is what a localized fee market looks like.

Different applications, even in a gas war, will not affect other applications

What happens if there are four or more hotspots? In this case, Solana resembles Ethereum. Gas wars may occur between competing hotspots, and the transactions with the highest fees will get in. The local fee market seems to be a nice solution to the general fee spike issue.

How does it work in practice? Solana's fee market design still has some issues:

First, the base fee generated by transactions is currently the same, whether it is a token transfer, swap, or flash loan. This is clearly not reasonable. Fees should be based on the compute resources (CUs) consumed, although this is already being considered. CUs represent block space, so paying a higher fee should allow for more space.

Second, due to the lack of a mempool, validators only arrange transactions based on fees after they are assigned to different threads, so higher fee transactions do not always succeed. This could lead to the next issue.

Third, Solana does not have a mempool like Ethereum, so higher priority fees do not guarantee that transactions will be included in a block. Therefore, seekers (those looking for MEV) find that the best way to extract MEV is to bombard the network with multiple transactions and hope that validators choose one of them. On Solana, this practice is relatively easy due to lower transaction costs.

Community Atmosphere

Steve Ballmer once said, "The key to .net's success is developers, developers, developers." This is the only meaningful metric when building a new ecosystem. A strong network of developers builds applications, which in turn develop use cases that ultimately convert into real users. Whether on mobile, desktop, cloud services, or blockchain, developers are the pathway to relevance.

Thus, I am curious about how many developers are in the Solana ecosystem. However, it is important to note that much of the Solana ecosystem was initially hit hard due to the collapse of FTX.

Packy sarcastically mentioned in a 2022 article that SBF was one of the characters that made Solana an interesting ecosystem. When FTX collapsed, the ecosystem lost one of its biggest supporters. New tokens were no longer listed, venture capitalists stopped investing, and development talent may have flocked elsewhere for resources.

Monthly active developers on Solana in 2023

According to recent Solana data, approximately 3,000 developers have been developing on Solana over the past year. This number considers developers contributing to public repositories and does not include those developing in private repositories on GitHub. Given the recent surge in SOL prices, more developers may turn to this ecosystem. As users flock to Solana (due to price increases), this number could increase significantly.

Comparison of the number of developers on major public chains in January and October over the past three years, source: https://www.developerreport.com/

If we compare this number with Electric Capital's developer report, which states that in October 2023, there were over 19,000 developers in the blockchain ecosystem, then developers on Solana account for about 15% of the entire ecosystem.

Compared to traditional Web2 ecosystems, Solana offers developers lower costs and faster transactions, providing users with a better experience. As consumer onboarding toolkits around Solana develop, more developers will build on it.

To establish a sustainable ecosystem, it is crucial to benefit developers. Solana provides resources for serious developers building on it through foundations, community hackathons, and platforms like Superteam Earn. Teams have raised nearly $600 million from ecosystem hackathons. Additionally, through airdrops targeted at developers, Solana has released a batch of new talent who can build without the pressure of raising funds.

In 2022, Bonk allocated 5% of its airdrop to developers. Another 20% was allocated to existing NFT projects within the ecosystem, and 10% was allocated to artists and collectors. This 35% is now worth $450 million. Developers who held onto this token may have realized about $500,000 in profits during Bonk's surge in December, equivalent to a pre-seed round of financing.

Google Trends search trend for Saga Phone

The recent shift in sentiment towards Solana can be quantified by the sales of the Saga phone. Although the phone was rated "the worst phone of 2023," users who bought the phone found that it could pay for itself as Bonk prices surged. Phone owners became eligible for Bonk's airdrop, turning the phone into a free crypto-native device. Due to the limited number of phones, similar to Bored Ape NFTs or other collectibles, traders began to realize the arbitrage opportunities and future airdrop value, leading them to rush to buy the phone. Demand peaked, and unopened Saga phones sold for over $5,000 on Solana.

This situation indicates a change in sentiment around the Solana ecosystem, with Bonk being an example of a meme asset, similar variants include WIF. However, relying solely on meme assets may not help the ecosystem grow. In reality, consumer demand for using products on Solana, such as earning points and potential airdrops, is the main factor changing sentiment. Two recent examples are Pyth and Jito.

Pyth Network provides oracle services on one hand and increases Solana's liquidity by airdropping tokens to users. Jito airdrops a portion of its supply to users who stake SOL in Jito's validator client and engage in DeFi activities using LSTs. These airdrop activities are more beneficial for smaller users, providing them with substantial value gains.

Total JTO allocated to different tiers

Interestingly, Jito's airdrop scheme adopts a tiered model, where the number of JTO received decreases gradually from the first tier to the tenth tier, showing a diminishing trend. This means that users in lower tiers receive higher value points.

Jupiter is a DEX on Solana that had already disclosed its airdrop plan before Jito. Although people have realized that Jito will launch a token, the scale of the airdrop was underestimated, which may be why the airdrop was not heavily utilized.

Now everyone is focused on Solana, and everyone is trying to participate in the next JTO airdrop. Some projects like Tensor, Kamino, Marginfi, Zeta, Meteora, and Parcl have announced their point programs and are converting these points into their respective tokens. Some believe these point programs are not a good idea, while others argue that they can serve as loyalty points and a more transparent token distribution method, unlocking behaviors that increase product value.

For example, Marginfi allocates one point daily to staked users but allocates four points daily to borrowing users. This system has its rationale, as the protocol needs borrowers. Nevertheless, detecting Sybil activity has become very challenging, but projects like Marginfi and Zeta have a detection method; for instance, if a wallet matches a money laundering transaction pattern on Zeta, its points will be set to zero.

These examples have attracted a large number of users to join the ecosystem. In our view, building an ecosystem involves two balancing forces. On one hand, you need to be able to build culture and passion, which meme assets, points, and airdrops address. On the other hand, you need to design excellent products that pique people's curiosity and retain users. Therefore, while various aspects of Solana can be further explored, more attention should be paid to the products that developers have built over the past year.

Ecosystem

On-chain ecological map of Solana (incomplete version)

The development of internet products has always been accompanied by improvements in bandwidth. The same is true for Web3; Solana marks a moment where its high throughput and low transaction costs make it possible to create consumer-grade applications. Just as platforms in the Web2 era bore server costs, on Solana, compressed NFTs allow developers to send a million NFTs for a few hundred dollars.

Currently, most of the content on Solana is an extension of the broader cryptocurrency landscape, viewed as "X, cheaper and faster." However, building entirely new applications requires countering users' inherent behaviors, which requires significant resources that most startups are unwilling to challenge.

However, what excites me about Solana is its potential to change the current internet landscape. I will detail how it achieves this at the end of the article, but for now, let’s look at Solana's current situation.

1) Trading Platforms

Given Solana's relationship with FTX, the early ecosystem was primarily focused on DeFi. Mercurial was initially a stable asset exchange platform on Solana, similar to Curve on Ethereum. After the collapse of FTX, hackers stole over $400 million worth of tokens from FTX, of which about $800,000 was Mercurial's governance token, MER. This led developers to part ways with Alameda Research. As part of the recovery, Mercurial was abandoned, giving birth to two new protocols: Jupiter and Meteora, which are yield aggregators and DEX aggregators, respectively.

Solana's low fees make it easier for users to trade more frequently, which is easily seen in the numbers. Three charts illustrate the differences in trading on Ethereum and Solana. In terms of trading volume and total value locked (TVL), Ethereum shows superior metrics.

It is important to note that Ethereum has a five-year head start and a healthy DeFi ecosystem, with multiple underlying tokens valued in the billions. Therefore, the metrics below are somewhat flawed. When observing the charts, conclusions should be drawn by looking at all three charts rather than a single one.

Weekly trading volume comparison between Ethereum and Solana

TVL comparison between Ethereum and Solana

However, the difference in TVL between the two chains is far greater than the difference in trading volume. At some point, the TVL numbers become less significant. The higher the ratio of trading volume to TVL, the better the capital efficiency. Recently, Solana has shown a clear advantage over Ethereum in this regard.

Trading volume to TVL ratio for Ethereum and Solana

One reason for the recent increase in trading volume is that users want to obtain airdrops. Jupiter announced an airdrop plan, reserving 50% of the tokens for the community, divided into four different phases, with the first phase possibly launching in early 2024.

Although airdrops may be driving Solana's activity, it must be understood that certain designs are impossible on Ethereum. For example, order book designs are not feasible on Ethereum's base layer. Protocols like dYdX and Aevo have branched out to their own chains.

The combination of Solana's speed and low fees means that market makers can engage in high-frequency trading on-chain without resorting to CEXs or waiting for high-performance layer two solutions.

Nowadays, many CEXs hardly touch the chain. Sometimes, when chain integration is difficult, they simply add tokens and prohibit deposits or withdrawals of those tokens. However, CEXs also have their advantages, and market makers (MMs) still choose CEXs as their primary activity platforms, not only because of fees but also due to performance guarantees.

As the saying goes, liquidity breeds liquidity. Traders flock to platforms with the most market makers because they are relatively easy to enter and exit large positions.

2) Lending and Yield Aggregators

On-chain lending markets allow market participants to earn yields on assets. Additionally, they enable investors to switch from one asset to another without triggering taxable events. Marginfi is the highest-valued lending protocol on Solana, locking in over $350 million in deposits and $80 million in loans.

Before the collapse of FTX, Solend was the primary lending protocol on Solana. In November 2021, its total locked value was nearly $1 billion. In November 2022, as FTX headed towards bankruptcy, the prices of tokens in the Solana ecosystem plummeted, leading to positions in DeFi protocols being liquidated. Solend's total locked value dropped from over $350 million to about $25 million in just a week.

As of December 26, 2023, the total locked value is just above $200 million, yet to recover to pre-FTX collapse levels. The decline in Solend's locked value created an opportunity for a new protocol to attract funds. Given that Solend already has a token, merely relying on interest rates to attract and retain users is insufficient.

Marginfi seized this opportunity and announced the launch of "points," meaning that depositors and borrowers will receive airdrops at some point in the future in addition to earning interest. Marginfi launched its points in the first week of July 2023. Since October 15, Marginfi's total locked value has grown from about $30 million to approximately $485 million in just two months, increasing more than tenfold.

Total TVL of lending protocols on Solana

Kamino is the second-largest lending platform on Solana, and its incentive mechanism shows rapid growth for the platform. The protocol announced its upcoming points on December 3, and its total locked value grew eightfold within three weeks, reaching approximately $245 million.

3) Liquid Staking

Staking is one of the core components of proof-of-stake (PoS) chains. It allows stakers to earn rewards from protocol inflation and fees while securing the chain. Liquid staking is critical infrastructure because chains should set low barriers for staking and should not exclude users due to high fees.

Liquid staking allows investors to stake any amount without needing deep technical understanding or running node software. While Solana's validators had to stake SOL from the beginning, Ethereum only transitioned to proof-of-stake last year, yet the liquid staking industry on Ethereum is leading. Over 383 million SOL are staked, accounting for about 90% of the circulating supply.

Of this, an astonishing 362 million, or about 95%, is native staking, meaning it is locked and does not utilize any staking derivatives. This means that users staking through native SOL miss out on the opportunity to use liquid tokens for DeFi. If staking SOL through protocols like Marinade or Jito, users would receive mSOL or JitoSOL as rewards, which can be used in DeFi applications. With the development of staking derivatives, it can be expected that users will gradually choose derivatives instead of incurring opportunity costs.

Staking of SOL (liquid and native)

The liquid staking market has only about 20 million SOL. Currently, 24% of circulating ETH is staked, but about 68% (31% is LST and 37% is platform) is staked through liquid staking platforms and CEXs. If 31% of SOL were also staked through different LSTs, Solana's LST market could be estimated at around 115 million SOL or approximately $11 billion.

Marinade is the first liquid staking protocol that emerged after winning third place in the 2021 Solana hackathon. The protocol was launched on the mainnet in August 2021. This solution, similar to Lido, is simple and practical. When users stake SOL through Marinade's staking pool, they receive Marinade SOL or mSOL, which can be used in Solana's DeFi applications.

mSOL accumulates rewards earned by the Marinade staking pool and adjusts relative to SOL every period (approximately every two days). When users stake using the liquid staking option, they must pay a fee to the pool. Liquid staking exposes users to the smart contract risks of the staking protocol.

Marinade also offers users the option to stake native SOL. When they do this, users do not receive mSOL as a reward. When users exercise this option, they utilize the native Solana functionality, and Marinade merely acts as an interface. Users are the only ones who can withdraw their SOL at any time.

Users effectively create a Solana staking account and delegate the responsibility of managing the stake to Marinade. The staking account receives staking rewards at the end of each period. Marinade does not charge users any fees, and they do not face the smart contract risks of Marinade.

Total TVL of liquid staking on Solana

Marinade and Jito are the two major liquid staking protocol providers on Solana. Marinade's total locked value is approximately 7.1 million SOL, with a market share of about 41%. Jito's total locked value is approximately 6.4 million SOL, with a market share of about 38%. Similar to Marinade's mSOL, Jito provides JitoSOL to users as proof of locking SOL in its staking contract. In addition to validator rewards, Jito also passes MEV rewards to JitoSOL holders.

Liquid staking tokens are very convenient for users, but they also have some drawbacks. One of them is that liquidity can become an issue. For example, mSOL experienced a decoupling on December 12. When a trader sold a large amount of mSOL, the price dropped from 1.16 to 1.02. This can be quite harmful for a token that is supposed to be anchored. Although arbitrageurs ensured the price returned to the pegged level, this event highlighted the need to improve the liquidity of liquid staking tokens.

mSOL experienced decoupling on December 12

Currently, there are over 10 liquid staking tokens on Solana. As more liquid staking tokens are launched, the low liquidity issue may become more pronounced. To address this, Sanctum has proposed a solution. Sanctum Infinity is a multi-liquid staking token pool that allows exchanges between all liquid staking tokens in the pool. This can be seen as an aggregation layer for Solana's liquid staking tokens. This solution is expected to launch in the first quarter of 2024.

4) NFT Ecosystem

The NFT ecosystem on Solana has rapidly developed over the past year. Initially, there was a lack of showcase content, and some flagship projects like DeGods and yOOts chose to migrate to other chains. Although Magic Eden has been the leading NFT market on Solana, it has hedged by multi-chain expansion. Leading NFT collectibles are crucial for the community, so this gap must be filled.

New collectibles like Claynosaurz and Mad Lads have filled this gap and established a strong sense of belonging in both communities by choosing to stay on Solana. The commonality of these two projects is that they are means to achieve goals rather than endpoints.

Mad Lads is a collection formed by former FTX engineers, aiming to replace FTX with another platform called Backpack. This platform is intended to fill the void left by FTX while being more compliant, transparent, and adhering to the spirit of DeFi. Mad Lads has developed a Solana wallet that utilizes executable NFTs or xNFTs, blurring the lines between applications and NFTs.

Unlike traditional NFTs, which are stored on servers, xNFTs can execute code. xNFTs allow users to interact with applications like Jito Staking, Birdeye, Orca, and Marginfi within the Backpack wallet.

Magic Eden was initially the dominant NFT market on Solana. It expanded its support for Ethereum in August 2022 and eventually added other chains like Polygon and Bitcoin (Inscriptions). While Magic Eden expanded its support for other chains, Tensor focused on Solana and provided additional features like TradingView integration and market orders. In addition to these features, Tensor also launched a points program similar to Blur, where traders receive Tensor's governance token as rewards.

Weekly trading volume of NFT markets on Solana

5) Infrastructure

I have been using Solana for over two years and have personally experienced the changes in infrastructure. In 2022, Solana stopped producing blocks more than ten times, but in 2023, it only happened once. While such failures are undesirable, they are common for new chains trying cutting-edge technology. Even layer twos like Arbitrum experience these failures during traffic surges.

Various factors contribute to the improvement of infrastructure, from the operation of fee markets and client diversity to RPC nodes. Companies like Helius Labs and Triton are helping application developers by providing the following services:

RPC nodes and webhooks for interacting with the Solana network. Outsourcing this responsibility allows developers to focus more on solving core issues.

Enhanced APIs that help developers save time in obtaining necessary data, such as transaction history, NFT data, token metadata, etc.

Another infrastructure change is state compression, where Solana uses Merkle trees and only stores partial data, significantly reducing storage costs. NFTs were one of the initial applications of state compression. Helius Labs and Triton provide the necessary RPC node infrastructure and indexing services, while wallets like Phantom and Solflare offer user-friendly interfaces.

Minting one million NFTs on Solana costs about $247, while on Polygon it costs about $98,000, and on Ethereum it costs about $65 million. DRiP is an NFT platform that sends three million NFTs to different users weekly instead of showing them ads. Through state compression technology, DRiP can achieve the same effect for about $250.

Some projects are improving the connectivity of Solana with other chains, mixing the best components of Solana and other chains. Eclipse uses Solana's virtual machine SVM for computation and Ethereum as its settlement layer. In contrast, Neon is building EVM on Solana for parallel processing. Nitro is building Cosmos L2.

6) DePIN

DePIN stands for Decentralized Physical Infrastructure Networks, and the idea of utilizing decentralized infrastructure with token incentives has been around for a long time. DePIN blurs the lines between consumer and commercial devices. Helium and Hivemapper are some examples of DePIN on Solana.

Helium's original mission was to create a decentralized wireless infrastructure to support IoT devices. Helium's devices act as hotspots, and about 50 hotspots are enough to provide internet connectivity for a city. Anyone can host a Helium hotspot.

Daily addition of prepaid users for Helium Mobile

Before migrating to Solana in April 2023, Helium had its own blockchain with over a million hotspots. To support growth and further expansion, Helium outsourced tasks like infrastructure support to Solana to save costs and achieve better scalability.

Hivemapper is another example of a DePIN application built on Solana. It helps map the world by installing dash cams, incentivizing participants with HONEY tokens. So far, Hivemapper has mapped roads worth one billion kilometers, of which 6.6 million kilometers are unique.

Source: Hivemapper

Hivemapper leverages the power provided by web3 infrastructure by incentivizing ordinary people to install dash cams and start mapping. This model allows services like Uber and Zomato to potentially use Hivemapper like Google Maps in the future, while requiring fewer permissions.

Conclusion

When the cost of interacting with products drops sharply, the adoption of technology accelerates. We experienced this firsthand in the early 2000s when cheap Nokia phones replaced landline connections, and people gradually switched to mobile phones. The development of Moore's Law and Android enabled people worldwide to access the internet via mobile devices. In my view, the features offered by Solana are very suitable for attracting the masses.

You can ignore the other content of this article; just try receiving $1 in Solana's Phantom wallet, and you'll understand what I mean. I remember when I first experienced it, the speed and experience were closest to what I saw when using PayPal in the early 2010s. Solana's unit economics allow developers to pay for on-chain user interactions without leaving large holes on their balance sheets. Solana's unit economics make it possible to build consumer-scale applications that go beyond today's crypto-native user base.

This does not mean that products like MarginFi or Jupiter are irrelevant. They are critical infrastructure; however, to attract the first batch of users, their needs must be met. Replacing existing financial infrastructure is a daunting but worthwhile goal. However, as I look ahead to the next decade, unless the Facebook and Substack of our era are built, we will struggle to gain relevance beyond an ever-decreasing small portion of speculators.

Blockchains are financial infrastructure. In their current form, we overemphasize user transactions rather than value exchanges on the backend. What forms of value exchange can Solana's blockchain enable (which users are unaware of)? These answers are beyond the scope of this article.

Like most price surges, focusing on the main things (Build) rather than being overly concerned with price will lead to the network losing its long-term advantages. Therefore, Solana must slow down its pace of competing with EVM chains and turn towards consumers. It needs a new batch of venture capital firms willing to invest in consumer crypto applications alongside founders who have built in Web2 in the past. As the market stubbornly competes for a share of 10 million active on-chain users, this search for alternative directions may lead Solana down a completely different trajectory.