Solana continuously releases new technologies, what is different about "Solana 2.0"?

Author: Bitpush Asher Zhang

Solana has consecutively released three innovative technologies: Actions, Blinks, and ZK Compression, sparking ongoing discussions in the market. What are the characteristics of these three new technologies from Solana? What other factors have contributed to Solana's strong performance in the second quarter? How will Solana develop in the future?

What are Actions, Blinks, and ZK Compression, and how significant are their innovations?

On June 24, Mert Mumtaz, CEO of the Solana ecosystem development platform Helius, announced on the X platform that ZK Compression is being introduced to Solana. On June 25, the Solana Foundation announced the launch of two new features: Solana Actions (transactions) and Solana Blinks (blockchain links). With the launch of a series of new features, Solana has once again sparked market discussions. So, what are the technological innovations behind Actions, Blinks, and ZK Compression?

Solana Actions is an API designed to allow websites to interact with the Solana blockchain, enabling on-chain activities such as transfers, voting, and donations. It is a standardized API that returns transactions on the Solana blockchain, which can be previewed, signed, and sent in various contexts, including QR codes, buttons + widgets (user interface elements), and websites on the internet. Users can send various transaction instructions through Actions, such as transferring on-chain assets and purchasing token assets. At the same time, developers can also use Actions to call and execute smart contracts, enabling complex on-chain logic. Actions are characterized by high performance, low latency, and high flexibility, making Solana network application development and user transactions more convenient, while also adding support for the execution of on-chain smart contracts and laying a solid foundation for Solana's entry into the SocialFi space.

Blinks is a tangible representation of Actions, which can take the form of a QR code, a URL, a clickable button, etc. Blinks can transform any Solana Action into any dissemination method on any information platform, allowing clients that can detect Actions (such as browser extension wallets, bots, etc.) to present additional features to users. When using Blinks, users can perform specific actions on the current platform page without entering the Dapp behind this tangible representation (which can be a QR code, URL, etc.), making the interaction method extremely convenient and simple.

What is ZK Compression? ZK Compression uses a process called state compression, allowing developers to utilize Solana's ledger space more economically rather than relying on more expensive account space to store certain types of data. ZK Compression stores the hash values of off-chain data on-chain, keeping the specific data off-chain, and uses a state tree for verification. The application of this technology can effectively reduce the demand for on-chain storage space, thereby lowering costs and improving overall scalability. By adopting ZK Compression technology, the Solana ecosystem can handle large amounts of data more efficiently and provide developers with more flexible storage options, promoting the development and innovation of blockchain applications. Solana's official documentation defines ZK Compression as: ZK Compression is a new fundamental feature built on Solana that helps developers and users build applications at scale.

Technically, Actions and Blinks are a set of development tools that facilitate developers in integrating applications, helping blockchain applications to be as user-friendly as Web2 applications. ZK Compression, from a technical perspective, mainly aims to reduce the development costs for developers. Overall, Actions, Blinks, and ZK Compression are all dedicated to promoting Solana towards large-scale applications. However, there are still many shortcomings in Solana's aforementioned innovations, such as the current limitation of Blinks' usage to desktop platforms.

Crypto influencer Haotian stated that the launch of (Blinks and others) faces many real challenges. For example, directly embedding interactive links for payment on Twitter can bring a certain upgrade in experience, but issues such as compatibility between mobile and desktop, users' cognitive trust issues when clicking links, and potential security risks behind the links are fundamental obstacles affecting the deep application of this interaction method in the short term. Personally, I believe that what Blinks can bring to Solana and how many platforms and users will accept it still lacks a "rigid" driving factor. Imagine, users use Bots on Telegram for faster fundraising, but what would motivate users to use Blinks? Voting, mini-games, tipping, etc., are clearly not strong driving scenarios.

Solana's impressive performance in the second quarter, which ecological protocols played a crucial role

The overall performance of the crypto market in the second quarter was actually lackluster; however, the MEME craze on Solana became one of the few highlights in the crypto market, making the Solana ecosystem stand out in the second quarter. The most noteworthy is the pump.fun protocol, which benefited from the Meme craze sparked by pump.fun, further heating up the DeFi ecosystem on Solana.

pump.fun drives the Meme coin frenzy on Solana. pump.fun is a Meme coin launch platform on Solana, where users can easily create Meme tokens without providing liquidity. In May, several celebrities launched their tokens on pump.fun, triggering a celebrity Meme coin craze on Solana. According to DefiLlama data, pump.fun generated $48 million in revenue in the second quarter, with an average daily revenue of $525,000.

pump.fun indirectly boosts activity on the Solana chain. According to Dune data, in the second quarter, there were over 1 million transactions involving Meme coins deployed on the Pump.fun platform; the number of active addresses and new addresses on the platform also showed a growth trend throughout the second quarter, with an average of over 60,000 daily active addresses by June. Correspondingly, the fees generated from non-voting transactions in the second quarter significantly increased their share of the total transaction fees on the Solana network.

With the active trading on the Solana chain, the DeFi ecosystem on Solana also performed strongly. In the second quarter, DEX trading volume on Solana surged, with average daily trading volume for spot DEX increasing by 32% month-over-month, reaching $1.6 billion. Notably, Raydium has consistently been the biggest beneficiary of the Meme coin launch platform pump.fun, as once a token reaches a market cap threshold of $69,000, all liquidity from pump.fun combined with Curve will be transferred to Raydium.

Jupiter also saw a significant increase in spot trading volume and derivatives TVL during this Solana Meme frenzy. From the first quarter to mid-second quarter, Jupiter accounted for over 50% of DEX trading volume. In addition to spot trading, derivatives trading volume on Solana also grew significantly. Zeta Markets is a perpetual DEX on the Solana ecosystem, and Zeta Markets' average daily perpetual contract trading volume increased by 212% quarter-over-quarter, reaching $82 million.

How will Solana develop in the future?

Solana has performed strongly in this bull market, consistently being a market hotspot, with periodic surprises. In the early days, the DePIN track within the Solana ecosystem was highly anticipated, leading to the emergence of several leading projects such as Render and Helium; subsequently, leading projects also emerged in the full-chain gaming and AI tracks within the Solana ecosystem; recently, despite the overall weak performance of the crypto market, the MEME track has once again made Solana the focus of attention, with projects like WIF and BONK emerging.

Recently, Solana announced a 2.0 upgrade, which still holds great potential for the future. From the perspective of the Solana ecosystem, the launch of Solana Mobile highlights its commitment to mobile integration. Currently, Solana Mobile 1 has 20,000 users, while Solana Mobile 2 has over 50,000 pre-orders. This provides a direct distribution channel for DePIN projects to address the initial user acquisition challenge. DePIN will continue to be an important development pillar for Solana in the future.

Beyond DePIN, Solana's important strategy is undoubtedly to venture into Web2. In December 2023, the Firedancer validator was launched, paving the way for Solana's large-scale adoption; earlier, Solana integrated with Paypal to open up payment channels. With the emergence of new technologies like Actions, Blinks, and ZK Compression, Solana is further advancing towards large-scale adoption.

Overall, Solana possesses technical advantages such as high performance; as its technology matures, Solana's next step is primarily focused on achieving large-scale applications. Currently, a series of actions by Solana are also aimed at continuously lowering the development threshold for developers and the usage threshold for users.