Solana True and False Prosperity Investigation: Robots Dominate 70% of Transactions, Meme Data Declines Sharply

Author: Frank, PANews

As the data on the Solana chain is rapidly surpassing that of Ethereum, discussions about Solana potentially overtaking Ethereum are heating up. At the same time, debates about the true prosperity of Solana have garnered significant attention on social media. Recently, several KOLs have published articles arguing that the data prosperity of Solana is not genuine. In summary, the controversies surrounding Solana on social media focus on the following points: 1. Proliferation of bots. 2. Inflated trading volume data. 3. MEV issues. 4. Financial loss issues. 5. The issuance of SOL tokens.

Based on long-term observation of the Solana ecosystem, some data investigations have been conducted regarding the authenticity of Solana's prosperity.

Proliferation of Bots: Nearly 70% of Transactions Come from Bots

Regarding the issue of bot proliferation on the Solana chain, several KOLs have recently stated on social media that Solana's on-chain transactions are filled with bots. Researcher Dan Smith released data on July 29 showing that Solana's weekly transaction fees and MEV income have surpassed Ethereum for the first time.

If you frequently trade MEME coins, you will find this situation to be particularly severe on pump.fun. Randomly opening a token trading page on pump.fun reveals that, as shown in the image below (the transactions marked with an exclamation mark at the end of the list are bot transactions), bot transactions account for the majority of trades.

However, identifying bot transactions and data is not easy, and there is a lack of official data on this matter.

Flip Research estimates that this ratio is as high as 93%, stating, "Considering the abnormally high ratio of transactions to users, as well as the wash trading/wash transaction volume on-chain, it seems that the vast majority of transactions are non-natural. On major Ethereum L2s, the highest daily transaction-to-user ratio is 15.0 times on Blast (which also has very low fees, and users are all using Blast S2). As a rough comparison, if we assume that the real SOL transaction and user ratio is similar to that of Blast, this would mean that over 93% of transactions and, by extension, fees on Solana are non-natural."

However, this data may not be entirely accurate. PANews randomly selected 10 relatively active tokens from Pump.fun and analyzed the last 1000 transactions for these tokens. The algorithm set for identifying bots focused on two aspects: buying and selling within a short time frame (less than 10 seconds) or repeated transactions with the same address and amount occurring during a trade. The analysis revealed that out of a total of 8268 transactions for these 10 tokens, 80.85% came from bot transactions, with real user transaction volume being less than 20%. The token with the highest bot ratio reached 99.5%, with an average of 159 transactions per bot in this range, while the average for real users was 1.99.

However, this does not imply that all trading pairs on Solana are in this situation. Subsequently, PANews analyzed the last 10,000 transactions of 10 tokens with higher market capitalization, such as $WIF, JUP, POPCAT, BOME, MEW, etc. Among these mature tokens, we found that the proportion of bots significantly decreased to 50.73%. The tokens with higher ratios were $WIF (81.6%), POPCAT (87.5%), and MEW (88%), all of which are MEME coins, while the bot trading ratio for JUP (Jupiter governance token) was 51%, and KAMA's bot ratio was only 27.3%.

Tokens that have not completed their liquidity curves are still trading on Pump.fun, while tokens that have completed their liquidity curves will go live on Raydium. Therefore, the two comparison methods mentioned above can also be seen as a microcosm of the comparison between newly listed tokens on Pump.fun and tokens that have completed their liquidity curves on Raydium and other DEXs. From the current distribution of token trading volume, the number of transactions on pump.fun accounts for about 53% of Solana DEX (data from August 8). Based on this ratio, approximately 66% of Solana's daily trading volume is from bot transactions. This indicates that real users currently prefer tokens with higher market capitalization and stable prices, rather than new listings.

PANews subsequently analyzed the trading data of the top three tokens by market capitalization on Pump.fun at the time of their initial creation and found that two months ago, the bot ratio on Pump.fun was only around 35%, and the number of real user transactions and transaction counts were far higher than at the current stage.

Average Daily Transaction Volume of Real Users is About 16, Not Much Different from Ethereum L2

What is the average daily transaction volume of users on the Solana chain? Flip Research pointed out that the daily transaction volume per user on Solana is as high as 217 times, far exceeding that of other public chains.

In fact, Solana's transactions are divided into voting transactions and non-voting transactions. The data used by Flip Research from tokenterminal combines both voting and non-voting transactions, while normal user transactions are mainly concentrated in non-voting transactions, with the volume of the two usually differing by about an order of magnitude.

As of August 6, there were 34.8 million non-voting transactions and 987,000 active users, with an average of 35 transactions per user.

Additionally, according to PANews' estimates, about 13% of the current active addresses are bot addresses, while 86% are real users.

Based on the trading volume of 34.26 million transactions on August 8 and 822,000 DAU addresses, the estimated number of real user transactions is about 11.31 million, with the number of real users around 706,900, resulting in an average of about 16 transactions per real user. This figure is significantly higher than Ethereum's approximately 3.37 transactions and Base's approximately 6.18 transactions, but is close to Arbitrum's approximately 12.39 transactions, and lower than Blast's 30.8 transactions (data from August 6). From this perspective, excluding bot transactions, the real user activity on Solana does not differ significantly from other Ethereum L2s.

Significant Decline in MEME Data

Another data point indirectly highlights the superficial prosperity on Solana. From the perspective of the number of new tokens issued daily, the issuance of new SPL tokens on Solana has not seen a significant decline, remaining around 20,000 tokens issued daily. However, looking at the details, in early July, a total of 71,000 tokens were issued on pump.fun, with 5,187 tokens going live on Raydium that week (tokens on pump.fun automatically go live on Raydium after meeting liquidity requirements). By the week of August 5, pump.fun issued a total of 55,000 tokens, while only 1,850 new tokens went live on Raydium during the same period. This data indicates that while the number of tokens issued on Pump.fun has not declined significantly, the proportion that successfully goes live on Raydium is decreasing, currently not exceeding 3%, compared to about 7.3% in early July. On August 12, according to Dune panel data, Pump.fun issued 11,796 types of Meme tokens in the past 24 hours, with only 157 ultimately going live on Raydium, accounting for just 1.33%.

Moreover, the data on New Token Accounts (newly created token accounts) on the Solana chain has also seen a significant decline recently, dropping from 12.24 million on July 20 to 6.67 million on August 8, a decrease of nearly half. This data can be understood as the total number of newly created token holding addresses on a given day. While the daily creation of new tokens on Solana has not decreased, the total number of holding addresses has declined, indicating a significant drop in the average number of holders per new token. As bots occupy the trading pool, real users are leaving the new MEME coins.

Validators as Beneficiaries of Fake Transactions

Meanwhile, Solana validators are profiting immensely from bot transactions. Dan Smith revealed that on July 29, the total fees generated amounted to $5.5 million, the highest in the past three months. 58% of this value came from MEV tips, and 37% from priority transaction fees. He stated, "MEV only occurs when it is profitable, meaning that as long as retailers continue to chase MEME, MEV will take place. Once MEME starts to cool down, MEV fee income will also collapse."

On a website dedicated to tracking sandwich attacks, PANews conducted a rough estimate and found that recognized sandwich attacks occur about 16 to 20 times per minute. This translates to at least 23,000 sandwich attacks per day. Previous reports indicated that the most notorious address had seized over $30 million in two months, and now it seems that there are even more sandwich attackers than before. (Related reading: In two months, "seizing" $30 million, Solana's largest sandwich attacker earns $570,000 daily, drawing public outrage). To cope with this situation, currently, 82% of transactions add priority fees (which can avoid sandwich attacks), but this increases the transaction costs for ordinary users.

No Evidence of Financial Loss

Additionally, the issue of financial losses and inflation rates was raised by KOL xiaoxiongbinggan.eth, who stated that Solana has been operating at a loss, with financial data showing that losses have increased from $143 million in Q2 2023 to $956 million in Q2 2024. Regarding this issue, another KOL, riyuexiaochu, provided further interpretation, stating, "This is not an increase in losses. It is merely a data illusion caused by pricing in USD." The average price of SOL in Q2 2023 was around $25, and due to price fluctuations in Q4, if we calculate using an average price of $50, this year’s Q2 would be calculated at around $160. Roughly estimating that SOL is issued at 6 million coins per quarter, simple multiplication shows that Q2 2023 is $150 million, Q4 is $300 million, and this year’s Q2 is $960 million.

Furthermore, PANews found that the Solana Foundation has not publicly disclosed its current holdings and financial data. The only source of financial data online is Coin98 Analytics, but this company has not disclosed the source of this data.

Regarding the issuance of SOL tokens, riyuexiaochu explained that the data cited by xiaoxiongbinggan.eth from Messari refers to new liquidity, which may be tokens unlocked by the foundation that typically do not flow into the market.

As for SOL's inflation, according to data from solanacompass, the current inflation rate of SOL is 5.1%, and there is no 15% inflation rate.

Discussions about Solana may continue. Overall, the state of the Solana ecosystem is not as dire as some viewpoints suggest. According to The Funding, some crypto fund managers are significantly increasing their positions in Solana. Ryan Watkins, co-founder of Syncracy Capital, believes, "Currently, Solana can compete with Ethereum on most meaningful metrics, yet its valuation is only 1/5 that of Ethereum."

However, on a finer scale, Solana still faces crises, especially as the MEME coin ecosystem that once propelled Solana to prominence is experiencing a severe decline. In addition, the entire industry is still searching for new hotspots for growth. The Solana ecosystem is currently playing out a dark forest-style hunting performance centered around ordinary retail investors, and as the beneficiaries begin to over-exploit, it remains uncertain whether this is the end of prosperity.