Solana Network’s daily trading volume on its decentralized exchange (DEX) has increased by 319% to $1.5 billion, making it a popular destination for retail traders and memecoin traders.
Projects built on Solana raised $89.2 million in the first quarter, surpassing the total funding for the entire year of 2023 by $2.5 million.
The launch of token extensions has provided token issuers with a set of configurable features. Stablecoin issuers, including Paxos and GMO Trust, as well as native crypto projects like Photo Finish LIVE and Wen, have adopted token extensions.
Solana’s ecosystem has made significant progress in further decentralization with the launch of developer store Anza and growth organization Colosseum.
While Solana Network experienced its first outage in nearly a year due to an error in the legacy loader, the network remains stable. Upcoming schedulers and network upgrades will reduce spam and improve user experience.
Solana’s SOL token continues to maintain its leading position in the market. It ranks fifth in market capitalization, following BTC, ETH, USDT, and BNB. After reaching a peak of $77 billion in the previous cycle, SOL’s market capitalization has reached a new all-time high of $86.4 billion in the first quarter, with a 97% increase. However, SOL is still about 25% away from its historical high of around $260.
In terms of revenue, there has been a 200% increase when calculated in SOL. When calculated in USD, the quarterly total revenue has increased by 597% to $98.8 million due to the rise in SOL price. Solana achieved a new daily revenue record of approximately $4.9 million on March 18.
Half of these fees are burned, while the other half is distributed to block producers, reducing Solana’s quarterly inflation rate from 5.5% to 5.2%. SOL issuance rate will decrease at a rate of 15% per year until it reaches 1.5%.
Network activity measured by non-voting and fee-paying transactions continued to increase in the first quarter. The daily average of fee-paying users increased by 214% to 597,000, reaching a peak of over 2 million on March 17. The growth in the number of addresses was mainly driven by memecoin trading. The daily average of non-voting transaction volume increased by 71% to 70 million transactions. However, 62% of non-voting transactions failed, with a 10% increase compared to the previous period. The majority of failed transactions were from arbitrage bots or user transactions on DEXs.
New fee-paying users also showed a similar growth trend, reaching a peak of approximately 1.2 million on March 17. The average daily increase in new fee-paying users was 266% to 115,000. The retention rate of new fee-paying users was also high, with a monthly retention rate of over 30% for the user groups in December 2023, January 2024, and February 2024, compared to an average retention rate of 18% from January 2023 to November 2023.
Solana’s security and decentralization have seen mixed results. The staking rate of SOL has decreased for the second consecutive quarter, with a 7% decrease compared to the previous quarter. The main reason for the decrease is the cancellation of staking by FTX Estate during token unlocking. However, the total staked value in USD increased by 71% to $70 billion due to the rise in SOL price, ranking second among all networks, second only to Ethereum.
In terms of performance, upgrades, and roadmap, Solana Network experienced its first outage in nearly a year on February 6, lasting for about 5 hours due to an error in the old loader. Although the network experienced congestion issues due to increased usage, it remains stable. Identified issues and potential solutions include the introduction of transaction schedulers and network upgrades.
The most notable development this quarter was the introduction of token extensions, which provide a set of configurable features as part of the new SPL token standard. These extensions support functionalities that can be achieved on other networks but currently require developers to build their own infrastructure or permissioned environments.
In the DeFi sector, Solana’s TVL (Total Value Locked) increased by 232% to $4.9 billion, ranking fourth among all networks. The lending and yield protocol Kamino jumped to the top of the TVL rankings, with a TVL of nearly $1.3 billion at the end of the quarter, an 811% increase.
DeFi trading volume also continued to grow, with a 319% increase in daily spot DEX trading volume to $1.5 billion. The growth in DEX trading volume was mainly driven by memecoin trading. SLERF and BOME ranked seventh in terms of trading volume. Other memecoins in the top 15 trading volume include BONK and WEN.
Telegram bots have become popular trading venues for retail traders, with Solana Telegram bot’s daily active addresses increasing by 573% to 45,000. Approximately 5% of the quarterly total trading volume comes from Telegram bots, more than doubling compared to the previous period.
BONKbot is the largest trading volume among Solana Telegram bots, with an average daily trading volume of $37 million. The bot charges a 1% fee, which is used to buy BONK and distribute it to various parties, including burning (10% of the fee).
In mid-March, BONKbot launched the Valhalla upgrade. Trojan on Solana was launched at the end of January, with an average daily trading volume of nearly $14 million, and released the Bolt Pro feature in March. Other Telegram trading bots include FluxBot, SolTradingBot, and Banana Gun.
More than 59% of spot DEX trading volume is through the Jupiter trading aggregator. Jupiter launched its native token JUP at the end of January. Since its launch, Jupiter Perps has had an average daily trading volume of $328 million. Another major player on Solana, Drift, has maintained strong growth momentum. Drift’s daily average revenue increased about tenfold in the fourth quarter and sixfold in the first quarter, reaching $142 million. In late January, Drift launched a loyalty program, which will be followed by the launch of tokens after it ends in March. In mid-March, Drift launched its pre-market product starting with W from Wormhole, providing rewards for unreleased tokens.
After growing by 21% in the previous quarter, Solana’s stablecoin market capitalization increased by 55% to $2.8 billion, ranking fifth among all networks. This growth was driven entirely by USDC, which saw a 111% increase in its Solana market capitalization to $2 billion. Solana now has the second-largest amount of USDC after Ethereum.
Solana’s liquidity staking rate increased by 27% to 5.5%. The liquidity staking protocol Jito has been leading in terms of growth. Jito’s TVL increased by 47% to 9.4 million SOL, surpassing Marinade and ranking first in TVL. Jito’s market share in the liquidity staking market was close to 50% at the end of the quarter. Marinade Liquid’s TVL decreased by 9% to 6.4 million SOL. Blaze’s TVL increased by 38%.
In terms of NFTs, daily average NFT trading volume increased by 57% to $7.6 million. Tensor’s market share in the NFT market increased by 9% to 71%. Magic Eden’s market share continued to decline, decreasing by 18% to 25%.
Solana is becoming the center for DePIN applications, including hosting Helium, Hivemapper, Render, Teleport, and GenesysGo. Notable events in the first quarter include the collaboration between Helium Wi-Fi and Telefonica, Io.net’s funding, and launch plans.
After a persistent bear market, investment in Solana projects is picking up. Projects built on Solana raised $89.2 million in the first quarter. Combined with the fourth quarter of 2023, a total of 25 projects raised $146.3 million, compared to 7 projects raising $9.6 million in the previous two quarters.
In summary, Solana continues to grow in 2024 after a strong performance in 2023. It has become a major hub for retail traders and memecoin traders, with a significant increase in daily spot DEX trading volume of 319% to $1.5 billion. Solana has also made significant progress in its ability to support institutions with the launch of token extensions, providing a set of configurable features for token issuers.
However, the increase in network activity has led to congestion issues, which will be addressed in upcoming network upgrades, schedulers, and fee markets.
Investment in Solana projects is on the rise after a prolonged bear market. Projects built on Solana raised $89.2 million in the first quarter, surpassing the total funding for the entire year of 2023 by $2.5 million. Solana’s ecosystem is also becoming more decentralized, with the establishment of developer store Anza by former Solana Labs engineers and executives, and the launch of the growth organization Colosseum by the former head of Solana Foundation.
