Solana 2024 in Review

Solana’s 2024: A Year in Review

Solana began 2024 with a mission to reassert its position in the blockchain arena. Despite facing challenges in the preceding years, the Solana community and developers persevered. 2024 witnessed a remarkable resurgence for the network, solidifying its place as a leading force in the decentralized finance (DeFi) landscape and beyond. This report delves into Solana’s key achievements and milestones throughout 2024, analyzing its performance across various metrics and highlighting its potential for future growth.

OPOS (Only Possible on Solana)

A defining characteristic of Solana is its capacity to support applications that are “OPOS” (Only Possible on Solana). These innovative use cases leverage Solana’s unique architecture and high throughput to achieve functionalities not feasible on other blockchains. Here are some prime examples:

  • On-chain order books: Solana’s speed and low transaction fees allow for high-frequency trading with on-chain order books, a feat not practical on Ethereum due to high gas fees 1. This capability opens up new possibilities for decentralized exchanges and trading platforms.
  • Compressed NFTs: Solana’s state compression technology, implemented through projects like the Light Protocol, enables the creation of compressed NFTs 2. This innovation reduces storage costs and improves efficiency, making Solana a more attractive platform for NFT projects and creators.

These OPOS applications demonstrate Solana’s potential to drive innovation and unlock unique use cases within the blockchain space. As the Solana ecosystem continues to mature, we can expect to see even more groundbreaking OPOS applications emerge.

Network Performance

Solana’s resurgence in 2024 was largely fueled by its impressive network performance. Let’s examine the key metrics that illustrate this progress:

Total Value Locked (TVL)

Solana’s Total Value Locked (TVL) experienced a significant surge in 2024, rising from $1.41 billion in January to $9.45 billion by December 7th, representing a remarkable 572.34% increase 3. This growth was driven by several factors, including the rise of liquid staking, the expansion of DeFi lending protocols, and a renewed sense of optimism surrounding the network. Notably, for the first time in three years, five Solana DeFi protocols individually surpassed $2 billion in TVL 3. This impressive growth underscores the increasing attractiveness of Solana as a platform for DeFi applications.

It’s important to acknowledge that Solana’s TVL, measured in USD, did experience a dip towards the end of the year, falling by $1.1 billion to $8.01 billion in December 4. However, this decline should be considered in the context of the broader market downturn and the inherent volatility of the crypto space. Furthermore, Solana displayed resilience by maintaining high on-chain volume, exceeding $3 billion daily despite the market conditions 5.

DeFi Metrics

Solana’s DeFi ecosystem witnessed explosive growth in 2024. Monthly decentralized exchange (DEX) volume skyrocketed from $1 billion in 2023 to a record-breaking $129 billion in November 2024, surpassing Ethereum’s all-time high of $117 billion set in May 2021 3. This remarkable surge in DEX volume highlights Solana’s growing dominance in DeFi and its ability to attract liquidity and users.

Several factors contributed to this DeFi boom. Grayscale Research noted that “retail traders increasingly enter the crypto market through Solana speculation intensifies around Solana-based memecoins and AI agent tokens” 6. This influx of retail investors, coupled with the expansion of key DeFi protocols like Jupiter and Kamino Finance 3, fueled Solana’s DeFi growth.

Furthermore, Solana-based decentralized applications (DApps) raised $173 million in Q3 2024, a 54% increase from the previous quarter 7. This significant investment demonstrates growing confidence in Solana’s potential from both retail and institutional investors.

To support this burgeoning ecosystem, Solana offers a range of token launch tools, including Armada and Jupiter’s LFG Launchpad 1. These platforms provide the necessary infrastructure for new projects to launch and thrive on Solana, further contributing to the network’s growth.

Transaction Fees

Solana’s transaction fees are structured to be remarkably low, with a base fee of 0.000005 SOL per transaction 8. This affordability is a key factor in Solana’s accessibility and appeal to users. However, it also presents challenges. The low-fee structure can incentivize spam transactions, potentially leading to network congestion and increased transaction fees 8.

To mitigate these challenges, Solana has implemented solutions like priority fees, which allow users to pay extra to expedite their transactions, and local fee markets, which help to distribute transaction processing across the network 9. Despite these efforts, Solana’s transaction fees have experienced fluctuations, reaching their highest point since May 2024 due to the surge in memecoin activity 10. It’s important to note that these fee increases could potentially impact trading activity on the chain 2.

In 2024, Solana validators earned more from MEV (miner extractable value) than their Ethereum counterparts for the first time 11. This shift in validator economics highlights Solana’s growing importance in the DeFi landscape and its ability to generate revenue for network participants.

Uptime

Historically, Solana has faced criticism for network outages 12. However, 2024 saw significant improvements in network stability. From September 2023 to January 2024, Solana achieved an impressive 100% uptime 13. While the network did experience a 5-hour outage in February caused by a bug in the LoadedPrograms function 14, it’s crucial to highlight that the time between outages continues to grow 13. In fact, Solana’s longest-ever period without a network interruption was 309 days, from February 25, 2023, to December 31, 2023 13. This trend suggests that Solana is making progress in addressing its historical stability issues.

Transactions Per Second (TPS)

Solana boasts an impressive Transactions Per Second (TPS) capacity, averaging 2200 in the first half of 2024 15. This high throughput is a crucial factor in Solana’s ability to handle a large volume of transactions and support a thriving DeFi ecosystem. When compared to other blockchains, Solana ranks second in real-time TPS, with 1,202 tx/s, only trailing behind ICP 16. This performance solidifies Solana’s position as a high-speed blockchain platform.

Number of Apps/Protocols

The Solana ecosystem continued to expand in 2024, with a growing number of apps and protocols built on the network. As of March 11th, Solana had over 4,021 nodes spread across 45 countries 17. This global distribution of nodes contributes to the network’s decentralization and resilience.

The number of daily active addresses on Solana also surged in 2024, surpassing 5 million in September 18. This growth in active addresses indicates increased user engagement and adoption of Solana-based applications. In fact, Solana ranked second among all blockchains in terms of daily active addresses, with 2.6 million and an impressive 702% year-on-year growth 19. This data further supports the claim of Solana’s growing ecosystem and user base.

Moreover, Solana has attracted a significant number of new developers, particularly in India, where it holds the largest share of new developers compared to any other blockchain 20. This influx of developers signals a growing interest in building on Solana and contributes to the platform’s long-term potential.

Unicorns

Solana witnessed the emergence of new “unicorns” in 2024, with companies like Phantom wallet achieving a $1.2 billion valuation 21. Other notable unicorns include Jito, a liquid staking protocol, and Bonk, a memecoin that gained significant traction in the Solana ecosystem. These milestones highlight the growing investor confidence in the Solana ecosystem and its potential to foster successful projects.

Solana in Mobile

Solana has made significant strides in the mobile space, with initiatives aimed at integrating blockchain technology into everyday devices. The Saga phone, priced at $450, and the JamboPhone 2, priced at $99, are examples of Solana’s efforts to bring blockchain to the masses 9. These mobile-focused initiatives demonstrate Solana’s commitment to expanding beyond DeFi and reaching a wider audience.

Solana’s success in mobile can be attributed to several factors:

  • Superior mobile experience: Solana’s high throughput and low transaction fees make it ideal for mobile applications, where speed and efficiency are paramount.
  • Dedicated mobile devices: The Saga and JamboPhone 2 provide a user-friendly interface for interacting with Solana-based applications, making blockchain technology more accessible to a wider audience.
  • Integration with existing mobile platforms: Solana has integrated with popular mobile wallets and applications, allowing users to seamlessly access and manage their Solana assets on their smartphones.

Validator Economics

Running a validator node on Solana involves costs for hardware, on-chain voting fees, server expenses, and bandwidth 9. However, advancements in technology and the availability of cloud-based solutions have reduced these costs. You can rent bare metal servers for around $300 per month, and the Solana Foundation Delegation Program (SFDP) helps to offset voting costs for participating validators 9.

Comparison with Other Blockchains

Solana’s performance in 2024 should be analyzed in comparison to other leading blockchains. While Solana has often been positioned as an “Ethereum killer,” a more nuanced perspective reveals a dynamic and competitive landscape.

MetricSolanaEthereum
TVL (Dec 2024)$8.01 billion 4$17 billion (Liquid Restaking) 22
Daily Fees (Dec 2024)Highest since May 2024 10$67 million per week (nine-month high) 23
Uptime (Nov 2024 – Jan 2025)No incidents reported 2499.64% – 100% 25
TPS (Real-time)1,202 tx/s 1615.15 tx/s 16
Daily Active Addresses (Dec 2024)4.27 million 2610.9 million (DeFi-related super users) 27

Solana demonstrates clear advantages in terms of TPS and lower transaction fees. However, Ethereum maintains a larger TVL and a more established DeFi ecosystem with a higher number of active users.

Beyond Ethereum, Solana faces competition from other emerging blockchains like Sui and Aptos 28. These platforms have also seen significant growth in 2024, with Sui, in particular, rivaling Solana in terms of price performance 28. Additionally, blockchains like Hyperliquid, Sui, and TON have experienced substantial increases in daily active addresses, further intensifying the competition 29.

While other blockchains, like Base, have tried to position themselves as “Solana killers,” they haven’t been able to match Solana’s performance and ecosystem growth 30. Solana has outpaced Ethereum in actual development, not just theoretical potential, as evidenced by its higher TPS, lower fees, and growing number of DApps and active users 7.

Key Events and Achievements

Several key events and achievements shaped Solana’s trajectory in 2024:

  • Migration of Protocols: A notable trend in 2024 was the migration of various blockchain protocols to Solana. This includes established DeFi protocols like Ondo Finance and even TradFi giants like PayPal, which brought its stablecoin PYUSD to the Solana ecosystem 31. This migration highlights the growing recognition of Solana’s capabilities and its attractiveness as a platform for diverse applications.
  • Memecoin Frenzy: Solana-based memecoins experienced a surge in popularity, with platforms like Pump.fun generating substantial revenue and attracting a wave of retail investors 32. This memecoin frenzy contributed significantly to Solana’s on-chain activity and brought increased attention to the network.
  • Launch of DEPIN: Solana emerged as a hub for DEPIN (decentralized physical infrastructure networks). Projects like Helium and Honey, focused on building decentralized wireless networks, expanded to Solana, leveraging its high throughput and low-cost transactions 33.
  • State Compression with Light Protocol: The introduction of state compression with Light Protocol marked a significant milestone in Solana’s development 34. This open-source technology 35 utilizes zero-knowledge proofs to compress on-chain state, reducing storage costs and enhancing scalability. Light Protocol also supports custom ZK compute, opening up new possibilities for developers 35.
  • Firedancer Improvements: The development of Firedancer, a new validator client built by Jump Crypto, promises to further enhance Solana’s performance and scalability 36. Firedancer went live in non-voting mode during the Solana Breakpoint conference in September 2024 37. While the full launch timeline remains uncertain, recent code commits suggest ongoing progress towards full functionality 37.
  • Cross-chain Interoperability: Solana made significant strides in cross-chain interoperability with the launch of Circle’s Cross-Chain Transfer Protocol (CCTP) and LayerZero 1. These integrations enhance Solana’s connectivity with other blockchains, facilitating the seamless transfer of assets and data.

Sustainability

Solana has demonstrated a commitment to sustainability, significantly reducing its environmental impact in 2024. According to the Solana Foundation, the network achieved a remarkable 69% reduction in its carbon footprint, going from nearly 8,800 tons of CO₂ in 2023 to just 2,671 tons in 2024 38. This achievement highlights Solana’s efforts to minimize its environmental impact while maintaining high performance.

Future Outlook

Solana’s achievements in 2024 have laid a strong foundation for continued growth in the future. The ongoing development of Firedancer, the potential for increased on-chain activity driven by factors like memecoins and DEPIN, and the expansion of OPOS applications are all positive indicators. However, Solana also faces challenges, including competition from Ethereum Layer-2 solutions and the need to maintain network stability and address concerns regarding transaction fee fluctuations.

Conclusion

Solana’s 2024 renaissance was a testament to the blockchain’s resilience, adaptability, and innovative spirit. The network not only recovered from previous setbacks but thrived, establishing itself as a key player in the DeFi space and beyond. Solana’s focus on specific niches like memecoins and DEPIN, coupled with its high-performance architecture and growing ecosystem, positions it for continued success. However, navigating the competitive blockchain landscape and maintaining a balance between affordability and network stability will be crucial for Solana’s long-term growth.

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Published by Thomas Bahamas

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