From messari by Matthew Nay

Key Insights

Primer

Solana (SOL) is an integrated, open-source blockchain with the goal of synchronizing global information at the speed of light. Solana optimizes for latency and throughput, sacrificing some verifiability. It seeks to accomplish this through features such as its novel timestamp mechanism called Proof-of-History (PoH), block propagation protocol Turbine, and parallel transaction processing. Since mainnet launch in March 2020, several network upgrades have brought further network performance and resilience, including QUIC, stake-weighted Quality of Service (QoS), and local fee markets.

Network and ecosystem development and growth are supported by the non-profit Solana Foundation, Solana Labs, as well as many third-party organizations, including Anza, Colosseum, Helius, and Superteam. Solana Labs has raised over $335 million in private and public token sales. The Solana ecosystem features a growing set of projects across many sectors, including DeFi, consumer, DePIN, and payments.

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Key Metrics

Ecosystem Analysis

App Revenue

In Q4, Chain GDP on Solana (total app revenue) grew by 213% QoQ from $268 million to $840 million. November was the largest month, bringing in $367 million in revenue to applications on the protocol.

The leaders for Q4 are as follows:

These applications are directly related to the increase in speculation on meme coins and the increase in AI-related coins launched during this quarter. The highest application not directly related to memecoin trading was Jito at 10th with $21.4 million in revenue, a 398% QoQ increase. Jupiter finished the quarter in 7th with $46.2 million in revenue, a 135% QoQ increase.

App Revenue Capture Ratio (App RCR)

A network’s App Revenue Capture Ratio (RCR) is the ratio of revenue generated by apps on a blockchain, in this case, Solana, to the blockchain’s Real Economic Value. It reflects the efficiency with which applications capitalize on the economic activity taking place on the network. A higher app RCR indicates that apps effectively capture a significant portion of the economic activity generated on the blockchain, suggesting a vibrant and monetization-ready ecosystem. This would indicate that network users are using applications and not simply sending transactions between wallets. A lower app RCR may signal untapped potential for app developers or inefficiencies in revenue capture despite high blockchain usage. If the app RCR = 20%, this implies that for every $1 of Real Economic Value generated on the blockchain, $0.20 is captured as revenue by apps.

In Q4, App RCR on Solana was 102.5%, a 25% QoQ decrease from 137.3% in Q3. This can be interpreted as when $100 is spent in fees (and/or Jito tips) by a wallet to interact with the chain; applications accumulate $102.50 in revenue. A network’s RCR can be greater than 1 when a network’s applications are highly successful in monetizing the blockchain activity, driving revenue streams for developers and the broader ecosystem. An easy example of this is Dex’s charging swap fees or an NFT marketplace imposing royalties on top of transaction fees on Solana.

DeFi

DeFi TVL on Solana grew by 64% QoQ to $8.6 billion, ranking it second among networks, surpassing Tron in November. DeFi TVL denominated in SOL grew by 28% QoQ to 46 million SOL.

Raydium took the lead in TVL on Solana with an 86% growth rate QoQ, ending with $2.1 billion and a 24% market share. This growth can be attributed to memecoin and AI-related coins speculation trading. Kamino fell to the second spot, even with a 23% QoQ increase in TVL, ending with $1.8 billion and a 21% market share. On December 5, Kamino introduced Kamino Swap, an intents-based exchange platform that offers zero slippage, fees, and MEV. The beta version first launched with SOL and USDC as the first available tokens, but has since added support for USDT, TRUMP, PYUSD, jitoSOL, and FARTCOIN.

Jupiter Perps once again saw the largest jump in TVL at a 130% growth rate QoQ, ending with $1.7 billion and a 20% market share. MarginFi once again took the biggest hit in terms of market share (40% decrease QoQ), while the protocol’s TVL only fell by 4% QoQ to $349 million - down 55% from $811 million in early April.

DEXs

Average daily spot DEX volume grew by 150% QoQ to $3.3 billion. This growth can be attributed to the memecoin craze starting up again following the 2024 U.S. election and AI-related memecoins gaining traction. Popular Solana tokens are AI16z, which reached a $2.5 billion market cap in Q4, and FARTCOIN, which reached a $1.5 billion market cap at the end of Q4.

Raydium’s average daily volume increased by 242% QoQ to $1.9 billion with a 56% market share. Read more about Raydium’s Q4 developments in our report. Orca saw a 30% increase ($624 million) QoQ in average daily volume, but its market share dropped to 18%. Pumpfun rose to the fourth largest dex on Solana after increasing by 228% QoQ in Q4 to $210 million. It is important to note that this volume is only on coins with a market cap of less than $69,000. Once a token hits that milestone, it graduates into a Raydium pool. This further proves the revival of the memecoin craze.

Jupiter remained the primary Solana trade source, accounting for 38% of Q4 spot DEX volumes. Notable Jupiter updates from this quarter include:

Jupiter perps averaged $873 million in daily trading volume, a 73% QoQ increase - ending the quarter with an 81% market share. Other main perps exchanges include:

Stablecoins

Stablecoin market cap on Solana grew by 36% QoQ to $5.1 billion, ranking it 5th among networks.

PYUSD ended the quarter with a $175 million circulating market cap on Solana, a 47% decrease. At the beginning of Q3, several Solana apps, including Jupiter and Kamino (along with an incentives campaign), onboarded PYUSD.

Regardless of these developments, USDC remained the dominant stablecoin on Solana, growing its Solana market cap by 53% QoQ to $3.9 billion, ending with a 75% market share.

USDT was the second largest stablecoin on Solana by the end of Q4, with $912 million (a 20% QoQ increase) and an 18% market share. USDS ( launched on Solana in mid-November and ended the quarter with a $93 million market cap.

Other notable DeFi-related events include:

Liquid Staking

The liquid staking rate on Solana (the percent of liquid-staked SOL) increased by 33% QoQ to 11.2%. With 66% of eligible SOL supply staked, the liquid staking rate must continue growing to enable an ecosystem built on yield-bearing SOL.

Since launching in Q1, Sanctum has quickly gained adoption, with Sanctum LSTs accounting for 14% of Solana LST market share, a 7% QoQ decrease. Sanctum has 100 LSTs after adding over 27 LSTs in Q3. The abundance of LSTs is only possible because of Sanctum Infinity, a multi-LST liquidity pool that allows supported LSTs to tap into each other’s liquidity.

Binance’s liquid staking token, bnSOL, launched in late September. Over Q4, the LST grew by 1,467% QoQ to 6.5 million SOL, taking the second spot amount LSTs, a 15% market share.

Jito’s jitoSOL remained the LST leader on Solana. Its supply grew 6% QoQ to almost 14.7 million SOL, giving it a 34% market share. In Q3, the management of the Jito Stake Pool transitioned to StakeNet. StakeNet is an open-source protocol for decentralizing Solana staking pool operations. The transition brings increased transparency, enhanced security, greater efficiency, and community governance to Jito. In July, Jito also introduced Jito (Re)staking, infrastructure for hybrid staking, staking, and VRTs. The code consists of the Vault Program and the Restaking Program. The Vault Program manages the creation and operation of Liquid Restaking Tokens (VRTs). The Restaking Program manages the creation and management of Node Consensus Operators (NCN) and operators.

Marinade’s mSOL supply grew by 4% QoQ to 5.6 million SOL, giving it a 13% market share. Its native staking product, Marinade Native, has an additional 267 million SOL. Marinade unveiled its Stake Auction Marketplace in mid-June, where validators can bid on staked SOL. The feature will be rolled out in phases; the live marketplace went live on August 14.

Consumer

NFTs

The average daily NFT volume grew by 7% QoQ to $2.7 million. Tensor took the majority of share in Q4, with $103 million in volume - a 14% QoQ increase. Magic Eden’s volume decreased by 28% QoQ to $68 million. While overall volume is down, NFTs on Solana lead on creator royalties.

In early December, Magic Eden launched their token ME. The token initially eclipsed a $1 billion market cap before slowly decreasing, finishing the quarter at around $400 million with 13% of the supply circulating.

The Tensor Foundation released the TNSR token in early April, airdropping 14.8% of the total supply. TNSR ended the quarter with a $55 million market cap and around 22% of the total supply circulating.

Social and Creator Platforms

Other consumer-related events include:

Gaming

There were a host of gaming-related announcements this quarter:

DePIN

Solana is becoming a hub for DePIN applications, hosting Helium, Hivemapper, Render, Nosana, and Jambo.

Notable Q4 events include:

Payments

With low transaction costs, sub-second finality, and a network of several thousand nodes, Solana promises to help power mainstream payment flows—so says Visa, which expanded its USDC settlement pilot to Solana in Q3 ’23.

Notable events from Solana-native payments infrastructure companies and applications this quarter include:

Infrastructure

Notable infrastructure-related events from Q4 include:

Growth

In Q4, 21 projects announced funding rounds, a 28% QoQ decrease. Those projects raised a combined $42 million, a 76% QoQ increase.

In November, Messari launched the Solana Portal. Users can use this to keep up to date on all things qualitative and quantitative within the ecosystem. Other analytics tools announced support for Solana over Q4: Nansen and Arkham.

Hackathons and Accelerators

In Q3, Colosseum held its Radar Hackathon with 1,359 project submissions, the largest hackathon yet. All winners are announced here. The topline winners were:

At the end of the quarter, SendAI launched the Solana AI Hackathon. The Hackathon lasted 15 days with over 400 projects applying. Although run independently, the Solana Foundation and ai16z were two of the large sponsors. This was paired with SendAI’s announcement for the Solana Agent Kit, which allows any AI agent to connect to Solana Protocols. All projects that participated in the hackathon can be seen here. Shortly after Q4 ended, the winners were announced:

At the end of the quarter, Helius Labs announced their startup launchpad.

Solana Labs also announced the next round of the Solana Incubator, based in New York City. The new cohort started shortly after the end of Q4.

Institutional Growth

Notable Q4 institutional events:

Network Analysis

Usage

Network activity, measured by non-vote transactions and fee payers, saw increased metrics in Q4. Average daily fee payers increased by 171% QoQ to 5.1 million, and average daily new fee payers grew by 189% QoQ to 3.8 million. Average daily non-vote transactions increased by 32% to 81.5 million.

The average transaction fee increased by 122% QoQ to 0.000242 SOL ($0.05), and the median transaction fee increased by 9% QoQ to 0.000008 SOL ($0.0016). There was a spike around November when activity on the network increased due to speculation that the next U.S administration will be friendlier to the space and increased attention to memecoins.

Security and Decentralization

Staked SOL decreased by 5% in Q4’23 and then 7% in Q1’24, largely driven by the FTX Estate unstaking its tokens as they unlocked. Staked SOL rebounded in Q2’24 and Q3’24, then stayed flat in Q4, increasing by 0.4% to 389 million. Staked SOL in USD terms increased by 25% QoQ to $74 billion.

In July and at the end of November, the Nakamoto coefficient on Solana fell to 18, an all-time low since the protocol broke out in 2021. While ending the quarter at 19, the Nakamoto coefficient remains above the median of other networks.

The Nakamoto coefficient is the minimum number of nodes needed to break liveness. The metric can also be measured across other dimensions important to the resilience of a validator network, including distribution of stake by location, hosting provider, and clients.

Solana network’s 1,404 active validators are hosted in 40 countries, up 5% QoQ and up 18% YoY. At the end of last year, Solana was nearing 33% of its stake in the United States but has since dropped to 20%. With Germany at 18%, Solana has a geographic Nakamoto coefficient of 2. Solana validators are hosted in 272 unique data centers, down 5% QoQ, and its hosting data center Nakamoto coefficient dropped by one to seven.

Performance, Upgrades, and Roadmap

Agave Updates

At the end of Q3, the Anza team announced at Breakpoint that Agave V2.0 is live on SolanaTestnet and Devnet. Over October, validators started to upgrade to V2.0 on mainnet, reaching ~25% of validators at the beginning of November. This new client version completes the transition from the Solana Labs repository, which has been archived and can no longer be used.Currently, most of the changes involve removing and renaming RPC endpoints, SDK calls, crates, and validator arguments. At the time of writing, over 90% of validators are running a V2.0 or later version. Technically, most of the network stake is running the Jito-Solana client, an Agave fork optimized for MEV.

Firedancer/Frankendancer Updates

Beyond improvements to the Agave client, the network is set to benefit from upcoming clients being written from scratch. Notably, Jump Crypto is developing Firedancer in C. At Breakpoint, the Jump team displayed an update on the client's development. Frankendancer, a version of Firedancer that includes parts of Agave code, is now live on Solana mainnet. Additionally, Firedancer is live on testnet. Firedancer is also live on mainnet in a non-voting mode, which means the client can listen to the network and replay blocks in real-time. The team highlighted that the Firedancer client has been active on testnet for 12 weeks, voted on over 10 million blocks, and can build a block with 136,000 transactions. As of early Q1’25, 18 validators were running Firedancer, expecting a full launch at the end of Q1/early Q2.

Other Client Updates

Other teams are also upgrading the network. The Jito team announced another bug bounty program to discover bugs and vulnerabilities, where developers can earn up to $250,000. Syndica has now completed the repair stage, allowing the client to fetch blocks and rewrite the SVM. In Q3, the Mithril client, a full node client aiming to lower hardware requirements needed to verify blocks, completed the reimplementation of the SVG in Golang and, at the end of November, completed the first step during milestone 2 - Block Replay and Simple RPC Interface. The Tinydancer team has also been working to develop light clients for Solana. In mid-May, it launched its simplified payment verification (SPV) client on Testnet.

SIMDs

Financial Analysis

SOL’s market cap grew by 27% QoQ to $91 billion. In November, the market cap reached as high as $120 billion for a few days, when it reclaimed all-time highs and at one point was the fourth largest asset. However, at the end of the quarter, it fell to 6th among all tokens in market cap, only behind BTC, ETH, USDT, XRP, and BNB. Real Economic Value, which measures all transaction fees and MEV to validators, increased by 211% QoQ in SOL terms to 4 million ($819 million). Of this, 48% came from transaction fees, with the rest coming from MEV tips.

Currently, 50% of Solana transaction fees are burned, while the other half are distributed to the block producer. Due to the implementation of SIMD-0096, 100% of the priority fee will be distributed to validators while continuing to burn 50% of the base fee. The Agave and Firedancer clients have implemented the proposal and are currently waiting for mainnet activation.

As noted above, validators do not have native functionality to share transaction fees (base and priority) with delegators. By default, most validators only share inflationary rewards and MEV tips. SIMD-0123 was proposed in May to enable native transaction fee distribution.

In Q2, the FTX Estate auctioned off the remaining tokens acquired from the Solana Foundation and Solana Labs. In early April, it was reported that the Estate sold 30 million SOL at $64 per token. At the end of April, a smaller sale of 1.8 million SOL at prices between $95 and $110 was reported. By the end of May, it was reported that the Estate had sold the last of its tokens, with one purchaser reportedly paying around $102 per token. Reported buyers among the sales have included Pantera Capital, Figure Markets, Galaxy Trading, and Neptune Digital. The tokens sold are subject to the same unlock schedules as the original purchases by Alameda and FTX. The average unlock date of the tokens is in Q4’25, with March ‘25 featuring by far the most unlocks of any month (11.2 million tokens - ~$2.5 billion). Upcoming unlocks can be viewed on Messari’s Solana Portal.

With a crypto-friendly administration, the momentum to get a SOL ETF approved has completely made a 180. The odds of an ETF getting approved before July 31 is 59% and the odds of one getting approved in 2025 is 86%. All SOL ETF’s that applied before the election have been denied, but in early Q1, after President Trump’s inauguration, Grayscale filed for a SOL ETF.

On September 12, the Canadian-traded company Cypherpunk Holdings rebranded to SOL Strategies, representing its bet on the Solana ecosystem. SOL Strategies' strategy is similar to Microstrategy’s; however, it is going a step further by staking its SOL tokens (over 86,000) and investing in projects in the ecosystem. SOL Strategies doubled down on its bet in Q4 by selling BTC for 8,000 SOL and also market purchasing another 5,853 SOL.

Closing Summary

Solana continued to establish its position as a dynamic force in the blockchain ecosystem throughout Q4 2024. The quarter saw remarkable growth across multiple sectors, including DeFi, liquid staking, NFTs, and institutional involvement.

DeFi remained a cornerstone of the growth on Solana, with its Total Value Locked (TVL) soaring by 64% to $8.6 billion, securing the network's place as the second-largest in the space. This increase was driven by significant jumps in lending platforms and decentralized exchanges (DEXs), with Raydium and Jupiter leading the charge in daily volumes. The memecoin trend provided further momentum, boosting application revenues and market activity. Meanwhile, the liquid staking rate rose by 33% QoQ to 11.2%, solidifying its role in the growing yield-bearing SOL ecosystem.

Consumer-facing initiatives on Solana also saw impressive developments. New products like the Seeker phone from Solana Mobile and various updates from Dialect were major milestones in expanding the network's reach to broader audiences. The introduction of blinks, a feature designed to integrate blockchain transactions into digital environments, exemplified the network’s continued push for user-friendly solutions.

Infrastructure upgrades were also key highlights of the quarter. The rollout of Agave V2 enhanced the network's transaction scheduling, while the upcoming Firedancer client promises to boost scalability and performance further. Moreover, innovations such as ZK Compression were introduced to optimize blockchain usage, reinforcing the network’s commitment to maintaining its high throughput and low transaction costs.

Financially, the ecosystem experienced robust growth, including a 76% increase in fundraising announcements, which saw 21 projects raise a combined $42 million. Institutional interest remained strong, exemplified by Visa's expanded USDC settlement pilot on Solana and the addition of Solana support for Société Générale’s digital stablecoin issuance. The market cap of SOL increased by 27% QoQ to $91 billion, reflecting the network’s growing adoption and investor confidence.

Despite external market fluctuations, Solana remains resilient, with key metrics reflecting solid growth across diverse sectors. The network’s performance and ecosystem expansion position Solana well for continued innovation and adoption into 2025.

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