Solana Ecosystem Report
Disclaimer : I wrote this ecosystem report as a part of a possible Solana Foundation instagrant on the occasion of 3 years since Solana mainnet went live. However, the grant got rejected due to certain strategic decisions to prioritize other stuff at Solana. However, this piece of article deserves to be on the internet. So, here it goes.
People usually say “What doesn’t kill you, makes you stronger”. Web3 community somehow thrives this way. The more flaws we find in this ecosystem as a part of the community, the stronger our reinforcement learning model keeps getting. 3 years ago, a small, but significant blockchain community felt the need to address some serious intricacies in the existing infrastructure and ecosystem. Someone had to go tip-toe with the elephant in the room and we had the genesis block for Solana blockchain laid out on 16 March,2020.
When the Solana whitepaper was published in 2017, it aimed at building a future with fair access to finance, freedom and security. A high performance blockchain designed to solve some of the most pressing problems faced by other chains like transaction speed, Solana has become one of the most robust, fastest and powerful solutions in the community. In the span of 3 years, Solana has made the prime concern of transaction speed which was a big barrier in mainstream adoption, look diminished now.
Moving rapidly towards mass adoption, Solana is home to a massive of 11.5M+ active accounts and has attracted a lot of promising projects in the ecosystem, with a fascinating capacity to handle more than 65,000+ transactions per second. Bringing the strength of decentralization to the people, Solana supports experiences for power users, new consumers and everyone in between. It’s been 3 years since Solana mainnet went live. Things have changed and scaled drastically in the crypto space and it looks like we are closer than ever to the vision we had.
Key Metrics and overview
During a period of time when promises of web3 were crumbling down, Solana turned out to be a solace with its community-centric initiatives.
As of April 2023, Solana ecosystem boasts of a community of millions. More than 11.5M active accounts are existing out there in the Solana ecosystem. A massive 22M+ NFTs have been minted over the Solana blockchain up till now. However, the capacity to handle 65,000 tps is one of the most fascinating ballpark numbers in Solana’s weaponry. Initially, what turned out to be a fallout for the mainstream adoption and traction scaling was the gas fee issue. An average transaction gas fee on Solana is way too low, i.e. , $0.00025 per transaction, making it extremely suitable for mass adoption.
While this article was penned down, Solana holds a market capitalization of $182 billion USD, making it one of the most acceptable chains in the market. The Solana community has been empowering and putting strength over decentralization, the very core value of web3, since its advent and Solana has over 1000 active validators across the world, making it one of the most decentralized chains.
DeFi is the newest buzz in the market coming out of web3. The financial counterpart of conventional banking setup has been gaining traction promising greater inclusion and access to its participants. As of today, the Total Value Locked (TVL) locked in Solana Ecosystem is over $20B US Dollars. Solana has grown rapidly in the past year, with the number of daily transactions increasing by over 2000% since April 2022.
According to the CryptoCompare Exchange Benchmark Report of 2022, Solana is ranked as an “A” grade exchange, indicating that it has a strong security and compliance framework, as well as a high quality of market data and trading services.
Indeed, the metrics we discussed earlier suggest that Solana has strong fundamentals and is well positioned for continued growth and adoption in the future.
Key Integrations and Partnerships
Solana has forged a number of key integrations and partnerships that have helped to strengthen and expand its ecosystem.
There are some of the top projects building or extending out components of Solana’s infrastructure that are not directly tied to the protocol itself — think developer tooling, onboarding tools, experiments with different virtual machines, DAO tooling, and more.
Let’s discuss some of it:
- Audius: A decentralized music streaming platform that leverages Solana’s speed and scalability to provide seamless, high-quality streaming experiences. Audius is creating a fully decentralized community of artists, developers, and listeners collaborating to share and defend the world’s music. Using Audius, creators can generate immutable and time-stamped records for creative works and register assets.
- Mango Markets: A decentralized trading platform that operates on Solana and provides users with fast, secure and low-cost trading options. Mango is a decentralized autonomous organization. Makers or takers can earn interest on deposits and margin positions, as well as trade with near zero fees thanks to Solana’s high-performance blockchain.
- Chainlink: Chainlink is an Oracle protocol that can be used for trading binary options and is capable of price updates every 400ms with Solana’s architecture, with developers using ChainLink to build DeFi assets and marketplaces. It provides reliable, tamper-proof data feeds to Solana based applications.
- USDC: Solana has partnered with Circle to enable USDC transfers on the Solana blockchain, providing users with access to stable, fast, and low-cost transactions. USDC for Solana is now available on mainnet, and Circle will bring comprehensive support for Solana across its suite of platform services and APIs in Q4.
- Solana Wormhole bridge: The Solana Wormhole Bridge is a cross-chain bridge that allows users to transfer assets between different blockchains, such as Ethereum, Binance Smart Chain, and Solana. The Wormhole Bridge is a key feature of the Solana ecosystem, as it enables interoperability between different blockchains and allows users to access a wider range of DeFi applications.
Developer community (BUIDLs)
As per Electric Capital Developer Report of 2022 which looks at developer activity across the web3 industry, there are more than 2,000 developers building on Solana, which is second in developer activity next to Ethereum ecosystem, additionally, an increment of 83% from previous year statistics. Also, the Solana ecosystem saw a 16x growth in the number of full-time developers. Additionally, developer activity in the Solana ecosystem sees a rise around hackathons and other events, when a new pool of incoming developers start building in the Solana ecosystem, eyeing their sight on the prize spots.
Solana has a thriving developer community, with over 700 active contributors on Github and a number of hackathons and developer programs supporting innovation on the platform.
Solana’s DeFi ecosystem has also been growing rapidly, with many new decentralized switches being made into the Solana ecosystem. These projects are offering DeFi based solutions like DEXs, lending protocols, and liquidity pools, and are attracting new users and investors into the Solana ecosystem.
Additionally, Solana is also seeing a surge of interest in the NFT ecosystem. Even though once NFT exploded like one crazy thing, tractions in the NFT market has now reached a saturation with only the engaging people staying back.
Solana also launched Solana Beach which is a blockchain explorer and analytics platform that provides developers with a real-time data and insights into the Solana ecosystem with a range of tools and features, such as transaction tracking, block analysis and token monitoring, that enables developers to build more effective and painstakingly evolve Solana more as a mainstream adoptable ecosystem.
In August 2022, the Solana Foundation published a network health report that delves deeper into the issue of decentralization than ever before. This groundbreaking report moves beyond the conventional Nakamoto coefficient to assess various dimensions of decentralization. The report takes into account factors such as geographic dispersion, data center ownership, and the degree of entity control over validators to provide a more holistic view of network health. While a high Nakamoto coefficient and an expanding validator set are certainly valuable indicators, they are not sufficient on their own to ensure complete protection against the risks of centralization.
The Solana Foundation’s report highlights the importance of exploring multiple facets of decentralization in order to achieve greater network resiliency and security. It is yet another example of the Solana community’s dedication to fostering a robust and decentralized blockchain ecosystem.
Community Engagement
Overall, the Solana developer community is very active, with many exciting projects and initiatives being developed on the blockchain. These developments are helping to drive the growth and adoption of Solana’s blockchain and position it as a leading player in the DeFi and NFT spaces.
On February 2nd, the Solana Foundation hosted the Grizzlython, a hackathon event that offered a massive $5 million in prizes and seed funding to aspiring Solana developers. The Grizzlython was a thrilling six-week sprint that saw innovative project ideas evolve into fully-fledged companies, with tracks spanning the diverse and dynamic Solana ecosystem Mobile, DeFi, Payments, Web3 consumer, tools+infrastructure, gaming and DAOs+ Network States. The Grizzlython was a testament to the strength and vibrancy of the Solana community and its commitment to fostering innovation and growth in the blockchain space.
In December 2021, Solana hosted a global hackathon, called Solana Season, which attracted over 6,000 participants from around the world. The hackathon aimed to encourage developers to build dApps on Solana’s blockchain. The hackathon offered over $5 million in prizes and provided participants with access to Solana’s technical resources and developer tools.
The Solana Foundation has been providing grants to developers to support the growth of the Solana ecosystem. In October 2021, the Foundation announced a $100 million grant program to support projects and initiatives building on Solana’s blockchain. The grant program is designed to support developers at all stages of their projects, from early stage ideas to fully developed dApps.
If you’re eager to uncover the exciting projects that the newest Solana teams are working on, then keeping tabs on hackathon activity and Solana hacker houses is your best bet. The 2023 schedule has just been announced, featuring an eclectic mix of locations that includes Mumbai, Austin, Istanbul, NYC, and many others. Past hackathons have already proven to be major successes for Solana, with activity trending upward and onward. Although the price may not have followed suit in the same timeframe, there’s no denying the buzz and excitement surrounding Solana’s thriving developer community. The future looks bright for Solana as they continue to nurture and foster innovation across the globe.
Challenges And Opportunities
The recent downfall of Sam Bankman-Fried sent shockwaves through the world of cryptocurrency, bringing down not only the $32 billion FTX exchange, but also threatening the foundation of decentralized finance on Solana — Bankman-Fried’s blockchain of choice. (I explained the entire drama here) At the heart of this ecosystem was Serum, a decentralized exchange platform and liquidity provider that had been founded in August 2020 by a consortium including the Solana Foundation, FTX, and Alameda Research. With its order book serving as a critical component for DeFi on Solana, Serum was integrated into nearly all of the biggest DeFi projects on the network, from Jupiter to Raydium.
The future of Solana’s DeFi ecosystem looked uncertain in the wake of these events, but the community rallied together to keep the platform thriving. Despite the challenges, Solana remains committed to fostering an inclusive and innovative ecosystem that can weather any storm.
However, it’s also true that many other builders have and are still committed to expanding the ecosystem. A popular narrative with respect to Solana developers has been ecosystem flight. A recent survey aimed to gather data to confirm or deny this narrative. There were two takeaways with it. A lot of developers wished to switch to Ethereum however a material majority of 66% devs voted to stay and develop with Solana. While surveys like these aren’t exactly rigorous enough to get published in Science Magazine, they do offer some much-needed data to better understand the broad reality of the situation.
Moving on to some other stats, the number of Github developer repos and the number of daily unique programs are both up ~2.5x year-over-year. The regulatory environment surrounding cryptocurrencies and blockchain technology is still evolving, which creates uncertainty and potential roadblocks for Solana and other blockchain ecosystems.
However, Solana’s high throughput and low fees make it an attractive option for developers looking to build scalable applications. Overall, Solana’s strong technical capabilities and growing ecosystem position it well to overcome challenges and take advantage of opportunities in the years ahead.
While it’s true that the Solana ecosystem has faced some challenges recently, it’s important to remember that these issues don’t define the entire ecosystem. Yes, TVL has taken a hit, and the legitimacy of one of its most prominent champions, SBF, has been called into question.
But despite these setbacks, there’s still plenty of promise to be found in Solana. In fact, the ecosystem is poised for new growth and innovation. There are exciting new apps in development that could attract new users and help to rebuild TVL. And even if SBF’s contributions to the network are called into question, there’s potential for other champions to emerge and drive progress forward.
Plus, it’s worth noting that the Solana team is actively working on technical upgrades to improve network performance and mitigate issues. As these upgrades are implemented, the ecosystem will only become stronger and more resilient.
In short, while there may be bumps in the road, the Solana ecosystem is still full of potential and opportunity. It’s an exciting time to be a part of this dynamic and innovative community.
