Key Takeaways
- Solana (SOL) has been one of the standouts of this bull market, soaring by over 1,600% from its lows of US $8.00 in late 2022.
- This price rally has coincided with strong growth across a range of various onchain metrics. Activity related to meme coins is a notable driver of this growth.
- Despite this progress, Solana still has a number of upcoming catalysts. These include the much-anticipated ‘Firedancer’ release, potential ETF approval in the U.S., and the upcoming Breakpoint 2024 conference.
- Jupiter (JUP) and Jito (JTO) are two of the leading projects in the Solana ecosystem. Should Solana’s growth trajectory continue, Jupiter and Jito will have every chance to capitalise.
What The Data Tells Us About Solana
Solana and its fast-growing ecosystem have been major beneficiaries of this current crypto bull market. From a return perspective, SOL is up 1,630% from the lows of this bear market, well above BTC (+258%) and ETH (+183%). Encouragingly, this price action has coincided with growth across various usage metrics.
Network Adoption and Usage
Daily active addresses for Solana are clearly on the rise, demonstrating increased usage of the chain. In contrast, Ethereum mainnet activity has barely changed, while BNB Chain has dropped off across several metrics. The only other chain showing relatively healthy active addresses is Base, an Ethereum L2 incubated by Coinbase that launched in mid-2023.
New Tokens
Solana is also leading in the creation of new tokens, predominantly meme coins. Its high speed and low transaction costs are key reasons for this.
Total Value Locked (TVL)
Similarly, Solana’s TVL has increased considerably, indicating higher adoption. Although Ethereum’s TVL of $45 billion dwarfs all others, making direct comparison challenging, Solana’s growth in TVL is a positive sign for its ecosystem.
Source: DefiLlama
Future Catalysts
Solana’s growth has clearly outpaced competitors so far in this bull market. But can it continue the momentum?
Firedancer: Solana’s Next Major Upgrade
Solana has a significant upgrade in the pipeline called Firedancer. Despite Solana’s already impressive transaction speed and low costs, Firedancer promises to bolster these metrics even further. If implemented successfully, it could open up more possibilities for blockchain use cases.
Potential For Solana ETFs In U.S.
Following the successful launches of Bitcoin and Ethereum ETFs, there is speculation that Solana will be next to get a spot ETF. For what it’s worth, investment manager VanEck filed a spot Solana ETF application in June 2024.
While ETFs can be short-term catalysts for speculation and hype, they also simplify crypto ownership, making it more accessible. Realistically, a spot Solana ETF is unlikely to exist in the U.S. any time soon for several reasons. However, the anticipation alone can influence price and adoption.
Breakpoint Conference 2024: Expect Lots of Announcements
This year’s edition of Breakpoint, Solana’s main annual conference, will take place in Singapore in late September. These conferences are excellent indicators of ecosystem growth and provide a platform to showcase Solana’s future prospects. In particular, at Breakpoint 2024, watch for any updates on Firedancer’s development.
Solana Ecosystem: Key Players
Jupiter (JUP): The Go-To Place For Swapping Tokens
Launched in 2021, Jupiter (JUP) is among the most established and well-known projects in the Solana ecosystem. It started out as a decentralised exchange (DEX) aggregator for token swaps, providing users with the best possible pricing for swapping between any supported token pairs (e.g. USDC/SOL).
While the DEX aggregator—also known as Jupiter Swap—remains Jupiter’s most popular feature, its offerings have expanded in recent years to include the following:
- Perpetual exchange: a platform for trading perpetual futures contracts with its own native token, JLP.
- Automated strategies: ways to execute strategies such as dollar-cost average (DCA) and value average (VA).
- Limit orders: a way to buy or sell any token pair according to your specified price limit.
- LFG: a token launchpad where projects are voted on by JUP stakers.
- JupSOL: a liquid staking token that represents SOL staked to Jupiter’s validator.
- Ape: a platform for instant meme coin trading.
Jupiter has been one of the main beneficiaries of Solana’s meteoric growth (Source: Dune)
Moving forward, Jupiter’s goal is to capture as much market share as possible in the swaps and perps markets. Like many other DeFi protocols, in time, the DAO may vote to direct a small percentage of protocol fees to JUP stakers. (Worth noting, this is not guaranteed to happen.)
In the interim, JUP will continue to serve as the governance token of JUP DAO. To date, active governance members have been rewarded with additional JUP and native tokens of certain partner projects. For example, in July 2024, roughly $60M worth of JUP and other tokens were distributed to JUP stakers who voted on any JUP DAO proposals spanning a three-month period.
Jito (JTO): The Pillar of Solana Staking
Jito (JTO) is Solana’s largest staking service, with its infrastructure built in certain ways that optimise for boosted staking yields by distributing rewards related to so-called maximum extractable value (MEV). (More on MEV.)
While Jito has multiple products, its main one is the Jito Stake Pool, which allows users to stake their SOL tokens in exchange for a liquid staking token called JitoSOL. Holders of JitoSOL tokens benefit by getting rewards from staking and MEV.
The JTO token is Jito’s governance token, where holders can vote on matters that impact the Jito Stake Pool (e.g. fee structure) as well as other Jito products.
Moving forward, Jito’s goals are to continue to assist with improving Solana’s staking infrastructure and increasing the number of DeFi integrations for JitoSOL to ensure its holders continue earning competitive yields.
Jito’s JitoSOL is the dominant liquid staking token on Solana (Source: Jito Foundation).
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