Author: Joyce
Recently, with the successive listing of Memes such as Goat, Pnut, and Act on Binance, the Solana ecosystem has ushered in a new wave of enthusiasm. According to statistics from Blockworks Research, after October 19, 2024, Solana's daily on-chain fees have exceeded Ethereum for many consecutive days, and on October 24, the revenue even exceeded 10 million US dollars. The popularity of the Meme track has allowed various funds to continue to enter the Solana ecosystem, making it the hottest ecosystem in the circle.
It has to be said that Solana is indeed the hottest chain in this bull market. More than half of the star projects in the DePin craze came from the Solana ecosystem, and there were waves of Meme crazes later. It can be said to be very lively.
So, where does the high return of the Solana ecosystem come from? How long can this hot state last?
Solana on-chain fees at a glance
Similar to Ethereum, Solana's on-chain revenue also includes basic transaction fees, MEV tips, etc. After the EIP1599 proposal, Ethereum destroyed all the basic Base fees, and the MEV tips were directly rewarded to the verification nodes. Solana also has a similar destruction mechanism, destroying the basic fees at a fixed ratio (initial setting of 50%), and the rest is distributed to the validators.
Therefore, when comparing Ethereum and Solana on-chain revenue, all destroyed base transaction fees are also included.
Specifically, Solana’s on-chain revenue includes base fees, limited transaction fees, tips (Jito), and voting fees, as shown in the figure below.
Judging from the daily fee change trend on the Solana chain shown in this figure, the basic transaction fee and voting fee have not changed much compared to the other two items, but the priority transaction fee and tip have increased rapidly since March this year.
So, what are these two fees? The priority transaction fee is easy to understand, that is, the fee paid by the user to speed up the transaction, which is generally added directly at the time of the transaction. The tip (Jito) is an additional fee paid by the user to the validator, which is generally used for MEV-related transactions and targeted payments.
The rapid growth of both means that the activity of the Solana network will increase, and the network congestion caused by the increase in DeFi activities will increase. Users are more willing to increase transaction speed by increasing priority transaction fees. At the same time, validators will have more opportunities to capture MEV by optimizing transaction order.
So, what are the specific DeFi transactions on the Solana chain, and are they completely Meme-driven?
It is not difficult to see from the data in the above figure that transactions on the Solana chain mainly include Meme (Pumpfun), Meme (others), project tokens, LST Tokens, stablecoins and SOL transactions, among which project tokens include DePin, SocialFi, etc. in addition to all the categories listed above.
In the past two months, the transaction volume share of all Memes has increased from 48% to 74%. Of course, the sharp decline in the proportion of several other transaction volumes does not mean a decrease in transaction volume. When the market is on the rise, the transaction volumes of projects such as Token, LST, stablecoin and SOL on the Solana chain have increased significantly. However, the increase in Meme is too exaggerated, with an increase of 667% in the past two months. Therefore, in comparison, the proportion of other transactions has dropped significantly.
This also confirms the above data, because of the rapid growth of Meme transaction volume, and driven by the belief that "time is money" in Meme transactions, users are naturally more willing to pay priority transaction fees. The more active the on-chain transactions, the more opportunities for MEV.
Active Dapps on Solana Chain
1) DEX
Currently, Meme transactions are the main form of transactions on the Solana chain, so naturally, DEXs are the most active Dapps. Among all the DEXs in the Solana ecosystem, Raydium is the most popular. The data in the figure below shows that, thanks to the explosion of Meme, Raydium, which is deeply bound to Meme, has accounted for 63.5% of the entire Solana ecosystem transaction volume. Orca, which initially had an absolute advantage in the Solana ecosystem, has seen its market share squeezed as Meme transactions exploded, from more than 60% to around 15% at present.
PumpFun, as a meme launch platform, has its own meme trading function, which accounts for nearly 5% of the transaction volume in this wave of meme outbreak, and has a trend of gradual increase.
Solana ecosystem DEX market share, source: Dune.com
2) Aggregate DEX and trading robots
In addition to direct transactions on DEX, aggregated DEX and trading robots in the Solana ecosystem are also very active. The figure below shows the market share of DEX in the Solana ecosystem by transaction source. The latest data shows that Jupiter's transaction volume accounts for 33%, and other protocols (including trading robots) account for 19%.
Solana DEX market share by transaction source. Source: Dune.com
As the largest aggregated trading Dex in the Solana ecosystem, Jupiter’s TVL has exceeded $1.57 billion, setting a new record. In addition, Jupiter has made a lot of moves recently:
- First, on October 2, the proposal to "use the unclaimed 230 million JUP to extend and fund the ASR" was passed, and the Active Staking Rewards (ASR) will be extended for another year;
- Then on October 8, a mobile app was launched, which supports multiple payment methods such as Apple Pay and credit cards, and is considered a new French B channel;
- On October 17, the Solana MemeCoin terminal "Ape Pro" was launched, focusing on achieving MEV protection and improving the sandwich attack phenomenon in transactions.
- With this series of actions, the price of Token JUP is also very strong.
In addition to the aggregated trading platform, trading robots in the Solana ecosystem are also very active, with more than 10% of transactions contributed by trading robots. The top four in terms of revenue are Photon, Trojan, BONKbot, and Banana Gun. Photon's revenue in the past thirty days reached 29.85 million US dollars, making it the protocol in the Solana ecosystem second only to the Solana main chain in terms of revenue. In addition to the Solana main chain and the Pump protocol, the other three seats in the top five protocols in the Solana ecosystem are all trading robots, which shows their ability to attract money.
Solana Ecosystem Protocol Revenue Ranking, Source: DefiLlama
3) Other Dapps
Although DEX, aggregated DEX and trading robots around Meme have been very popular throughout the Meme season, with the popularity of the Solana chain, the price of SOL has also been rising, thereby driving the pledge, re-pledge, borrowing, leverage and other protocols in the ecosystem. The following are some of the more popular Dapps.
Jito
Jito is currently the DApp with the highest TVL in the Solana ecosystem, with a TVL of over $3 billion, accounting for more than one-third of the TVL of the entire Solana ecosystem. Jito supports users to deposit Solana or Solana's LST Token for re-staking. Compared with other staking protocols, Jito's biggest feature is its MEV suite, which extracts MEV income from transactions in the Solana ecosystem and distributes this income to stakers, thereby increasing their income.
Currently, Jito’s re-staking deposits have reached the hard cap of 25 million US dollars, and it is stated that the upper limit will be increased in the second phase to meet the staking needs of more users.
Kamino
Kamino is the top stablecoin and LST asset yield platform in the Solana ecosystem, integrating functions such as lending, liquidity provision and leverage. The TVL of the entire protocol has now reached US$2 billion.
Kamino supports a one-click automatic compounding centralized liquidity strategy, which allows users to maximize returns by controlling borrowed funds. In addition, Lend V2 is expected to be launched in the fourth quarter of this year, which will allow the creation of different borrowing markets without permission to meet the needs of a wider range of users, as well as the introduction of automated single-asset borrowing vaults to aggregate liquidity across markets, in order to become the foundation layer of Solana on-chain finance.
Marinade
Marinade is also a liquidity staking protocol for the Solana ecosystem, with a current TVL of 1.79 billion, ranking fifth after Raydium. However, as a liquidity staking protocol, the revenue of Marinade is far less than that of Jito. Recently, Marinade has been promoting Solana staking services for institutional investors, and its TVL has increased by nearly 50% in the past month and a half.
summary
The meme craze has indeed boosted the popularity of the entire Solana ecosystem, and the most direct manifestation is Solana’s on-chain revenue and user activity.
However, the current Meme is only a product of a specific period of the bull market. Once the bear market comes, if the MeMe market no longer continues, how the Solana ecosystem can maintain its leading edge in the public chain is something that needs to be considered. Just like the once popular NFT market, after the feast, it is also a mess. Can Solana take advantage of the popularity of MeMe to create a healthier ecological income structure?
