Coin Metrics noted that the Solana blockchain has emerged as a key player in the web3 and crypto ecosystem, due to its relatively high throughput, fairly low transaction costs, and a fast-growing ecosystem (although a lot of activity centers around speculative trading and meme coins).
The extensive report from Coin Metrics provides an analysis of Solana’s technical strengths, overall market performance, and evolving role in the blockchain / DLT sector.
Leveraging on-chain data and market insights, the report highlights Solana’s recovery from past challenges including the FTX collapse, its competitive edge over rivals like Ethereum, and the factors driving its resurgence.
Solana’s architecture is built for speed and scalability, processing up to 65,000 transactions per second (TPS) at peak capacity, far surpassing Ethereum’s 15 TPS.
This is enabled by its unique Proof-of-History (PoH) consensus mechanism, which timestamps transactions to optimize validation, combined with a Proof-of-Stake (PoS) system.
The report emphasizes that Solana’s relatively low fees—averaging $0.00025 per transaction—make it an attractive platform for decentralized applications (dApps), particularly in decentralized finance (DeFi) and non-fungible tokens (NFTs).
In 2024, Solana processed over 400 million transactions, a testament to its ability to handle massive volumes without compromising efficiency.
The blockchain’s uptime has also improved significantly.
After early network outages in 2021 and 2022, Solana achieved 100% uptime in 2024, reflecting upgrades in its validator network and software stability.
With over 1,700 active validators and a Nakamoto Coefficient of 31—indicating a high degree of decentralization—Solana balances performance with security, positioning it as a robust alternative to competitors.
Solana’s market trajectory has been a rollercoaster, heavily impacted by the 2022 FTX collapse due to its association with the exchange.
The native token, SOL, plummeted from a peak of $260 in November 2021 to below $10 by late 2022.
However, the report details a remarkable recovery, with SOL surging over 600% in 2023 and continuing to climb in 2024, reaching a market cap that ranks it among the top five cryptocurrencies.
This rebound is said to be attributed to renewed developer interest and institutional adoption, including speculation about SOL’s inclusion in a U.S. crypto strategic reserve under a new administration.
Adoption metrics underscore this growth, the team at Coin Metrics noted.
The report pointed out that Solana’s active addresses grew by 50% year-over-year in 2024, surpassing 1 million daily users at times.
DeFi total value locked (TVL) on Solana reached $10 billion, driven by protocols like Jito and Raydium, while NFT trading volume hit $5 billion, fueled by marketplaces like Magic Eden.
These figures highlight Solana’s ability to attract both retail and institutional users, cementing its role in Web3 innovation.
Solana’s ecosystem thrives on its developer-friendly environment. The report acknowledges the Solana Foundation’s support for builders through grants and hackathons, reportedly resulting in over 2,500 active dApps by late 2024.
Key sectors include gaming, with titles like Star Atlas, as well as stablecoins adoption, with Circle’s USDC seeing significant usage.
Partnerships with firms like Visa for blockchain-based payments further signal mainstream traction.
Yet, challenges remain.
The report cautions that network congestion during high-traffic events, such as meme coin launches, occasionally slows performance.
Additionally, Solana faces stiff competition from Ethereum’s Layer 2 solutions and emerging chains like Aptos.
Scalability upgrades, such as the anticipated Firedancer client, aim to address these issues, potentially boosting TPS to 1 million.
Coin Metrics’ analysis paints Solana as a blockchain poised for leadership in the next wave of crypto innovation. But there are many other competing protocols such as Tron (TRX) and Cardano (ADA) but they are focused on varied / different use-cases.
Its combination of speed, (relative) affordability, and a growing ecosystem positions it to challenge Ethereum’s dominance, particularly in high-frequency use cases.
But Ethereum is considered to be more decentralized and already has a wide range of DeFi protocols that have built various solutions on top of it. Therefore, ETH decisively maintains first-mover advantage and it will be challenging to overtake the leading smart contract platform in the foreseeable future. Moreover, Ethereum will be upgraded through various system updates so this should help it to maintain its leading position in the coming year at least.
However, sustaining this seemingly positive momentum will require continued technical improvements and broader web3 and crypto ecosystem adoption.