Solana post-disaster reconstruction this year what doesn’t kill me makes me stronger

Solana's Post-Disaster Reconstruction Building Resilience Through Adversity

Solana community has a strong sense of identity, which has kept it resilient in the face of significant setbacks.

Author: flowie

Compared to the embarrassment of last year’s FTX crisis, Solana can be said to have come out on top at this year’s Breakpoint. Dan Albert, the executive director of the Solana Foundation, finally announced the launch of the Firedancer testnet to address the downtime issue and received praise from various tech experts, including Georgios Konstantopoulos, the CTO of LianGuairadigm, and Raoul LianGuail, the founder of Global Macro Investor. What’s even more exciting is that during the conference period (October 30th to November 3rd), Solana’s token price reached a high of $45, setting a new record in the past 14 months, and its price has increased by over 80% in the past month. As of the time of writing, the Solana token price has fallen back to $39.6.

Although many cryptocurrency users have joked about manipulation in which Solana’s price rises every Breakpoint, Arthur, the founder of DeFiance Capital, even quipped, “If Breakpoint is so effective in driving up Sol’s price, Solana can have it every week.” However, regardless of the jokes, we cannot deny that Solana’s recovery is a result of the hard work in the “post-disaster” rebuilding this year.

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Last year, around the same time, shortly after the Breakpoint conference, ChainCatcher also wrote an article “Solana’s response to internal and external problems after being caught in FTX predicament” about Solana before and after Breakpoint. At that time, Solana was in a sorry state, with continuous downtime, unprecedented large-scale attacks on ecosystem projects, and strong competition from new blockchains Aptos and Sui, all amidst the crypto winter. In addition, Solana was also affected by the collapse of FTX, with the token price falling below $8 and hanging on the edge of survival.

Now, the resurrected Solana has come back stronger, with multiple indicators showing a growth trend and technical infrastructure and ecosystem development recovering and even making breakthroughs. According to the summary of Messari’s Q3 Solana ecosystem report, “The development momentum is stronger than when it entered the bear market.” Perhaps more people are willing to believe that Solana, the “Ethereum killer,” is writing a story of “What doesn’t kill me makes me stronger” as it prepares to navigate two cycles of bull and bear markets.

From data, Solana fundamentals

Although the surge in Solana’s token price inevitably involves institutional investors driving up the market, various key indicators of Solana have indeed rebounded and climbed. According to Defilama, Solana’s TVL has reached $460 million, more than doubling from $210 million at the beginning of the year, currently ranking eighth in the public blockchain race.

What’s more convincing than TVL is its DeFi Velocity data, which evaluates the activity and adoption of the chain by measuring the trading volume (DeFi Velocity) of every dollar TVL. According to the latest data from Nansen, Solana’s DeFi Velocity ratio for the past 7 days (September 26-October 2) is 0.71, indicating that the trading volume is close to $0.71 for every $1 of liquidity per week. Compared to other public chains like Arbitrum, BSC, Base, Optimism, and Ethereum, Solana’s DeFi Velocity is higher.

Looking at the number of active addresses and daily transaction volume, there has been no significant decline in active transactions on Solana since the FTX scandal. Although the number of active addresses experienced a brief silence in the first two months of the year, it reached a peak of over 500,000 in May and June. Daily transaction volume also peaked in May and June, surpassing 25 million transactions. Overall, Solana’s transaction volume is ahead of Ethereum, Polygon, and Aptos. At that time, the Bitcoin ecosystem protocols and meme coins were popular, causing congestion and high transaction fees on the Bitcoin and Ethereum networks. This led many developers and users to choose Solana for its lower fees.

In terms of developer activity, the FTX scandal did not cause a mass exodus of Solana developers. In November last year, users of X platform conducted a survey targeted at the developer community, and approximately 73% of developers believed that there was no need to leave Solana, with about 67% choosing to deploy solely on Solana.

According to the data on the Solana official website, they currently have over 2000 active developers per month, a significant increase compared to the 1234 active developers mentioned in Solana’s Q2 report (as of April), gradually returning to the highest peak in March this year. According to Electric Capital’s developer report data, Solana’s developer activity increased significantly in March after the FTX scandal, with a monthly count of 2,732 active developers, but it has declined since March, primarily due to changes in non-full-time developers, with only a small decrease in the number of full-time developers.

All in all, the trauma caused by FTX did not destroy the strong fundamentals that Solana established in the previous cycle.

Multiple boots on the ground, impressive breakthroughs in technology

The long-standing issues of downtime solutions, EVM compatibility, and other important breakthrough measures are gradually being implemented this year.

First, the most anticipated Firedancer testnet was launched on Breakpoint.Firedancer is a new generation node validation client launched by Jump Crypto for the Solana public chain. As the second client of Solana, it will reduce the single-point risk caused by a single client, increase the diversity of node clients, and enhance the stability of the Solana blockchain. It is expected to increase Solana’s throughput by 10-100 times.

Firedancer is the most anticipated infrastructure upgrade for Solana in the coming years. Anatoly Yakovenko, co-founder of Solana, referred to it as a long-term solution to Solana downtime in a recent interview, highlighting its importance. It’s worth noting that since its launch in 2020, Solana has experienced at least five major interruptions, three of which occurred in 2022. The tremendous instability of Solana has led ecosystem projects to suffer large-scale attacks and migrate to emerging public chains like Aptos and Sui.

The mainnet for Firedancer is expected to launch in 2024. However, it’s important to note that Delphi Digital analysts believe that the online launch of Breakpoint is actually just the network component of Firedancer called Frankendancer. The complete version of Firedancer may face significant challenges and may not be realized until 2025.

In terms of downtime issues, network upgrades including QUIC, Stake-weighted QoS, and localized fee markets have improved Solana’s network stability compared to 2022. According to Solana’s Q2 report, there was a network interruption on February 25 (during the last software upgrade), but no similar issues have occurred after the improvement.

Furthermore, in addition to addressing downtime issues, solutions for integrating the EVM ecosystem are also being implemented. In July of this year, the Solana EVM compatibility solution Neon finally launched on the mainnet, followed by the release of Solang, a Solidity smart contract compiler that allows developers to easily write Ethereum applications on Solana.

In addition, Solana’s new anchor point GameFi, announced during Breakpoint last year, has also made progress. During this year’s Breakpoint, Solana announced the launch of the GameShift game development tool’s test version, aiming to reduce the difficulty and complexity of developing games on the Solana chain.

In addition, Solana’s Web3 phone Saga went on sale in May this year, although it didn’t have impressive sales figures, it was a preemptive step for Solana’s entry into the mobile market.

After solving long-standing problems such as downtime, Solana has also made some impressive technological breakthroughs. In April of this year, Solana announced the introduction of state compression. State compression is a new method of storing data that can reduce the cost of minting NFTs by over 2000 times. According to statistics from the Nansen report, using state compression technology, the cost of minting 1 million NFTs decreased from $25,300 to $113. In contrast, the costs on Ethereum and Polygon were $33.6 million and $32,800, respectively. Helium benefited from state compression technology during the migration to Solana in April this year. During the migration process, nearly 1 million hotspots on the Helium network were minted as NFTs. Without compression technology, it would have cost over $200,000, but with the technology, it cost around $110.

The ecosystem remains resilient

In addition to its technical advantages, Solana has always been known for its ecosystem development. Despite a brief lull in the Solana ecosystem due to the crypto winter and the FTX incident, this year, with technological upgrades, the Solana ecosystem unexpectedly welcomed giants like Visa and Shopify from the Web2 world.

Around September, payment giant Visa announced the expansion of its USDC stablecoin settlement functionality to the Solana blockchain. E-commerce giant Shopify also announced its integration with Solana, allowing its platform users to use USDC for payments. Visa also outlined its reasons for choosing Solana, citing “Solana’s unique technical advantages, including high throughput with parallel processing, low-cost localized fee markets, and high elasticity with numerous nodes and multi-node clients.” The addition of Visa and Shopify has brought color to the payment use cases in the Solana ecosystem.

In addition to the support from Web2 giants, Web3 leaders and star projects are also endorsing Solana. In particular, MakerDao founder Rune publicly stated, after comparing numerous public chains, that Solana is the most suitable as a NewChain. The L2 blockchain Eclipse also incorporates Solana’s SVM (Solana Virtual Machine) and states that the network effect of SVM is growing.

With the support of the industry’s leaders, Solana is also actively promoting incentives within its ecosystem. Throughout the third quarter, Solana not only hosted the Solana Hyperdrive hackathon with a million-dollar prize pool but also participated in various hackathon events such as OPOS Hackathon, Hacker Houses, and PlayGG through sponsorship. Recently, Solana also launched an incubator aiming to attract startup founders to choose Solana.

This year, the Solana ecosystem has witnessed impressive growth not only with prominent protocols like Marinade Finance, Lido, and Solend, but also with emerging projects like Jito, marginfi, Ocra, Tensor, and BackLianGuai, most of which are in the liquidity staking sector. According to DeFilama’s data, protocols with high TVL in Solana have generally increased in the past month, with three protocols achieving over 100% growth, the highest being over 255%.

Among them, Jito, a liquidity staking protocol that launched shortly after FTX’s collapse, has seen its TVL rise from $4 million to nearly $200 million in just one year, making it the second-ranked protocol in the Solana ecosystem, only second to Marinade Finance. One unique characteristic of Jito is that it offers additional MEV rewards to stakers in addition to staking rewards. According to Solana’s latest release, over 31% of Solana validators are running through the Jito Labs client. In addition, MarginFi, a DeFi collateral protocol, has experienced over 700% TVL growth in the third quarter alone. It has led the development of the rewards mechanism in Solana’s DeFi, followed by perpetual contract trading platform Cypher and Solana lending protocol Solend, both of which subsequently introduced rewards mechanisms.

Recently, Solana’s integrated Web3 application, BackLianGuaick, has been making frequent moves and is worth paying attention to. BackLianGuaick was the first to innovate the construction of Web3.0 wallets. Unlike other wallets, it allows developers to build permissionless asset management tools on a single interface using the revolutionary new standard xNFT. This enables new core functionalities to be implemented through API requests, in order to provide a more user-friendly experience for mobile users.

Recently, BackLianGuaick also launched the NFT project Mad Lads, which is currently the highest valued NFT project on Solana, with 24-hour sales surpassing the top 5 of the NFT series. BackLianGuaick also announced the upcoming launch of the regulated cryptocurrency exchange, BackLianGuaick Exchange. Currently, BackLianGuaick Exchange has obtained a trading service virtual asset service provider (VASP) license from the Dubai Virtual Assets Regulatory Authority (VARA), and will release a beta version to existing BackLianGuaick and Mad Lads community members in November of this year.

The Goodwill Behind Solana

When counting, Solana has no shortage of big-name fans supporting them in difficult times. Industry figures like Vitalik, founder of MakeDao Rune, founder of Bankless, and Chris Burniske, partner at Placeholder VC, along with giants of Web2 asset management such as VanEck and payments giant Visa, have all shown support for Solana.

And if you look closely at the reasons given by each supporter, most of them point directly to Solana’s technical strength and community vitality, and they are even more optimistic about Solana after the FTX collapse. Not long after the FTX collapse, Vitalik Buterin tweeted, expressing the hope that the Solana community has a fair opportunity to thrive. Because someone smart told him: Solana is a serious and clever development community, and now those terrible, opportunistic people have been washed away.”

This “smart person”, Placeholder VC partner Chris Burniske, also took the opportunity to explain his specific reasons for supporting Solana. For example, he mentioned that Solana’s community has dedicated and hardcore developers, and compared to Ethereum and Cosmos, Solana’s on-chain innovations are more independent. In terms of the ecosystem, the developers on Solana are more like a hybrid of Web2 and Web3, with strong encryption in the backend and the ability to engage with the mainstream in the frontend. Founder of MakeDao Rune favors Solana for its high code quality and the resilience of its ecosystem after the FTX collapse.”

VanEck directly published a long report expressing optimism about Solana, comparing it to Ethereum in terms of ecosystem applications and revenue. VanEck believes that “Solana’s community has a strong sense of identity, which has enabled it to maintain resilience in the face of significant setbacks, even though these setbacks may have destroyed many other blockchain ecosystems.”

After experiencing ups and downs, Solana may be telling us that in the brutal elimination game of Web3, maintaining “resilience” and constantly innovating under major setbacks will make you stronger and unbeatable.

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