SOLANA BREAKPOINT ROUND-UP

Solana hosted its second conference, in Lisbon over the past 3 days, with the event finishing up yesterday. The amount of growth and interest seen in the network has been incredible over the past year – Here are some of the network statistics that were presented by Anatoly Yakavenko & Raj Gokal, the founders of Solana :

Solana is extremely fast & cheap when it comes to transactions as the team optimised for high throughput. Due to the blockchain trilemma, a trade off was made for scalability vs decentralisation, however the network continues to become more distributed as we see the node count increase (Bitcoin has +- 12,000 nodes).

Massive ecosystem growth has been observed and there is much more predictable scaling thanks to Moore’s Law. Almost all exchanges support SPL-based tokens & stable coins. Phantom has been a huge contributor to the active accounts statistics, which is now the flagship wallet in the ecosystem, providing a slick, seamless & easy user experience.

Above we see the Solana ecosystem in March 2021, according to Solanians data.

Just based off of these visuals, we can see the rapid growth and development in the Solana ecosystem. The ecosystem is diverse, spanning from DeFi which now has +$15B in TVL, to NFTs and Play2Earn gaming which began to explode around June. Metaplex has been at the centre of this growth.

Degen Ape Academy was a huge contributor to the NFT success on Solana. Audius has also been an interesting success, known as the decentralised Spotify. Audius has had 6.7m unique users in the last 30 days. Gaming, NFTs & user facing applications like Audius are the dApps that will onboard the next Billion people into crypto.

Since December 2020, there are now more than 1500 Solana developers. Exponential growth has been seen since June as a huge number of projects formed during the hackathons. More than 570 teams formed in the most recent hackathon in September.

With no clear timeline, the goal is to have 1 million developers in order to on board the next billion people. There is a strong importance for non-custodial use accompanied with low cost & latency.

There has been roughly $2B in venture capital invested into the ecosystem, with over $430m committed by 16 funds as of August. Some familiar & prominent names on this list include:

Solana Ventures has also given out grants of 1.7M SOL to 130 projects. $25M has been invested by Solana Ventures in 75 companies. In partnership with Lightspeed & FTX, they have now also launched a $100m gaming fund.

From a developers perspective, finality, cost, composability as well as the convenient exchange support & strong community has provided staying power. Consumers need fast, cheap and intuitive UX, and this is what Solana is focused on providing.

Web2.0 birthed over 50 million creators. NFTs fit better with the creative process as well as 95% of value, if not all, comes back to the creator unlike what we see on Youtube & Instagram, where the user is actually the product. Web3.0 changes this and establishes the creator economy, which is set to explode. 

If we compare monthly active users between todays largest social platforms & the largest NFT marketplace, we can see how early this NFT space really is: 

  • Youtube 3.3B MAUs
  • Instagram 1.4B MAUs
  • Tik-Tok 1B MAUs
  • Pinterest 0.5B MAUs
  • Twitter 0.4B MAUs

Opensea, the largest NFT marketplace, only has 300,000 monthly active users, which is 0.075% of Twitter’s MAUs, the smallest on the list of social networks. 

The upcoming trends were emphasised strongly over the past 3 days, which is NFTs using the Metaplex standard, gaming, social tokens & DeFi. With the massive success of Axie Infinity, it is clear P2E is a strong use case for gaming and onboarding users – Axie Infinity has 2 million daily active users. Gaming & collectibles are culture and it is relatable. Once users have played and they are in these virtual economies, they are going to ask “what next?” 

Aside from crypto, gaming is the fastest growing entertainment category in the world. Play2Earn is the first phase of blockchain gaming, but we are yet to see traditional games using this concept.

Another interesting development will be the convergence of DeFi x Gaming to on board more users as well as brands engaging with their users through NFTs, which could replace loyalty programmes. NFTs are an entirely new distribution channel so expect more major brands to leverage NFTs, providing digital content, IP & digital identity. 

With the NFT & gaming craze, DeFi price action has been rather quiet, however other metrics continue to see strong growth beyond price. An interesting project, Neon recently raised their 1st round of $40m. A problem we see is the blue chip projects on Ethereum like Sushiswap & Curve aren’t able to bridge to Solana. Neon solves this by bringing EVM compatibility to Solana, without the need to modify contracts in most cases.

Apart from bridging blue chip dApps from Ethereum like market makers (Sushiswap), borrow/lend platforms (Aave,Compound), NFT marketplaces (Opensea) & yield aggregators (Yearn), Solana has it’s own ecosystem that is flourishing:

Serum – Market Maker

Mango – Borrow/Lend

Solanart – NFT Marketplace

Sunny/Jupiter – Aggregators

With the offerings we see in DeFi, it is hard not to see a future where banks & enterprise lose customers to these more user-centric protocols. These institutions don’t want to lose customers, so it is also likely we see DeFi used in the backend while FinTech sits on the frontend.

Wall street banks are looking for more crypto offerings beyond being spot long, and this has led to the use of DeFi, borrow & lending platforms. Pricing credit risk is extremely important for institutions and they want to know they are regulatory compliant and removing operational risk. 

Solrise, a decentralised asset management protocol, is now the 1st KYC’d DEX on Solana. With the use of Serum order books & Civic digital identity, this has been made possible, allowing for fund managersWe will likely see more OTC & KYC infrastructure being built. DeFi markets are actually much less opaque than TradFi and embracing this as a regulator will benefit them, using it to their advantage to monitor markets. 

Innovation happening across the DeFi space, although in the shadows of gaming & NFTs, will see massive growth in the next 6-12 months as we aim for the next milestone of $1T locked in DeFi.

Different users need different products, in different formats & this infrastructure will continue to be built out to take 1-10M users to 100M-1B users. To stay up to date with what is transpiring in the markets, make sure to subscribe to our blog for updates directly to your mail. 

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