Solana Sets Another Record, But How Good Is It Really?
In July, Solana broke several network records, overtaking Ethereum in fees and trading volume on decentralised crypto exchanges. The number of active daily addresses also increased, reaching 2.1 million.
Given these trends, industry experts predict that by 2030 Solana could surpass Ethereum and become the leading blockchain for smart contracts. However, independent researcher Flip Research has highlighted performance issues with Solana, describing the network as a “house of cards”.
A significant difference between Solana and other networks is the number of transactions per day per active user. Solana averages 217, while other networks don’t exceed 10. For instance, Ethereum averages 2.9 and Arbitrum 4.5.
DEX statistics on Solana are particularly noteworthy. In July, Raydium ranked first by weekly volume, peaking at $8 billion. However, Raydium pools show extremely low liquidity, with some not reaching $100.
The graph below shows the aggregate liquidity of tokens on the platform and the trading volume:
Additionally, bots are impacting the stablecoin market on Solana. A recent VISA report on Solana’s network activity noted that bots account for over 90% of the volume.
High network activity and trading volumes with low liquidity are largely due to bots promoting memecoins. Thousands of quasi-tokens appear on the network daily, inflating indicators to attract attention.
However, the mania for memecoins will eventually fade, and bot activity will decrease. When that happens, Solana’s network indicators could collapse like a house of cards.
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