The Recovery Path of the Solana Ecosystem: Analysis of Key Indicators and Driving Factors

Introduction

The Solana ecosystem has shown a strong recovery momentum after experiencing significant setbacks. The price of $SOL has rebounded from a low of $9.6 in December 2022 to its current price of $71, and the total locked value (TVL) has recovered from $210 million to $812 million. This report will delve into the key factors driving the recovery of the Solana ecosystem.

Technical Features of Solana

Solana adopts a unique Proof of History ( mechanism, achieving high throughput, low transaction fees, and fast block confirmations. Additionally, Solana reduces the dependency of token prices on transaction frequency by charging state rent and validator voting fees, while also increasing the costs of deploying smart contracts.

In terms of decentralization, Solana has also made significant progress. Currently, there are approximately 3,000 nodes distributed across 392 data centers in 31 countries worldwide. According to the Nakamoto coefficient, Solana's degree of decentralization reaches 21, surpassing mainstream public chains like Bitcoin and Ethereum.

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Current Status of the Developer Community

Despite the impact of the FTX collapse, the number of developers in the Solana ecosystem remains high. According to a report by Electric Capital, the number of active developers on Solana was approximately 2,540 in March 2023. Although this is a decrease from 2,648 in December 2022, the number of core full-time developers has remained stable, demonstrating the ongoing vitality of the ecosystem.

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Capital Flow Analysis

Analyzing the data from CoinGecko and DeFiLlama reveals that the outflow speed of assets in the Solana ecosystem is significantly slower than the rate at which token prices are falling. Notably, during the period when FTX and Alameda Research were approved to sell staked $SOL assets, the token price actually showed a stable upward trend. This indicates that the Solana ecosystem is gradually shaking off the negative impact of the FTX bankruptcy, and the market holds an optimistic view of its future development.

Within the Solana ecosystem, the liquid staking protocols Marinade and Jito occupy the top two positions in TVL rankings. These two protocols adopt different profit optimization methods to offer users attractive yield rates.

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On-chain Activity Analysis

Solana's daily trading volume continues to lead other blockchains. The main on-chain transactions come from trading applications, but unlike Polygon or Base, Solana's on-chain activity presents a more diversified ecosystem.

It is worth noting that the speed and cost advantages of the Solana network are very significant. In the past month, the total number of transactions on Solana was approximately 825 million, which is 24 times that of Ethereum, but the total Gas consumption was only 62,735 $SOL), around 4.3 million USD(, with an average transaction cost of only 0.005 USD. In contrast, the average transaction cost for Ethereum during the same period reached 7.89 USD.

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Market Development and Technological Advancement

In 2023, Solana made significant progress in market expansion and technological innovation.

1. E-commerce giant Shopify and payment giant Visa have successively integrated Solana payment functionality.

2. Launch state compression ) State Compression ( technology, significantly reducing the cost of NFT minting.

3. Launch EVM-compatible solution Neon and Solidity smart contract compiler Solang.

4. The third-party verification client Firedancer has been launched on the test net, aiming to further enhance network efficiency.

FTX/Alameda Research Liquidation Progress

The liquidation process of FTX/Alameda Research is still ongoing and requires continuous attention to its potential impact on the price of $SOL. According to the court-approved liquidation plan, FTX can sell up to $50 million worth of crypto assets per week, with a cap that can be increased to $200 million.

The Solana Foundation report shows that approximately 58 million $SOL tokens were sold to Alameda Research and FTX. Of these, 10% have been unlocked, 7.5 million will be unlocked in March 2024, and the remaining portion will be unlocked linearly month by month before 2028.

According to the FTX bankruptcy report, FTX still holds $11.62 billion worth of $SOL and approximately 55.76 million tokens of ). Although the specific liquidation method is still unclear, the impact should be limited since these tokens are currently not in circulation.

Conclusion

The recovery of Solana is attributed to the interplay of several factors: its unique technical architecture, the resilience of its developer community, sustained interest from investors, technological innovations, and the gradual waning of the impacts of the FTX bankruptcy. These factors not only demonstrate Solana's ability to innovate and adapt in a dynamic blockchain environment but also highlight the growing trust from developers and investors, allowing Solana to maintain its leading position in the blockchain space.