Introduction

Since its establishment in 2017, Solana has risen rapidly in the fiercely competitive crypto industry, becoming a core competitor in the public blockchain sector due to its high performance, low latency, and unique Proof of History (PoH) consensus mechanism. It is often referred to as the “Ethereum killer.”

Currently, Solana ranks as the fourth-largest DeFi ecosystem globally, boasting unique technical advantages and a robust developer community. It has made significant progress in multiple sectors, including NFTs, blockchain gaming, and emerging fields like DePIN. These developments position it to further strengthen its market position in the coming years.

This report begins with the background and development trajectory of Solana, providing a systematic analysis of its current state, growth drivers, and specific segments while forecasting its potential growth path to offer comprehensive market insights for investors.

Solana Blockchain Technology Deconstruction

Unique PoH Mechanism

Solana’s underlying architecture is based on innovative technologies to solve the “blockchain trilemma”—the trade-off between scalability, decentralization, and security. The Proof of History (PoH) mechanism, developed by Solana’s founding team, is key to breaking through industry limitations, making Solana one of the high-performance public blockchains that support large-scale decentralized applications (DApps).

Specifically, the PoH mechanism introduces a Verifiable Delay Function (VDF): after performing computations, a small proof is quickly generated, which can be verified without recalculating. Unlike traditional blockchains that rely on Proof of Work (PoW) or Proof of Stake (PoS) to order transactions, PoH records the sequence of events, enabling nodes to independently verify the order without waiting for network-wide synchronization. This greatly increases transaction confirmation speed and reduces communication overhead during consensus.

With PoH, Solana achieves both security and high performance. For example, Solana can process nearly 70,000 transactions per second (TPS), far exceeding Ethereum’s 15-45 TPS. PoH also accelerates block creation, reducing Solana’s average block time to 400 milliseconds compared to Ethereum’s 12 seconds—a 30-fold improvement.

Key data comparison between Solana and Ethereum (Source: Gate Learn)

DPoS+PoH

DPoS, or Delegated Proof of Stake, complements the PoH mechanism to enhance computational efficiency in Solana’s smart contracts. Users delegate tokens to validator nodes responsible for maintaining network security and consensus. DPoS reduces the number of nodes involved, speeding up decision-making without significantly compromising decentralization.

The combined consensus mechanism minimizes latency during transaction validation, enabling Solana to maintain high throughput while balancing scalability, security, and decentralization.

Node election and block production process under DPoS (Source: learnblockchain)

Other Innovative Technologies

In addition to PoH and DPoS, Solana integrates several other innovations that enhance its ability to handle large-scale transactions and complex decentralized applications, further boosting its competitiveness.

Ⅰ. Tower BFT Algorithm
Tower BFT is an optimized Byzantine Fault Tolerance (BFT) algorithm built on PoH. It reduces communication costs and latency by using a PoH-optimized consensus model similar to PBFT. When nodes vote on forks, the votes are bound to a specific time interval, known as a “slot,” which lasts 400 milliseconds. As subsequent votes accumulate, it becomes exponentially harder to reverse earlier votes.

For instance, validators vote 32 times every 12 seconds. For these 12-second votes, the timeout can reach 2³² slots, approximately 54 years. Therefore, such votes are practically impossible to roll back. In contrast, the most recent votes only have a time of 2 slots, about 800 milliseconds. This design ensures that as new blocks are added, the finality of old blocks continuously improves, as the probability of confirming old blocks increases.

During runtime, Tower BFT leverages PoH’s time-stamping, allowing validators to quickly reach consensus based on minimal historical data, eliminating frequent inter-node communication. It acts like a “global clock” that enables each node to synchronize time precisely without needing mutual confirmation. It also allows validators to be rewarded for participating in the block production process, ensuring the coordination and efficient operation of the entire blockchain network.

Tower BFT consensus and data propagation (Source: binance）

Ⅱ. Turbine
Turbine is Solana’s block propagation optimization protocol. It fragments large blocks into smaller pieces and distributes them to multiple validator nodes, reducing network congestion. Like BitTorrent’s file-sharing method, Turbine breaks down data into small packets and relays them across nodes. This ensures faster data distribution and mitigates potential data loss with Reed-Solomon error correction, which allows reconstruction even if some data packets are missing, akin to completing a puzzle with some missing pieces.

Turbine’s role in Solana transactions（Source: coinchoice）

Ⅲ. Gulf Stream
The Gulf Stream mechanism enables validators to pre-process transactions before they are officially added to a block, replacing the traditional memory pool (mempool) management. This reduces transaction backlog and allows faster transaction confirmation, significantly boosting overall efficiency.

Like a forward in a soccer match positioning ahead of receiving the ball, Gulf Stream sends transactions to the next leader node in advance. This eliminates delays caused by waiting in the mempool, improving efficiency and reducing congestion—issues that often plague other blockchain networks.

Diagram of Gulf Stream’s principle

Developer Support

In addition to its technological strengths, Solana offers extensive tools and support for DApp developers.

Solana’s development toolkit includes various resources, such as the updated Solana Web3.js library, which features modular designs to improve development efficiency and experience. The library enhances type safety and supports modern JavaScript features like BigInt, the Web Crypto API, and AsyncIterators, helping developers reduce runtime errors and speed up the development process.

Also, Solana’s development environment is compatible with multiple programming languages, particularly Rust and JavaScript, facilitating an easy transition for Web2 developers to Web3. Rust, known for its performance and memory safety, is especially suitable for building complex smart contracts and high-performance decentralized applications on Solana.

For developers, the Anchor framework simplifies the DApp development process by providing tools to build, test, and deploy Solana smart contracts efficiently, lowering development barriers. Solana also offers extensive online resources, tutorials, and documentation to help developers quickly get started and build advanced applications. This robust support ecosystem makes Solana a popular choice for innovations in DeFi, NFTs, and Web3 applications.

Solana developer tools and support（Source: Solana）

Analyzing the Solana Virtual Machine (SVM) from the Perspective of EVM

Smart Contract Design

Security Performance

• EVM (Ethereum Virtual Machine)

In EVM, smart contracts are primarily written using flexible programming languages such as Solidity, but this flexibility comes at the cost of increased security risks. EVM operates under a PoS (Proof of Stake) consensus mechanism, requiring validators to stake ETH to obtain validation rights. However, this mechanism relies heavily on validators’ honesty, making the network vulnerable to attacks, especially if an attacker amasses enough tokens to manipulate the network.

Additionally, while EVM’s low hardware requirements reduce operational costs, they limit the network’s ability to handle a high volume of transactions. Node operators must continuously optimize their nodes to maintain compatibility and prevent chain splits.

Despite these challenges, Ethereum benefits from its early development, which has led to a wealth of community experience and a wide range of security auditing tools. These first-mover advantages and robust community support provide Ethereum with solid security performance and resilience.

• SVM (Solana Virtual Machine)

Regarding contract design, SVM utilizes high-performance languages like Rust, which is known for memory safety and support for concurrency. This reduces the likelihood of common vulnerabilities (e.g., “null pointer references”) and enhances the system’s robustness and resistance to DDoS attacks. As a result, SVM can maintain stable operations under changing internal or external conditions, reducing node operators’ need for frequent updates and maintenance.

Changes in decisions of a robust SVM classifier under different confidence levels（Source: SVM optimization of the inseparable points）

Looking back, Solana has faced significant security incidents, particularly multiple outages in 2021-2022. However, during the bear market, Solana focused on resolving network interruptions and improving both network stability and ecosystem expansion.

Compared to EVM, SVM’s auditing tool, Anchor, offers a convenient toolkit, but its maturity is still limited. For example, the misuse of certain account protection mechanisms within the Anchor framework can lead to conflicts with program-derived accounts (PDA), enabling attackers to block users from initiating specific transactions. This reveals that Solana has some potential security vulnerabilities in practical applications, with room for improvement in defending against complex attacks.

Development Experience

Tokens on the Solana Blockchain

What is SOL?

SOL is the native cryptocurrency of the Solana network. It serves multiple purposes, including paying transaction fees, participating in staking, and making governance decisions. SOL follows the SPL protocol on the Solana blockchain, which is similar to the ERC-20 standard on Ethereum.

Like other blockchain networks, SOL’s primary function is to cover transaction fees generated during network interactions and the execution of smart contracts. More importantly, SOL is key in Solana’s PoS (Proof of Stake) consensus mechanism. By staking SOL, holders contribute to network security and earn rewards. Additionally, SOL holders can participate in governance by voting on important topics, such as platform upgrades and parameter adjustments. Validators earn SOL rewards for verifying and confirming transactions, incentivizing more nodes to join the network.

Solana’s Token Model

Solana’s tokenomics is designed to support the network’s sustainable growth. The initial supply of SOL was 489 million tokens, with no fixed supply cap. Instead, Solana follows an inflationary model, issuing new tokens to reward validators and stakers.

Solana started with an initial inflation rate of 8%, which decreases by 15% annually, to reduce it to 1.5% by 2031. The network also employs a token-burning mechanism, where part of the SOL used to pay transaction fees is permanently destroyed, reducing the circulating supply and increasing token scarcity. This creates a positive feedback loop within the token economy.

SOL Distribution and Incentives

To promote the growth of the Solana ecosystem, the network offers various developer incentives and grant programs. These incentives, often distributed as SOL tokens, encourage developers to build and expand decentralized applications (DApps) on Solana. These initiatives foster rapid project development and drive innovation and expansion, strengthening the Solana ecosystem.

SOL Token Distribution Structure (Source: cointelegraph)

The Price History of SOL

Early Stage

• March 2020: The Solana project launched, introducing its unique Proof of History (PoH) consensus mechanism to improve transaction speed and reduce fees.
• April 2020: The SOL token went live with an initial price of about $0.20. At the time, the project received little attention, and both trading volume and awareness were low.

Rapid Growth

• January 2021: SOL’s price rose modestly from $0.20, surpassing $1, marking its initial recognition by the market.
• March 2021: With the rise of DeFi, significant capital flowed into Solana, pushing SOL’s price to $10.
• May 2021: As the ecosystem matured, the market saw Solana as a viable Ethereum competitor, earning the nickname “Ethereum killer.” During this period, SOL surpassed $50 for the first time.

Peak Period

• August 2021: A successful NFT auction showcased Solana’s high throughput and low transaction fees, attracting artists and investors and driving the price to $80.
• September 2021: Solana experienced a major network outage that halted transactions for several hours, leading to a price drop to $30. This incident raised concerns about the reliability of the PoH mechanism and network stability.
• October 2021: Despite setbacks, the Solana ecosystem thrived, hosting major DeFi and NFT projects like Serum and Raydium. In this favorable market environment, SOL reached an all-time high of $260, solidifying its position in the blockchain space.

Correction and Rebound

• January 2022: A market-wide correction saw SOL drop to $100, with investors becoming more cautious about future trends.
• February-June 2022: SOL’s price fluctuated between $30 and $60 amid a bearish market sentiment, though Solana continued to upgrade its network and enhance performance.
• November 2022: As the crypto winter deepened, SOL’s price fell to around $10, reflecting broader market challenges.

Second Recovery

• Mid-2023: Market sentiment improved, and new projects like Jito boosted confidence, causing SOL’s price to recover to $30-$50.
• Early 2024: With the rollout of significant network upgrades, transaction efficiency improved, and SOL’s price rebounded to $100.
• September 2024: Increased investor interest and a surge in network activity stabilized SOL’s price at $150. The market remains optimistic about Solana’s future, expecting further growth in decentralized finance (DeFi) and Web3 sectors.

SOL Token Price Trend Over the Years (Source: Solana - Blockchain.com)

Latest Trends of Solana

As of October 2024, Solana has made significant progress over the past year. Following Visa’s announcement to expand its stablecoin functionality on the Solana blockchain, SOL’s price surged, reflecting strong market momentum. Solana’s market capitalization now stands at approximately $73.3 billion, ranking fifth among major blockchain platforms and becoming a top choice for onboarding off-chain users.

The chart below shows Solana’s price trends and fluctuations over the past 24 hours and the past week. The gray area represents the Bollinger Bands, which measure volatility in daily and weekly price changes—the larger the gray area, the higher the market volatility.

SOL Price Data (Source: Solana’s Price Increased More Than 6% Within 24 hours - Benzinga)

As shown below, in the past 30 days, Solana’s ecosystem recorded 65.61 million total active users (Total UAW, Unique Active Wallets), representing a 39.54% increase from the previous period, highlighting a significant rise in user engagement. The total number of transactions reached 340.3 million. However, the total DApp transaction volume dropped by 36.94% to $2.67 billion, possibly reflecting volatile market conditions and shifting user behavior.

The total number of registered DApps in the Solana ecosystem has now reached 344, with 13 new ones added in the past month. This indicates continuous growth in its developer community and suggests that Solana’s ecosystem remains on a rapid development trajectory.

Solana DApp Data as of October 14, 2024 (Source: Blockchain.com)

Solana DAO

Governance Model of Solana

DAOs on Solana consist of several key components, including governance tokens, smart contracts, and treasuries.

Governance tokens are the foundation of a DAO, representing ownership and voting rights, allowing holders to participate in decision-making. For example, token holders can vote on major project proposals. DAO treasuries, often managed through DeFi protocols, ensure the secure and efficient management of funds.

Many DAOs on Solana adopt delegated or tiered voting systems, where participants can delegate voting rights to trusted representatives, enhancing governance efficiency. This flexible governance model allows Solana’s DAOs to adapt to different project needs.

Governance Participation Interface for Solana DAOs（Souce: DAOs and Governance | Solana）

Solana DAO Tooling

Building a DAO on Solana relies heavily on smart contracts and using SPL (Solana Program Library) tokens. Solana’s high-performance blockchain allows DAO smart contracts to process transactions rapidly and with low fees, essential for large-scale decentralized governance. SPL tokens serve as the core infrastructure, enabling voting, governance, and financial activities within the DAO.

Solana’s developer tools enable automated DAO management. Developers can write smart contracts using programming languages such as Rust or C, paying special attention to voting mechanisms, fund allocation, and member management. Maintaining smart contracts is also critical, requiring developers to update them regularly to address evolving needs and potential vulnerabilities.

Examples of DAO Governance Tools on Solana (Source: Medium）

Current State of DAO Development

DAOs on Solana are widely used across various sectors, from DeFi and NFTs to collective decision-making and investment funds. For example, Mango Markets manages its decentralized exchange through a DAO, using MNGO tokens to let users vote on protocol upgrades and other decisions. Similarly, the Solana Foundation is key in funding projects, maintaining the network, and fostering ecosystem growth.

However, DAOs on Solana also face challenges. One of the most significant risks involves attacks on governance mechanisms. The governance process could be manipulated if compromised, undermining fairness and transparency. Smart contract vulnerabilities are another potential risk, as hackers could exploit them, leading to financial loss or operational disruptions.

Solana DAOs typically adopt multi-layered security strategies to mitigate these risks. These include thorough, smart contract audits, multi-signature mechanisms, and improved voting systems to ensure governance transparency and greater resilience against attacks.

Interface of Mango Markets, a Solana-Based Trading Platform (Source: Mango.markets)

Key Ecosystem Sectors

DeFi Sector

In Solana’s DeFi ecosystem, major projects like Jupiter, Kamino, and Raydium cover essential areas such as trade aggregation, liquidity provision, lending, and decentralized staking. For example, Jupiter, as Solana’s primary DEX aggregator, handles 80% of trading volume, offering efficient trade route optimization and low fees, making it the preferred platform for users. Kamino provides advanced lending services, allowing users to manage liquidity with optimal interest rates. Raydium not only offers liquidity but also supports various DeFi applications within Solana through its automated market maker (AMM) model, solidifying its role as a core decentralized exchange in the ecosystem.

Tweet from Solana founder Anatoly Yakovenko (Source: X (@aeyakovenko))

In 2023, Solana’s total value locked (TVL) grew by 91%, increasing from $98 million to $190 million. Marinade Finance, a leading protocol in the decentralized staking (LSD, Liquid Staking Derivatives) sector, captured $120 million in locked assets. These top projects highlight the Solana DeFi ecosystem’s strong growth potential and market competitiveness, attracting more developers and users, boosting innovation, and driving ecosystem activity.

LST Projects

• Jito

Jito is a liquidity staking protocol in Solana’s ecosystem focused on optimizing the SOL staking experience. It allows users to stake SOL and receive liquidity tokens like jitoSOL, enabling them to enjoy staking rewards while also utilizing their assets flexibly within the DeFi ecosystem. This design improves capital efficiency and enhances liquidity options for users.

A key feature of Jito is its governance mechanism, which grants JTO token holders the ability to shape the future of the Jito network through decision-making. This ensures the protocol aligns with user needs and the broader Solana ecosystem. As part of the ecosystem, Jito’s design and goals position it for sustained growth in the DeFi space.

Official Jito Homepage (Source: jito-network.pro)

• Sanctum

Sanctum is another liquidity staking protocol within Solana, allowing users to stake SOL and receive liquidity tokens like sancSOL. It enables users to earn rewards from staking and ensures they can continue engaging with other DeFi activities. Sanctum emphasizes decentralized governance, giving token holders a say in the project’s development, ensuring alignment with user needs and the Solana ecosystem’s trends. By optimizing staking experiences and enhancing liquidity, Sanctum drives growth within the DeFi space.

Sanctum Entry Page (Source: Sanctum Guides)

Trading Platforms

• Jupiter

Jupiter serves as Solana’s primary DEX aggregator, consolidating multiple decentralized exchanges to help users find the best prices across platforms and minimize trading fees. This enhances transaction efficiency and improves the user experience, particularly in a fragmented liquidity environment within DeFi.

Jupiter’s design aims to boost liquidity across the entire Solana network, ensuring users can switch quickly and efficiently between different markets while enjoying the best prices and lowest fees. Managing about 80% of Solana’s trading volume through its aggregation function, Jupiter has become the go-to tool for executing trades. This multi-functional platform is more than just a trading hub—it is a vital pillar supporting liquidity and optimization within the Solana ecosystem.

Official Jupiter Page (Source: Jupiter |Swap)

Perpetual Contracts

• Drift

Drift is a decentralized derivatives trading platform focused on slippage-free perpetual contract trading. It allows users to trade with leverage while offering automated liquidation and risk management tools to enhance asset utilization. These features ensure that users’ assets remain protected from unnecessary losses, even in volatile market conditions, creating a robust and efficient environment for derivatives traders.

The Drift Protocol incorporates an automated market-making mechanism, improving liquidity management and offering better price discovery and stable liquidity support. Additionally, Drift optimizes the user experience through a user-friendly interface and integrated analytics tools, helping traders make quick decisions and strengthening Solana’s competitive position in the derivatives market.

Drift Homepage (Source: Drift | Trade Perpetual Futures)

Lending Platforms

• Kamino

Kamino is focused on smart liquidity management and lending services within the Solana ecosystem. Its intelligent interest rate management system has quickly gained attention and adoption in DeFi. By combining automated strategies, Kamino dynamically adjusts borrowing rates to ensure users’ assets maintain optimal performance during market fluctuations. This smart rate management improves capital efficiency and simplifies user operations, helping borrowers achieve higher returns across different market conditions.

Kamino also features a streamlined user interface and advanced risk management tools, making it accessible for novice and experienced users. The platform leverages Solana’s high-performance blockchain to offer low fees and high throughput, ensuring users can efficiently manage their lending activities in a fast and cost-effective environment. This establishes a strong competitive edge in the DeFi space.

Kamino Homepage (Source: Lending | Kamino Finance)

NFT Digital Assets

As of October 2024, data from CryptoSlam shows that total NFT sales on Solana have exceeded $6 billion, with more than 50 million transactions on-chain, involving approximately 5 million buyers and 2 million sellers. Historical records indicate that in December 2023 alone, NFT sales on Solana surpassed $365 million, setting the highest monthly sales record.

Comparison of NFT Minting Costs Across Different Blockchain Networks (Source: Gate Learn)

Solana’s NFT market continued to grow rapidly throughout 2024, driven by low transaction fees and high network performance. Compared to Ethereum, Solana’s lower fees attract a large number of artists and collectors, making it an ideal platform to avoid high gas fees. This economic advantage reduces the barrier to entry and significantly accelerates the expansion of Solana’s NFT ecosystem.

Successful NFT projects like Mad Lads exemplify the platform’s appeal by quickly gaining a large user base through innovative design and interactive elements. As of now, over 110 million NFTs have been minted on Solana, demonstrating the platform’s strong influence and potential for growth, positioning it as a top choice for new NFT projects.

Additionally, Magic Eden, the most popular NFT marketplace on Solana, facilitates trading across a wide variety of assets, from digital collectibles to virtual real estate. This marketplace plays a key role in establishing Solana’s leadership in diversified NFT trading and lays the foundation for future creative projects.

Solana’s Largest NFT Project – Okay Bears (Source: OpenSea)

Memecoin Sector

In the blockchain industry, memecoins are digital currencies inspired by internet culture, often carrying humorous or satirical themes. Solana has launched several successful memecoin projects, attracting significant community engagement and trading volume. These projects efficiently bring users into the ecosystem and promote its expansion.

Popular Memecoin Projects on Solana (Source: Gate Learn)

Bonk is recognized as the first widely popular memecoin on Solana. It sparked enthusiastic discussions across and beyond the ecosystem, serving as a prime example of a community-driven project. Projects like Bonk often use airdrops to generate buzz and attract network traffic, contributing significantly to Solana’s growth. Memecoins are now an essential part of Solana’s ecosystem, expanding its user base.

Representative Memecoin Projects on Solana

(1) SAMO
SAMO, founded in 2021, boasts a community called “The Samo Famo.” It aims to promote the Solana ecosystem and educate users about blockchain self-custody, fostering a better understanding of the decentralized world. As one of the pioneering dog-themed memecoins on the Solana chain, SAMO draws parallels to Ethereum’s Dogecoin.

(2) BONK
Similar to SAMO, BONK is another dog-themed memecoin. The project gained rapid popularity through an airdrop, distributing 50% of its tokens to the community, with the rest allocated to development, marketing, liquidity, and its DAO. BONK is vital in Solana’s DeFi space, driving community engagement and ecosystem activity.

(3) BERN
BERN leverages Solana’s SuperToken technology and serves as a companion token to BONK. It introduces features like a transaction tax, where a portion of tokens is redistributed to holders, and some are burned, increasing scarcity over time.

(4) WIF
Featuring a Shiba Inu mascot, WIF became a fast-rising memecoin on Solana, achieving a notable milestone by becoming the first Solana memecoin to surpass $3 in price. This accomplishment highlights its significant impact in the market.

These memecoin projects demonstrate Solana’s potential as a high-performance, low-cost platform for emerging trends. They increase community activity and contribute to Solana’s broader development in the DeFi space.

GameFi / SocialFi (SoFi)

Top GameFi Projects on Solana (Source: GameFi)

With support from Unity SDK and Unreal SDK, Solana has established a strong presence in Web3 game development, enabling developers to build high-performance blockchain games more easily. For example, Stepn, a popular Web3 social project, is the first “move-to-earn” mobile NFT game based on Solana. Stepn allows users to earn tokens through outdoor activities like walking, jogging, or running, aiming to bring millions into the Web3 era while promoting carbon neutrality.

In addition to Stepn, several other blockchain games on Solana have attracted large user bases:

(1) Star Atlas
Star Atlas is a sci-fi metaverse game built on Solana, where players explore space, engage in economic management, and participate in space battles to earn resources and virtual assets like ships, planets, and equipment. These assets are tradable as NFTs, and the game integrates DeFi and NFT elements, offering players a unique way to earn income through gameplay.

(2) Aurory
Aurory is a turn-based RPG game where players explore, battle, and collect NFT characters.
It adopts a play-to-earn (P2E) model, allowing players to earn the AURY token by completing quests and participating in competitive battles. These tokens can be used for in-game purchases or traded on the marketplace, creating a unique game economy.

(3) Genopets
Genopets combines move-to-earn (M2E) and play-to-earn (P2E) models. Players grow digital pets (Genopets) by engaging in physical activities. As these pets evolve through the players’ movements, they can be sold or used in battles.
Genopets offers a unique blend of real-world exercise and blockchain gaming, encouraging users to maintain a healthy lifestyle while earning crypto rewards.

(4) Hungry Robot Chicken Club (HRCC)
HRCC is an NFT-based game with a robot chicken theme that merges NFTs and DeFi mechanics. Players earn rewards by participating in game activities with their NFT chickens. With its entertaining design and reward structure, HRCC has attracted a large user base.

(5) MonkeyBall
MonkeyBall is a multiplayer football game on Solana where players use NFT monkey characters to compete in matches. Winners earn token rewards, and characters can be upgraded over time. The game’s unique design and competitive nature have quickly gained attention within the Solana ecosystem.
These games leverage blockchain’s transparency and decentralization while offering innovative play-to-earn models, attracting players and investors alike. They also provide users with opportunities to earn income through gaming, further driving adoption and growth within Solana’s GameFi ecosystem.

Web3 Payment Wallets

Solana Pay Payment Process Diagram (Source: Gate Learn)

Solana has made significant strides in the payments sector, leveraging its low gas fees to become a preferred platform for stablecoin transfers, particularly in cross-border payments. Solana’s integration with traditional payment systems like Shopify has further streamlined the payment experience for merchants and users, reducing transaction costs. The launch of crypto payment solutions such as Helio and Solana Pay has accelerated the adoption of decentralized payment ecosystems, enhancing the feasibility and convenience of Web3 wallets.

As Solana expands its payment infrastructure through integration with more platforms and traditional financial institutions, its market influence continues to grow. Notably, collaborations with PayFi-related projects have paved the way for Solana’s entrance into DeFi payment applications. Huma is another noteworthy project that leverages Solana’s high-performance network to deliver reliable and stable payment solutions. The introduction of Paypal USD further strengthens the ecosystem with regulatory compliance and ease of use, broadening Solana’s application across various payment scenarios.

Solana’s advancements in wallet functionality are equally impressive. Its newly launched Blink wallet offers a streamlined and efficient payment experience. Integration with social media platforms like Twitter (X) enhances the accessibility and usability of Web3 payments, promoting wallet adoption across mainstream social platforms. With robust multi-storage solutions, Blink strengthens Solana’s competitiveness within the payment ecosystem.

These payment solutions simplify users’ payment experience and help merchants reduce transaction costs, positioning Solana’s infrastructure as a standout in the Web3 space. As Solana continues to integrate with more platforms and payment institutions—particularly through support for decentralized payment applications (like Blink and Action) and mainstream payment solutions (such as Paypal USD)—the influence of Solana’s payment wallets is expected to grow further.

Emerging Sectors

DePIN

DePIN, or Decentralized Physical Infrastructure Networks, refers to decentralized hardware networks supporting real-world infrastructure, including, but not limited to, wireless networks, computing resources, mapping data, and sensors. Solana’s high performance has made it the platform of choice for many key DePIN projects, contributing to the development of a widespread decentralized network as these projects grow.

Top 10 DePIN Projects on Solana (Source: coingape)

Representative DePIN Projects on Solana

• Helium

Helium is the world’s largest decentralized wireless network, which has migrated to the Solana blockchain. It has deployed nearly 1 million hotspots across 192 countries, offering affordable 5G services to attract a large user base.

Solana’s Introduction to Helium (Source: Solana）

• Render

Render Network provides a decentralized marketplace for distributed GPU computing, supporting high-performance tasks such as artificial intelligence (AI) and media rendering. Since migrating to the Solana blockchain, Render has processed tens of millions of frames of image data, demonstrating its strong potential in distributed computing. Particularly in providing a decentralized market for GPU computing resources, Solana’s high throughput and low latency technical advantages enable Render to process these tasks more efficiently, further promoting its application in AI computing. This provides broad development space for future AI-driven DApp development, continuously driving the evolution of the Web3 ecosystem.

Active Nodes on the Render Network (Source: Flipside Crypto Report)

• Hivemapper

Hivemapper is a decentralized mapping network that incentivizes users to collect map data using onboard cameras, challenging traditional mapping monopolies.

Hivemapper Introduction on Social Media (Source: SolanaFloor/status）

Mobile Devices Sector

Solana has ventured into the Web3 hardware market with the launch of the Saga phone, a high-end 5G smartphone designed with Web3 technology at its core. The Saga phone offers secure seed phrase storage and advanced performance, providing a convenient gateway to Web3 applications. For example, Helium Mobile networks can integrate with the Saga phone, delivering low-cost 5G connectivity and showcasing Solana’s potential in hardware.

Saga Phone Model (Source: eBay)

RWA Innovations

RWA (Real World Assets) focuses on the tokenization of traditional assets such as real estate, bonds, and stocks, enabling their decentralized management on-chain. This process enhances liquidity and reduces intermediary costs. Solana’s efficient, low-cost blockchain technology has made significant progress in the RWA sector.

For instance, Maple Finance, a decentralized lending platform, uses Solana’s infrastructure to bring real-world financial assets, such as corporate loans, on-chain. The platform allows institutional borrowers to conduct lending and asset management through smart contracts, enhancing transparency in traditional lending processes. Solana’s fast settlement times and low fees enable RWA projects like Maple to operate more efficiently.

Over the next five years, as financial institutions increasingly embrace blockchain technology, the RWA sector is poised for explosive growth. This expansion will enhance the security, transparency, and efficiency of traditional asset management in the digital realm, while simultaneously drawing more institutional investors into the blockchain ecosystem.

Solana RWA Landing Page (Source: Solana Foundation）

SWOT Analysis

Strengths

1. High Throughput: Solana incorporates a timestamp variable, using global time to verify the chain’s correctness, greatly reducing transaction time and cost. This technical architecture enables it to process up to 70,000 transactions per second.
2. Modular Design: The consensus mechanism combining PoH and PoS effectively reduces network communication costs, enhances DDoS attack resistance, offers flexible scalability and multi-language support, and accelerates the development of the Solana ecosystem.
3. Low-Cost Advantage: Compared to Ethereum, Solana’s Gas fees are negligible, especially in high-load transaction environments where its throttling advantage is evident. This low-cost structure has led Solana’s widespread adoption in NFT, gaming, and DeFi applications.

Weaknesses

1. Community Trust Issues: While Solana has significant performance advantages, it has experienced multiple network outages during its development, especially during surges in transaction volume. These events have caused irreversible negative publicity regarding network stability and community reputation. The existence of security issues not only affects user experience but also weakens Solana’s credibility among institutional investors.
2. Centralization Problem: Solana’s high performance relies on many validator nodes with high hardware requirements, concentrating validators among entities with high-performance hardware. This imbalance may pose potential governance attack risks.
3. Token Model Limitations: The SOL token has some inflationary characteristics, issuing new tokens through a staking mechanism. However, this inflation rate may dilute the value of existing tokens, especially in cases of unstable demand, which can exacerbate price volatility. Moreover, due to the high proportion of SOL tokens being staked, a large-scale withdrawal of institutional funds could negatively impact Solana’s ecosystem.

Opportunities

1. Market Expansion Potential: With the popularization of Web3 applications, Solana’s high throughput and low fees provide enormous expansion opportunities in high-frequency trading and DeFi applications. Compared to Ethereum L2 solutions, Solana has greater expansion potential.
2. Evolution of Regulatory Environment: As global regulations for crypto assets improve further, Solana may benefit from clearer regulations. Especially given the trend of large-scale application demands, the regulatory environment’s opening up is expected to attract more institutional funds.

Threats

1. Industry Competition: The blockchain technology field is developing rapidly, constantly emerging new concepts. Solana always faces competition from other high-performance blockchains, especially established ones like Ethereum. Due to their early market entry and large user base, they have a clear first-mover advantage. Solana may lose market share if it cannot continuously innovate or keep up with competitors’ innovation speed.
2. High Market Volatility: In the cryptocurrency market, Solana’s development and value assessment have always been affected by overall market sentiment and crypto market volatility. Especially during market instability, panic selling emotions can trigger a sharp drop in SOL coin prices.

Conclusion

Solana’s journey has been marked by ups and downs, evolving from its initial acclaim as an “Ethereum killer” to demonstrating remarkable resilience in network stability challenges. This trajectory showcases Solana’s robust capacity for innovation in blockchain technology. Amid fierce competition from established players like Ethereum and Polkadot, Solana has distinguished itself with its high-throughput, low-cost technical architecture. This positions it favorably for future applications in high-frequency trading and large-scale scenarios. For sophisticated investors, Solana’s ecosystem extensibility and technical risks present both opportunities and challenges in future investment tracks. As Solana’s user base grows, it’s anticipated that its market share will continue to expand rapidly, reflecting a positive trend in adoption and usage.


References

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