Solana continued growing strongly, though some metrics cooled off from summer peaks. The ecosystem has demonstrated remarkable growth and resilience overall through the year, although there has been some moderation in key metrics quartering recent months. Solana’s Breakpoint event in September showcased a number of exciting technical developments and applications that continue to underscore our excitement about our Solana investment.
Monthly users surged to 66 million (up from 6 million at the end of 2023). That's an 11x increase in less than a year.
Solana now accounts for 63% of all new tokens appearing on exchanges - showing it's the go-to platform for launching new projects.
A lot of Solana's activity comes from "memecoin" trading - digital tokens often created as jokes. While this might seem frivolous, it demonstrates that Solana is so easy and cheap to use that anyone can create and trade tokens. Think of memecoins as the "gateway" that introduces new users to crypto. Many will eventually explore more serious applications.
The explosion of new tokens on Solana shows the platform is easy to use, but quality is mixed. Overall, memecoin trading loses money—we estimate retail traders lost about $1 billion annually during the June peak.
Critics say this isn't healthy or sustainable. Supporters compare it to casino gambling, where losses are much larger ($250billion/year), making this relatively small. Either way, activity has slowed recently, possibly due to trader fatigue, depleted funds, or typical summer market slowdowns.
We don't trade memecoins and it's not why we're excited about Solana. But this activity proves an important point.
Solana is easy and cheap to use. More importantly, it's bringing in new users who now have Solana wallets.
Memecoin users are likely to explore other applications on the platform—payments, DeFi, and DePIN (decentralized physical infrastructure). That's what really excites us about Solana's future.
Solana Breakpoint did a great job highlighting some of those applications and the continued technical advancements that will enable the next generation of developers and applications. Breakpoint was held in Singapore this year and a number of our investment team members took the time to attend and participate in the various panels and debates. The level of active engagement and vigorous discourse there was invigorating.
While there were many announcements, we thought it would be helpful to highlight the few that we found most meaningful.
● The Firedancer validator client is now live on testnet, boasting the capability to process over 1 million transactions per second.
● ZK Compression significantly reduces data storage costs on Solana by up to 1,000x, utilizing zero-knowledge proofs to verify off-chain data.
● PayPal’s Head of Crypto highlighted Solana as a superior payment solution compared to Ethereum due to its scalability.
● Franklin Templeton announced plans to launch a $900B private credit fund on Solana.
● Société Générale is expanding its EURCV (Euro-denominated Stablecoin) to Solana.
● Introduction of the “SolanaSeeker” – a new mobile device that is web3-optimized with enhanced security.
● Metaplex introduced “Aura”, a decentralized network for indexing and data availability on Solana, enhancing the Metaplex Protocol with efficient data storage and asset management for developers.
We are squarely focused on the fundamentals because we know if we are right on the fundamentals, our investment will appreciate commensurately. While early, year-to-date this has so far proven to be true.
As we move into Q4 2024 and beyond, we remain optimistic about Solana’s trajectory, while acknowledging the recent moderation in growth. The ecosystem’s ability to attract institutional players, the fast cadence of new product and application launches, as well as the robust technical innovations, positions Solana favorably for long-term success.
As always, we remain committed to providing transparent and balanced insights into the performance of our investment in Solana. We greatly appreciate your continued trust and support.
This letter is for informational purposes only and does not contain all information pertinent to an investment decision. Nothing in this letter constitutes an investment recommendation or an offer of investment advisory services. This letter cannot be relied upon in making an investment decision. Nothing contained herein constitutes an offer to sell, or a solicitation to buy, any securities. This letter contains information Solana Company believes to be reliable, and has been obtained from sources believed to be reliable, but Solana Company makes no representation or warranty (express or implied) of any nature, nor accepts any responsibility or liability of any kind, with respect to the fairness, accuracy, completeness, or reasonableness of the information or opinions contained herein. Analyses and opinions contained herein (including market commentary, statements or forecasts) reflect the judgment of Solana Company as of the date this letter was published and may contain elements of subjectivity (including certain assumptions) or be based on incomplete information. Investment decisions cannot be based solely on the graphs and/or charts presented herein.
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