Decrypting the Multiple Engines Behind Solana's Ecosystem Value Explosion
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Decrypting the Multiple Engines Behind Solana's Ecosystem Value Explosion
Most people are still underestimating Solana, which might not be such a bad thing after all.
Navigating Web3 tides with focused insightsAuthor: FLOW
Translation: Tim, PANews
Since late January, the crypto market has been in a downtrend, primarily driven by macroeconomic uncertainty and weak sentiment. However, recently we’ve observed signs of renewed upward momentum.
Although still early, multiple signals suggest we may be approaching an inflection point in cryptocurrency development. This trend prompted me to write an overview on the current state of the Solana ecosystem.
To me, Solana remains one of the strongest Layer 1 blockchains in the market. It is the fastest-growing ecosystem in crypto—a rare public chain with genuine organic growth advantages—and has already surpassed Ethereum on many on-chain metrics.
Without further ado, let’s begin.
Topics covered next:
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Network Status
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On-Chain Activity
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Ecosystem
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SOL Price Analysis
Solana Network Status
When starting our analysis, let's set price aside for now and focus on fundamentals. It should be noted that as a blockchain network, Solana appears to be entering the strongest phase in its history.
Solana Network Stability
In its early days, Solana faced criticism over network outages and instability. However, this seems to be in the past. Since February 2024, the network has experienced zero outages.
Lindy effect is a powerful force in crypto, serving as a key measure of trust and reliability. I believe this is precisely why Ethereum has won favor from major institutions so far: since its mainnet launch in 2015, the network has maintained a perfect record with no full-network downtime.
Solana still lags slightly in this regard, but its performance data is encouraging. As uptime improves, so does trust and reliability—this matters greatly.
Decentralization Level
Decentralization is a guiding principle of blockchains, distributing power and decision-making across nodes to enhance network resilience. A simple metric to gauge decentralization is the Nakamoto coefficient—the higher the number, the more decentralized the system. According to recent data from CoinTelegraph, Solana stands out with a Nakamoto coefficient of 21.
Another critical metric is client diversity. Multiple validator clients reduce single-point-of-failure risks, which is vital for blockchain maturity. Currently, only Ethereum has achieved an ecosystem with multiple independent validator clients coexisting. At present, Solana relies on just one validator client provided by Solana Labs (though Jito Labs’ version is essentially a fork, not an independent implementation). However, two independent clients are under development: Firedancer by Jump Crypto and Sig by Syndica. Once launched, these clients will significantly enhance Solana’s decentralization by eliminating reliance on a single codebase and introducing true client diversity.
SOL Staking Market Cap
Recently, Solana also surpassed Ethereum to become the blockchain with the highest staking market cap. On the surface, this indicates Solana currently leads in economic security. This figure will become even more significant once slashing mechanisms go live on mainnet.
(PS: I know the topic of "economic security" is controversial and involves simplifications, but for the purpose of this article, I'll treat staking market cap as a valid indicator.)
Developer Activity
Developer activity is another crucial metric to monitor. Ultimately, it is developer engagement that shapes the future landscape of blockchains. The latest report from Electric Capital shows that in 2024, Solana became the top ecosystem for new developer onboarding.
Last but not least, new initiatives aimed at improving Solana’s communication layer performance—such as DoubleZero—are emerging, marking another important vertical to watch closely in the future.
On-Chain Activity
Since early 2024, on-chain activity has been on a clear long-term upward trend, with numerous new projects launching and the DeFi ecosystem showing robust growth. This can be confirmed through various indicators.
TVL
Total Value Locked (TVL) climbed from less than $1 billion at the end of 2023 to a record high of over $15 billion by early 2025. Although TVL has pulled back slightly since then, it remains stable around $10 billion, demonstrating strong market resilience.
Stablecoin Market Cap
Solana has also seen strong growth in stablecoin inflows over the past year. At the time of writing, the stablecoin market cap on Solana has reached an all-time high of $13.2 billion. This clearly reflects growing adoption and trust in the network.
Transaction Fees
In terms of total fees collected last year, Solana ranked as the third-largest L1 blockchain, trailing closely behind Ethereum—further confirming high on-chain activity and strong market demand.
Ecosystem
The purpose of blockchains is to serve as foundational infrastructure for applications to build and thrive. Critics might argue that Solana’s success is merely due to Pump.fun and memecoin mania, but I believe this overlooks a deeper truth: Solana is the fastest-growing ecosystem in all of crypto, and its momentum is increasingly driven by real-world use cases.
In fact, I would argue that in the long run, the memecoin craze on Solana is more beneficial than harmful. This phenomenon acted like a carrot, successfully getting Phantom wallets installed on millions of phones worldwide. It effectively solved the “cold start problem” that every new network faces—how to break through the initial user base bottleneck.
With an established user base already onboarded, Solana now has a solid foundation to support more applications with real utility and sustain continued growth.
DeFi Maturing
DeFi on Solana is maturing. As mentioned earlier, Solana is now the second-largest Layer 1 blockchain by TVL and one of the few chains that surpassed its previous cycle’s all-time high TVL in 2025, continuing its prior growth trajectory. This reflects both high user stickiness and genuine market appeal.
The first wave of DeFi on Solana in 2021 was largely experimental and driven by market hype. Today, its growth is more sustainable, built on stronger fundamentals and clearer product-market fit.
Notable protocols worth mentioning include Jito, Kamino, Marinade, Radium, and Jupiter.
To illustrate Solana’s pace of development, here are some official updates shared on X for May:
Beyond that, we’re also seeing a new wave of DeFi primitives emerge, including:
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Real yield platforms such as RateX, Exponent Finance, Sandglass, or Pye Finance
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Liquidity restaking via Kyros
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New stablecoin base protocols in collaboration with Perena, Global Dollar, or KAST Card
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Yield aggregators like Lulo and Carrot
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Oracles based on Switchboard
There are many similar examples.
Solana continues to attract existing protocols—recently, 1inch launched on mainnet.
Rise of DePIN
Besides DeFi, we are witnessing the rise of DePIN. According to Dune data, 46.5% of the total market cap in DePIN is now concentrated on the Solana blockchain, hosting top projects like Helium, Hivemapper, and Render.
They have distributed over $400 million to participants—an enormous amount.
Breakthrough in Consumer Apps
While still early in the crypto space, there is strong momentum pushing into consumer applications. This is a challenging domain requiring extensive time and iteration to crack, but I’m optimistic seeing talent like Nikita Bier joining Solana as an advisor.
Currently, there is no better platform for crypto developers than Solana. The network is attracting top-tier talent and offering the most supportive initiatives: active ecosystem funds, frequent hackathons, and a strong developer culture where startup energy is genuinely alive. Data supports this vibrancy too: according to analyst Qw Qiao, Solana is poised to surpass other platforms and become the blockchain ecosystem with the most Alliance founders.
This makes me believe that among all Layer 1 blockchains, Solana is the most likely candidate to birth the first breakthrough crypto consumer application. If that happens, it would be highly beneficial for the network. This development warrants close attention.
Strong Community
So far, we’ve discussed many tangible metrics and elements for evaluating a network. But I’d argue Solana’s greatest strength is intangible: its community.
It’s often said that communities forged in adversity—like during the FTX collapse—emerge stronger and more resilient. I believe this is part of the story. Another key factor is the Superteam community, which excels at nurturing talent and maintaining momentum, consistently injecting vitality into the ecosystem.
To me, this is one of Solana’s secrets to success—one that cannot be replicated. No other blockchain project in crypto possesses this cultural fabric.
Institutional Adoption Accelerating
Institutional interest in blockchain networks is also accelerating. A recent example is BlackRock expanding its BUIDL fund to Solana after initially launching on Ethereum. There are many similar cases, but I believe this alone speaks volumes: confidence in on-chain infrastructure from traditional finance is growing steadily.
Moreover, Solana is likely to be the next cryptocurrency asset approved for a spot ETF in the U.S. According to current Polymarket predictions, the probability of approval in 2025 stands at 77%. ETF approval would further legitimize SOL as an investable asset and reinforce Solana’s market position as a trusted and credible network. Such regulatory recognition could open new participation channels for both institutional and retail investors, drawing more capital into the Solana ecosystem.
SOL Price Analysis
In terms of price action, SOL experienced its first hype cycle between 2020 and 2021. But like most emerging protocols at the time, its infrastructure was underdeveloped and its ecosystem immature. As the crypto market entered a bear market in 2022, this momentum quickly faded. The fallout from the FTX exchange collapse added further damage, leading many to label Solana a “dead project.”
Unlike most protocols struggling to recover, Solana came back stronger. After about a year and a half of consolidation, SOL broke out of its range for the first time, initiating the initial surge of a new bull market. In fact, it became one of the few Layer 1 protocols since 2021 to reach a new all-time high—this time backed by a real and robust ecosystem.
Currently, after dropping nearly 67% from its January all-time high, SOL has strongly rebounded to around $170. While there may be some short-term overbought conditions, the medium-to-long-term outlook remains highly explosive.
Among major L1s, SOL also demonstrates clear relative strength. The current SOL/ETH exchange rate has formed a definitive uptrend and is approaching its historical high.
What Next?
Of course, we can’t predict where prices will go. Instead, what we can do is establish a framework to better assess investment opportunities from a risk-reward perspective. One simple heuristic I like is comparing how much fundamentals have changed versus price changes for an asset between two points in time—A and B.
Right now, I see that you can buy SOL at roughly the same price the market paid during the 2021 frenzy. Back then, Solana was just a dream—without product-market fit and with a nascent DeFi ecosystem. Today, the network has a bright outlook: it’s the fastest-growing blockchain in crypto, with real users, actual use cases, and rising institutional interest.
Additionally, I believe market structure is evolving in a way where underlying networks will continue to accumulate the majority of market value.
From this perspective, here’s my thinking:
As more applications and projects continue to develop on crypto networks, with favorable regulation and rising adoption, the value of crypto networks will keep growing. Eventually, global investors will all want exposure to this space.
Besides Bitcoin, I believe Layer 1 blockchains will remain the core vessels for value accumulation (they are the operating systems of the crypto world).
Based on all the reasons outlined above, I believe among Layer 1 blockchains, Solana is in a particularly advantageous position.
Therefore, I am confident that for long-term crypto observers, SOL remains one of the best investment opportunities available.
Finally, I’ll leave you with this: most people are still underestimating Solana—and isn’t that a good thing?
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