Key Insights & Takeaways
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Solana has achieved an impeccable record of 100% uptime, experiencing a seamless year without any service interruptions. The sole outage occurred in February, leading to a network offline duration of approximately 19 hours.
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By the end of 2023, the Solana ecosystem's Total Value Locked (TVL) surged to an unprecedented peak, hitting a milestone of $1.48 billion.
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Solana's decentralized exchange (DEX) achieved its highest recorded volume of $1.21 billion – the resurgence of DEXs correlated with substantial token airdrops facilitated by Solana's DeFi protocols Pyth and Jito.
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October 2023 saw significant unstake activity in the Solana network. A sharp 50.3% surge raised curiosity when around 19.6 million SOL was rapidly unstaked by major entities like a16z and Alameda / FTX by the end of the 512 epoch.
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In October, significant changes occurred in the Solana validator landscape: CoinbaseCloud02 doubled its stake, two anonymous validators rose to the top with stakes of 8 million and 11 million SOL, and Figment secured a 5.5 million SOL delegation from FTX, reshaping the top Solana validators list.
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The skipped slot rate for the a16z validator surged to 100% due to their node being halted. Most other validators remained stable, except for a rising skipped slot rate observed in the SOL Community validator.
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In 2023, Solana experienced a tenfold increase in block rewards. The utilization of priority fees surged, leading to a substantial growth in overall chain activity and user transactions.
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Everstake is the most popular choice for staking Solana (SOL), with over 200,000 accounts trusting us with their tokens. Discover more about Everstake and consider staking SOL with us by clicking here.
We invite you to explore Solana's journey in 2023 in this Solana report. We'll delve into the network's continued evolution, unwavering community, and innovations and gain a glimpse into the exciting prospects in our continued pursuit of reimagining the future of finance and decentralized applications.
Methodology
This report analyzes the Solana blockchain, employing the following data practices and sources:
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On-chain Data: We gathered comprehensive data from the Solana blockchain, including raw transaction data and API-sourced information on staking, transactions, inflation, and other metrics.
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Data Preparation: Employing tools like Python and PowerBI, we meticulously cleaned and formatted the data, merging inputs from various sources for analysis.
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Data Analysis: We conducted a robust analysis, incorporating graphs, charts, statistical measures, and hypothesis testing to identify trends in staking, transactions, and other key metrics.
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Interpretation: Leveraging our expertise, we interpreted findings, discussed implications, made comparisons, and offered recommendations for further research or action.
Solana Network Performance
Previously, Solana faced persistent challenges related to reliability and uptime. These issues posed significant hurdles, affecting the network's stability and causing disruptions in service availability. However, things took a turn in 2023.
Since February 25, Solana has maintained a flawless 100% uptime, achieving an uninterrupted year without service disruptions. The singular outage in February resulted in the network being offline for nearly 19 hours.
Source: status.solana.com
After the outage on February 25, we introduced several enhancements to streamline the core network software upgrade procedure. These improvements included more external developers and auditors in the release process and enhancements to the server restart mechanism.
Also, the balance between voting and non-voting transactions has seen positive advancements. Voting transactions occur as validators confirm proposed blocks, while non-voting transactions result from user actions within the blockchain.
What is Only Possible on Solana?
Solana has become a global developer hub, promising a fast, secure, and scalable future. A rich ecosystem of resources – tools, tutorials, and a vibrant community – empowers developers at all stages of their journey, providing the building blocks and support network necessary to shape the next generation of impactful applications.
Source: Solana
Solana’s tech features:
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Scalability: Solana's inherent scalability eliminates the need to compromise between decentralization and performance. This opens doors for pioneering projects in various fields, including gaming, AI, and decentralized physical infrastructure (dePIN).
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Global payment capabilities: Solana's exceptional throughput and cost-efficiency enable seamless decentralized payments on a large scale. With Solana Pay, developers can access tools for integrating rapid payment functionalities into their applications, prioritizing auditability and confidentiality when required.
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Compressed NFTs: it slashes the expenses of high-volume drops significantly. This unlocks new opportunities for NFTs across various use cases, from event tickets to collectibles and social media stickers.
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Solana Mobile: Solana Mobile brings web3 straight to your fingertips. By merging top-notch crypto phone technology with a mobile dApp store and stack, all supported by rapid and secure blockchain tech, the potential becomes limitless.
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Environmentally mindful technology: On Solana, a blockchain transaction consumes a comparable amount of energy to just a few online searches. Real-time emissions monitoring ensures you work on high-performance tech and contribute to energy-efficient practices.
Solana TVL (Total Value Locked) and DEX Volume
Total Value Locked (TVL) is a pivotal metric, albeit some view it as simplistic, employed to measure the capital flow across a network's diverse DeFi applications.
At the end of 2023, the Total Value Locked (TVL) within the Solana ecosystem soared to an unprecedented high, achieving a remarkable milestone of $1.48 billion. Concurrently, the Solana DeFi environment is witnessing significant expansion propelled by projects like Marinade and mrgnfi that consistently innovate, devising compelling incentives to foster greater adoption of DeFi practices within the Solana network.
Source: DefiLlama
In December 2023, Solana's decentralized exchange (DEX) volume peaked at $1.21 billion.
The surge of DEXs coincided with substantial token airdrops from Solana's DeFi protocols Pyth and Jito. Towards the end of November, the oracle network Pyth initiated an airdrop, distributing tokens valued at approximately $87 million based on current market prices to its users.
Following suit, Jito, Solana's second-largest liquid staking protocol, proceeded with a distribution of JTO tokens, totaling an approximate value of $228 million as of today's evaluation.
Daily Active Addresses and Transactions in Solana Network
On December 17, 2023, a new record was noted in Daily Active Addresses, reaching 1.26 million.
Source: Artemis
Among the extra factors are the surge in interest for meme tokens within the Solana network and the buzz surrounding Saga phones, witnessing a tenfold surge in sales. This wave coincides with the airdrop of BONK tokens, adding to the excitement. By the way, the Saga mobile is currently sold out.
Solana has drawn significant investor interest, setting a new record for the highest total daily transaction count. According to Artemis, the daily transaction count on Solana surged to 51.63 million on November 24, marking the year's pinnacle. This remarkable milestone starkly contrasts with the metric's typical range, which had hovered around 20 million since at least late August.
Source: Artemis
Exploring the Dynamics of Solana Staking in 2023
Solana has experienced substantial advancement and remarkable expansion as a blockchain platform in recent years. This growth has coincided with an overall upward trend in the total staked value of SOL, Solana's native asset.
The staking mechanism on Solana allowed users to contribute to the network's security and earn rewards in return. Validators, responsible for confirming transactions and maintaining the network, garnered substantial attention. Users eagerly became delegators, entrusting their SOL tokens to these validators, benefiting from Solana staking rewards while contributing to the network's stability.
Solana's Total Stake Growth Analysis
The fluctuating trends in stake/unstake activity within the crypto sphere can be quite the rollercoaster ride, and October 2023 was no exception. The sharp 50.3% surge in such activity sparked curiosity and speculation, particularly when approximately 19.6 million $SOL was swiftly unstaked by prominent entities like a16z and Alameda / FTX by the conclusion of the 512 epoch.
Surprisingly, validators associated with FTX and a16 brought about a reversal, reactivating a substantial 7.5 million tokens from FTX and 6.9 million from a16z validators.
The dynamics of stake and unstake maneuvers within the crypto domain often carry nuanced implications and insights into the strategies of major players. Such notable reversals highlight the fluidity and unpredictability of these markets.
Stake Distribution Among Top Validators
Stake distribution among the top validators displays the decentralization and security of any network. In the case of Solana, this allocation of stakes becomes a window into the ecosystem's inner workings, providing insights into the active involvement and influential roles held by these key network participants.
Understanding how stakes are distributed among leading validators reveals their commitment, reliability, and impact on Solana's operational framework.
To enhance the graph's clarity, we've categorized the top validators based on commission fees into 0-5% and 6-10% groups for a more precise representation of the data on the graph.
0-5% fee
The top 10 validators with 0-5% fee rate are the following:
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Binance
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Laine
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Jito1
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Jito2
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ShinobiSystems
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Kiln
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MeleaOne
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Private
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StakeHaus
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Private
Following October 2023, Binance dominated the scene with a stake of 6 million SOL. However, in October, Jito1 and Jito2 received substantial delegations, boosting their stakes to 4 million and 5 million, respectively. This shift has significantly altered the stake distribution.
6-10% fee
The top 10 validators with a 6-10% fee rate are the following:
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CoinbaseCloud02
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Ledger by Figment
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Private
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P2P.org
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Private
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Figment
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Everstake
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Staking Facilities
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CoinbaseCloud
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Private
October indicated a month of transformations, as we can see on the graph. During this period, notable developments unfolded:
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CoinbaseCloud02 witnessed a doubling in stake.
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Two anonymous validators surged into the top ranks, boasting stakes of 8 million and 11 million, respectively.
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Figment secured a substantial 5.5 million delegation from FTX.
These updates completely changed the situation in the Solana validators’ top.
Staking Accounts Distribution Among Top Validators
A Solana stake account enables users to delegate tokens to network validators, potentially earning rewards for the account owner. However, each stake account is limited to delegating tokens to a single validator at a time. To allocate a portion of your tokens to a specific validator or delegate to multiple validators, creating multiple stake accounts is necessary. More about Solana Stake Accounts you can read in the Solana docs.
To simplify data analysis and enhance chart study, here we also segmented the top validators into distinct groups based on their commission structures.
0-5% fee
Laine (marked blue on the graph) and Shinobi Systems (marked yellow) have garnered significant popularity among delegators due to their proactive engagement within the Solana community.
From July 2023 onward, the count of Solflare (marked dark green on the graph) delegators saw a steady rise, coinciding with developers actively enriching their technical capabilities. The community met this effort with widespread appreciation.
6-10% fee
Among the validators charging 6-10% fees, Everstake (marked yellow on the chart) maintains its strong position as the best Solana staking validator. Compared to other Solana validators, Everstake stands unmatched in its track record of staking accounts, with over 200,000 accounts entrusting their SOL tokens to us.
We are proud of our robust infrastructure that guarantees high availability and peak performance for staking Solana. Moreover, we provide an enticing reward distribution system for delegators, ensuring they can optimize their staking returns. Join us and stake your SOL for a rewarding experience.
Rewards Distribution Between Top Validators
Distributing rewards to top validators is essential as it mirrors the principles and dynamics of the network. Validators are crucial for securing the network, validating transactions, and maintaining integrity through a consensus mechanism.
The way rewards are allocated to top validators is usually designed to encourage participation, foster decentralization, and guarantee the network's security.
Validators experienced decreased inflation rewards, but it's ingrained in the Solana protocol. The inflation undergoes a 15% reduction each year until it reaches a terminal rate of 1.5%. In block rewards, Solana witnessed a tenfold surge in 2023. The heightened utilization of priority fees resulted in significant expansion across the entire blockchain, fostering increased user transactions.
Skipped Slot Rates of Top Validators
A skipped slot rate signifies the frequency with which a leader fails to generate a block within their allotted slots. A lower figure indicates a higher success rate in block generation for the leader.
Please note that this factor does not impact the staking APR for delegators, as it's not included in the calculations for staking returns. However, it does affect the supplementary rewards for validators' leading blocks and overall contributes as a metric for the performance and health of Solana validators.
As of October 22, 2023, there was a notable surge in the skipped slot rate for the a16z validator, hitting 100% because their node was halted. Most other validators sustained stability, barring a rising skipped slot rate noticed in the SOL Community validator.
On November 14, the SOL Community validator recorded the highest skipped slot rate at 66.78%. This abrupt increase seems to be linked to internal operational conditions specific to that validator, as no similar patterns were observed among other validators. Subsequently, only the Chorus One validator displayed a similar uptick following this occurrence.
Solana's Staking Metrics: Staked Ratio, Supply, and APR
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The Staked Ratio indicates the percentage of actively staked SOL tokens with network validators, illustrating their commitment to the network's operation.
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The Supply of SOL tokens represents the total number of tokens circulating within the Solana ecosystem.
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Solana's staking APR, or annual percentage rate, represents the yield that participants earn by staking their SOL tokens.
This graph shows that throughout 2023, the staked ratio and APR remained notably stable without sudden fluctuations. Simultaneously, the SOL supply consistently trended upward, signaling an ongoing expansion.
It's crucial to differentiate the rising supply of SOL tokens from traditional inflation. This increase is an intentional mechanism to foster growth, sustainability, and continuous innovation within the Solana ecosystem.
Total Retail Stake and APR
The Total Retail Stake refers to the total amount of SOL tokens staked by individual retail participants within the Solana network. It embodies the collective commitment of retail investors who opt to lock their SOL tokens for a specific period to participate in the staking process. This measure is a crucial gauge of retail investors' involvement and the degree of network decentralization.
The graph illustrates a decline in the total retail stake starting from January 2023, reflecting a less favorable market situation and a subdued sentiment among stakeholders. However, from July 2023 onwards, there's an upward trend, suggesting a potential increase in engagement and active involvement of individual investors in the Solana ecosystem.
A declining trend in the APR is a typical situation for Proof-of-Stake networks: the overall reward rate drops as more tokens get staked. However, it's crucial to emphasize that Solana systematically reduces inflation over time, regardless of the staking rate. This approach contributes to the long-term stability and sustainability of the Solana ecosystem, providing users with a reliable and predictable framework for their participation in the network.
Solana Prospects for 2024
With its impressive throughput and cost-effective transactions, Solana seems ready to experience a significant uptick in its ecosystem in 2024. An expected surge of dApps, new projects, and DeFi platforms will likely converge on Solana, enticed by its scalability and exceptional performance.
The appealing OnlyPossibleOnSolana features can attract a more diverse range of users, from developers to institutions, thereby promoting widespread adoption. This indicates a strong interest in Solana and unveils numerous distinctive opportunities for all involved parties.
Solana has the opportunity to pursue cross-chain integration and interoperability initiatives actively, establishing partnerships with leading blockchain networks. This undertaking could open up new opportunities for projects on Solana and improve its relevance across various ecosystems.
Many users are eagerly anticipating the arrival of the Token extensions, Firedancer, Breakpoint2024, Solana Crossroads, and big upcoming hackathons, events, workshops, tech innovations and partnerships.
Solana's ecosystem showcases various projects, each offering unique contributions to the growth and acceptance of blockchain technology. From pioneering DeFi innovations to reinforcing infrastructure, these initiatives highlight Solana's potential as a significant player in the blockchain sphere in 2024 and the years ahead.
