An Exploration of the Changes Happening in the Solana Ecosystem

Original Title: “WhAt'S aCtUaLlY HaPpEnInG oN SoLaNa nOw?”

Author: Rui

Translation: ShenChao TechFlow

What is Actually Happening on Solana?

Nowadays, the connection between cryptocurrencies and U.S. stocks has weakened, and sensitivity to interest rate changes has decreased. On Solana, the meme craze is fading, while sandwich bots are making a fortune, which many anticipated. Issues regarding network stability, flaws in infrastructure and storage costs, and reliance on a single client have been criticized, leading many to express skepticism or even disdain. If you haven't lost faith yet, we can all agree that we are in an era of exploration.

This is the ultimate warm-up between enthusiasts and critics before SolanaConf.

"The wider the highway, the easier it is to get congested."

Higher TPS (transactions per second) can lead to "induced demand," attracting more crazy projects, which in turn leads to more traffic and congestion, similar to the situation with OREsupply. To scale Solana, multiple efforts are underway:

• At the mainnet level: anzaxyz addresses scheduling issues by avoiding "locking" on conflicting transactions. Clients like jumpfiredancer and jito_sol enhance horizontal scalability, improve fault tolerance, and reduce latency.
• At the Rollup level: always faster than the mainnet, with nodes that have a common positioning. Batch (temporary) solutions like magicblock maintain smart contracts and liquidity on the mainnet while maximizing efficiency.

What is the Mission of Solana Rollup?

Ethereum and Solana's Layer 2 networks (L2) serve different purposes. Op and Arb are solving scalability issues for Ethereum. However, on the high-performance Solana, merely mimicking a Layer 2 network may seem redundant.

Solana's L2 can focus on specific-purpose runtimes, such as gasless transactions, privacy protection, signature verification, different block times, and MEV policies. ZetaMarkets is developing for its perpetual contract DEX, DriftProtocol may utilize L2 to reorder transactions, while getgrass_io is used for large-scale data verification. (Avoid using terms created by mhonkasalo and KyleSamani.)

Will Centralized Exchanges Boost LST on Solana?

I am not a staunch fan of LST. Staking on Solana is very simple and can be unstaked at any time, making local staking, which is immune to contract risk, the preferred choice for 93.7% of stakers. Jito has captured most of the remaining market by incentivizing its MEV revenue.

Recent news from binance, bitgetglobal, and Bybit_Official indicates positive inflows into LST, and the expected infinite LST pool from sanctumso will enhance liquidity. However, the real question is how to translate this into actual user growth. Imagine the combination of LST with PayFi: using earnings to pay for your Helium 5G subscription instead of USDC, or like the example of soleconomist, supporting creators through staking LST for earnings.

Re-staking, jitosol has launched collaborative projects with SquadsProtocol, RenzoProtocol, and fragmetric, and is competing with solayerlabs. We hope to see stronger AVS solutions soon.

Why Do People Need Cryptocurrency?

Decentralized IoT (DePIN). I am a user of Helium5G, which is powerful and affordable. Now, they want to become the "network of networks"—this means opening up more DePINs to build on existing devices or networks while helping them achieve compliance and operations, etc.

Artificial Intelligence (AI). While it is uncertain whether exolabs will ultimately run on Solana, one can imagine end users using edge devices to run AI clusters—this means real users, real incentives, and real value. Additionally, more AI trading bots are expected to provide simple and intelligent access.

PayFi. It is easy to use on mobile through slingmoney and Tiplink, and "Buy Now Pay Never" offers opportunities to leverage the time value of money.

Prediction Markets. Drift has brought us prediction markets for elections, but who says you can't predict meme prices (like jogojogo), yields (like rateX), or even broader fields?

Meme is not a sin; the other side of the coin is fair distribution. We must consider sustainable business concepts rather than simply deceiving a minority.

What Are the Questions Worth Discussing?

If almost all Solana applications are centralized, what is the point?

It is unfair to blame those who want to build moats and achieve private ownership. Protocols cannot capture all the profits.

Why does MEV extract so much unethical value from memes? Aren't mature participants competing to reduce slippage to protect users?

Applications should improve user experience by providing fair and (automatically) accurate slippage, and perhaps establish a reputation system for validators based on slippage execution.

Who is building DeFi on Solana?

JupiterExchange serves as the interface, RaydiumProtocol and orcaso adopt a permissionless approach; perpetual contracts are handled by DriftProtocol and ZetaMarkets; your favorite exchanges Backpack and Perena_ provide stablecoin infrastructure, and metaplex brings digital assets to more SVMs; there are also lending platforms like thesendcoin, etc.

A Bird Not Swimming Is Not a Mistake

Blockchains have their own development paths. The best globalization is localization—I learned while working at tiktok_us that they view Southeast Asia, the Middle East, North America, Europe, and China as five important strategic regions. These regions differ in language, compliance, resources, policies, culture, and atmosphere.

Now living in New York, I feel two powerful forces—base as a representative of EVM compliance, with its total value locked (TVL) primarily dominated by stablecoins, thanks to the support of Coinbase and Circle. Additionally, cbBTC may be its next major project. However, Solana feels more like a paradise for ordinary users, a true retail carnival. Even if you think it won't become the home of RWA, I am willing to accept that, but look at those who are constantly striving, like aeyakovenko, 0xMert_, calilyliu, and the hackers from Colosseum, along with communities from the U.S., Singapore, South Korea, and China, who celebrate, gamble, enjoy, and live in an efficient and affordable world.

What is actually happening on Solana now?

Build it and make it a reality.