Despite adverse market conditions negatively impacting layer one blockchains, the Solana ecosystem has continued to improve its network stability and grow its user base, Messari stated in its Q1 report on the topic. . However, notable declines in key metrics demonstrate that the Ethereum challenger has struggled to maintain high network activity and volume due to ongoing security issues.

noticeable slowdown

Following explosive growth in 2021, Solana experienced declines in network usage and financial performance in the second quarter. The average number of daily transactions decreased 17.6%, while revenue decreased 44.4% due to poor network performance quarter-on-quarter.

However, the number of active users, who paid at least one transaction per day, reached an all-time high of 450,000 in May, averaging around 320,000 during the second quarter. Additionally, to address recurring outage issues that destroyed network stability, Solana deployed the first stages of the Mainnet Beta v1.10 series in late May, leading to a subsequent spike in activity.

“For perspective, the daily average TPS dropped to as low as ~700 during times of degraded network performance. After v1.10 started rolling out, TPS hit all-time highs above 3,000 and averaged closer to 2,300 per day.”

In terms of the number of developers working in the ecosystem, Solana followed a months-long downward trend with approximately 8,000 active developers in June, almost 50% below the number recorded in November 2021, when the entire cryptocurrency market was shot in an optimistic atmosphere. .

DeFi Protocols

Messari saw Solana as a leading Layer 1 network that has achieved a consistent amount of Total Value Locked (TVL), evenly distributed across various DeFi protocols.

In the case of the BNB chain, 50% of the TVL is in PancakeSwap; in contrast, no Solana applications achieved “too big to fail” status, and the high-profile protocol Serum accounted for 10% of the TVL at the end of Q2. A higher level of diversified TVL could lower ecosystem risks overall, Messari added.

In addition, Solana’s TVL declined at the average rate (-68%) of the peer group, with some possibly due to its exposure to TerraUSD and the disruption of Wormhole and Terra transfers. For context, all of DeFi was in shambles in Q2, with aggregate TVL declining from $228bn to $75bn, representing a 67% decline in USD terms.

NFT activity

In contrast to the slowdown in DeFi volume, Solana-based NFT activity grew sharply, with big-name markets like Magic Eden and the Serum-launched ecosystem grabbing a lot of attention in the quarter.

The number of newly issued NFTs on the network increased to 7 million in the second quarter, representing a quarter-on-quarter growth of 46%. Furthermore, behind only Ethereum, Solana maintained its position as the second largest network ranked by NFT secondary sales volume.

way ahead

Looking ahead, the cryptocurrency research firm looks forward to the upcoming releases of Neon EVM on the mainnet, Solana Mobile Stack, and the advancement of Solana Pay to further expand ecosystem adoption. However, concerns about network reliability continue to cloud users.

The notorious outages damaging the fundamentals and reputation of the blockchain stem from Gulfstream, Solana’s alternative to the mempool for pending transactions. Gulfstream has allowed bots to propose an arbitrary number of transactions, forcing block producers to verify all transactions before making a block.

Ultimately, block production continued to suffer from congestion due to the overwhelming number of junk transactions, causing the network to experience further performance degradation during Q2.

As mentioned above, the introduction of the v1.10 series has stabilized the network, but there is still a relevant concern in the community.

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This post Solana saw volume decline amid growing security concerns in Q2: Messari

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