After rising from a low point of $8 in December 2022 to $210 two months ago, SOL has become one of the most notable comebacks in the cryptocurrency market this cycle. However, the wealth creation within the Solana ecosystem is not limited to its native token holders. Developers have been actively promoting airdrops, starting with the PYTH airdrop in November, which distributed tokens on Solana to addresses interacting with the Pyth oracle on 27 networks, including Ethereum and its L2. This marked a turning point in providing direct economic incentives for users from other ecosystems to test Solana.
Shortly after, Jito Labs, a native liquidity protocol on Solana, conducted its own airdrop, rewarding eligible wallets that held jitoSOL deposit receipts with over 100 points, and distributing tokens in six figures. The dazzling distribution received by Jito users turned Solana into a prime destination for airdrop hunting, and the fledgling protocols on the chain facilitated the widespread adoption of point-based incentive systems, which have proven to be highly successful in attracting users and their funds.
While native protocols have laid the foundation for the acceptance of mainstream cryptocurrencies on Solana, the ecosystem is increasingly becoming a host for Ethereum developers. Migration may occur at a snail’s pace, but there is no doubt that as more projects realize the abundance of on-chain activity within Solana and eagerly seek to create deployments to leverage this opportunity, migration will undoubtedly take place.
Render, a decentralized compute-sharing network, has been a strong supporter of the Solana vision and chose to migrate its token to the SPL standard in November. Although MetaMask is often considered lagging in terms of user experience improvement, the project was one of the first Ethereum-native applications to introduce Solana compatibility in the “Snaps” launched in September last year. This application allows users to directly select external applications from their wallets. So far, Solflare’s snap integration with Solana’s native wallet has attracted over 500,000 users.
While there are numerous markets on Solana, there is no battle-tested security comparable to Aave, a leading blue-chip lending project on Ethereum. To leverage its brand as a competitive advantage on Solana, Aave DAO approved a temperature check in January with 83% consensus to deploy the minimum viable version of its V3 isolation currency market through Neon EVM, a fully compatible Ethereum development environment on the Solana blockchain.
Last Wednesday, a community-generated proposal appeared on the governance forum of the popular EVM-based perpetual contract trading platform GMX, seeking to establish an independent exchange deployment called GMSOL on Solana. The implementation of GMSOL will specifically utilize the GMX token for all value measurement and storage, while implementing the GMX buyback mechanism and allocating a significant portion of fees back to the GMX treasury to establish the GMSOL treasury.
In addition, there is widespread speculation that leading Ethereum projects Athena and Pendle will deploy to Solana in the near future, as these two projects have thrived in the improved cryptocurrency interest rate environment in recent months.
Applications serve users, not blockchains. While many blue-chip protocols should have a high standard when considering new deployments, it would be foolish if they do not flock to environments where users and activities exist. In a network lacking protocols, users will inevitably seek alternatives, putting the market share dominance of existing applications at risk, especially when their chains start ceding market share to competitors.
Ethereum and Solana have adopted drastically different scaling approaches, with the former opting for network fragmentation to allow everyone to operate validators, while the latter tends to concentrate usage into a single-layer unified state. While a greater level of decentralization at the validator level helps maintain the integrity of the Ethereum network, it certainly has some drawbacks that make Solana’s blockchain replacement vision appealing in certain aspects.
Currently, the cryptocurrency industry is still in its experimental stage, which means we truly do not know what our nascent industry will look like in 10 years. Just as investors can diversify their portfolios cautiously to mitigate risks, applications can diversify their deployments to maintain their market share.
Developers who strive for maximum success must recognize that the future of finance does not have an inevitable center, and they should deploy their applications accordingly, whether it’s Ethereum, Solana, or even EVM Frankenchain Monad or bank-operated regulatory settlement networks.
The cryptocurrency industry must bridge the gap of immense uncertainty to transition from its infancy to its final state, achieve true adoption, and bring trillions of dollars of traditional assets onto the blockchain. Until then, application developers who succumb to blind chain loyalty will leave money and market share on the table.