After rising from its ashes in the aftermath of the FTX/Alameda crash, Solana has solidified its position as a top-tier blockchain. In the subsequent community-driven revival, the sweat of the Solana native team has propelled the wheels of progress. But as SOL prices and DeFi metrics within its ecosystem stabilize and grow, non-native protocols are also ready to seize this takeoff opportunity.
The Solana native protocols have paved the way. SOL skyrocketed from its low point of $8 in December 2022 to $210 two months ago, making it one of the most remarkable comeback rallies in this crypto cycle. However, the wealth creation in this ecosystem is not limited to its native token holders.
Developers within the Solana ecosystem continue to create market highs. 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), a turning point was marked. This provided direct economic incentives for users from other ecosystems to test Solana.
Soon after, the Solana native liquid staking protocol, Jito Labs, conducted its own airdrop, rewarding eligible wallets that performed a simple operation of holding jitoSOL deposit receipts and gaining over 100 points. The dazzling distribution received by Jito users turned Solana into a prime destination for airdrop hunting, and these protocols, still in their infancy, have proven to be very successful in attracting users and their funds through a point-based incentive system.
The landscape is gradually changing. While native protocols lay the foundation for mainstream cryptocurrencies on Solana, Solana is gradually becoming the host for Ethereum developers.
This transition may be happening at a slow pace, but it is undeniable that more and more projects are starting to realize the abundance of on-chain activities within the Solana ecosystem and are eager to capitalize on this opportunity. Decentralized compute-sharing network Render was an early supporter of the Solana vision and chose to migrate its tokens to the SPL standard in November. And despite MetaMask often being considered a laggard in terms of improving user experience, the project was one of the first to introduce Solana compatibility, launching “Snaps” in September last year, allowing users to directly access Solana ecosystem applications from MetaMask. So far, Solflare’s Snaps integration with the native Solana wallet has attracted over 500,000 users.
Furthermore, while there are many native lending markets on Solana, none have reached the same level of maturity and security as the blue-chip lending protocol Aave on Ethereum. To leverage its brand as a competitive advantage on Solana, Aave DAO approved, with an 83% approval rate, a temperature check in January to deploy the minimum viable version of its V3 isolation market using the Neon EVM, a fully compatible Ethereum development environment on the Solana blockchain.
Last Wednesday, a community-driven proposal appeared on the governance forum of GMX, a perpetual contract trading platform in the EVM ecosystem, seeking to establish an independent exchange deployment called GMSOL on Solana. GMSOL will exclusively utilize the GMX token for all value measurement and storage, while implementing a GMX buyback mechanism and allocating a significant portion of fees to the GMX treasury to establish the GMSOL treasury.
In exchange for this new native Solana deployment, GMX DAO expects to bear all expenses related to protocol audits and grant licenses to replicate and use its frontend code.
In addition, it is widely speculated that two leading Ethereum projects, Ethena and Pendle, will deploy to the Solana ecosystem in the near future, benefiting from the improved market rate environment in the crypto market in recent months.
Long-term trends
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. On a network without 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. The former chose network sharding to enable everyone to operate validators, while the latter leans toward using a single shard for unified state. While a more decentralized validator layer helps maintain the integrity of the Ethereum network, it certainly has its drawbacks, making Solana’s alternative vision attractive in certain respects.
Currently, the crypto industry is still in its experimental stage, which means we really don’t know what it will look like in 10 years. Just as investors can diversify their portfolios cautiously to mitigate risks, applications can also diversify their blockchain deployments to maintain their market share.
Developers aiming for maximum success must recognize that the future of finance has no predetermined center, and they should deploy their applications accordingly, whether it’s Ethereum, Solana, or even the EVM+SVM of Monad and bank-operated settlement networks. The crypto industry must bridge the gap of immense uncertainty to transition from infancy to its ultimate state, achieve true adoption, and bring trillions of dollars of traditional assets onto the blockchain.
Until then, application developers blindly adhering to chain loyalty will lose out on money and market share at the poker table.