Research Summary
The report provides a comprehensive analysis of Solana’s performance in Q3, highlighting significant growth in its ecosystem, particularly in DeFi, liquid staking, consumer, DePIN, and privacy protocols. The minting of compressed NFTs (cNFTs) saw a 316% QoQ increase, with almost 45 million cNFTs minted. Solana’s DeFi TVL increased by 32% QoQ to $368 million, driven by DeFi and liquid staking protocols launching points programs. Solana’s underlying technology is gaining adoption, with examples in Q3 including Rune’s exploration of a Solana fork for MakerDAO, the launch of SVM-powered L2 Eclipse, and Visa’s payments integration on Solana. Solana’s V1.16 upgrade improved validator memory requirements, introduced capabilities for Confidential Transfers, and enhanced support for zk-proofs. SOL’s market cap grew by 17% QoQ to $8.4 billion, despite concerns over FTX liquidating its over 57 million tokens.
Key Takeaways
DeFi and Liquid Staking Drive Growth
- DeFi TVL Growth: Solana’s DeFi Total Value Locked (TVL) increased by 32% in Q3, reaching $368 million. This growth was driven by the launch of points programs by DeFi and liquid staking protocols, with MarginFi, Jito, Cypher, and BlazeStake leading the way.
- Liquid Staking Incentives: Liquid staking protocols, such as Blaze, have been implementing incentive programs to encourage participation and grow the amount of SOL staked in the ecosystem. Blaze launched a points system that rewards users holding bSOL and using it in DeFi protocols.
Adoption of Solana’s Technology
- Solana’s Tech Stack Adoption: Solana’s virtual machine (SVM) and general tech stack are gaining adoption and mindshare from external parties. Q3 saw notable examples of Solana’s adoption, including Rune’s exploration of a Solana fork for MakerDAO, the announcement of SVM-powered L2 Eclipse, and Visa’s payments integration on Solana.
- V1.16 Upgrade: The V1.16 upgrade achieved a supermajority of stake by the end of the quarter, bringing improvements such as reduced validator memory requirements, support for Confidential Transfers, and enhanced support for zk-proofs.
Market Performance
- SOL’s Market Cap Growth: Despite concerns over FTX liquidating its over 57 million SOL tokens, Solana’s market cap grew by 17% in Q3, reaching $8.4 billion.
- Revenue Growth: Revenue collected by the Solana protocol grew by 19% in USD terms to $4 million and 10% in SOL terms to 185,400. Half of these fees are burned, while the other half is distributed to the block producer.
NFTs and cNFTs
- cNFT Minting: The minting of compressed NFTs (cNFTs) saw a 316% QoQ increase in Q3, with almost 45 million cNFTs minted. The majority of these mints were accounted for by the free collectibles distributor DRiP, followed by Dialect and Helium.
- NFT Developments: Notable NFT developments in the quarter include the mints of Tensorians, Meegos, Reavers, Gates of BroHalla, and VTOPIANS, as well as the virtual horse racing game Photo Finish LIVE’s NFT collection becoming the top Solana collection by floor market cap.
Ecosystem Development
- Support from Solana Labs and Other Organizations: Solana’s network and ecosystem development are supported by the non-profit Solana Foundation, Solana Labs, and other third-party organizations such as Helius and Superteam.
- Various Sectors in Solana Ecosystem: The Solana ecosystem encompasses various sectors, including DeFi, consumer, DePIN, payments, and privacy.
Actionable Insights
- Investigate the Potential of Solana’s DeFi and Liquid Staking: With the significant growth in Solana’s DeFi TVL and the implementation of incentive programs by liquid staking protocols, there is potential for further growth and opportunities in these sectors.
- Explore the Adoption of Solana’s Tech Stack: The adoption of Solana’s SVM and general tech stack by external parties indicates its potential for wider application and integration. Businesses and developers may want to explore the benefits and possibilities of using Solana’s technology.
- Monitor SOL’s Market Performance: Despite concerns over FTX’s liquidation of its SOL tokens, Solana’s market cap saw growth in Q3. Investors and market watchers should keep an eye on SOL’s market performance for potential trends and opportunities.
- Consider the Opportunities in NFTs and cNFTs: The significant increase in the minting of cNFTs and the notable developments in NFTs on Solana suggest potential opportunities in these areas. Businesses and artists may want to consider the possibilities of creating and trading NFTs and cNFTs on Solana.
- Understand the Growth of Solana’s Ecosystem: The support from Solana Labs and other organizations, as well as the growth of various sectors in Solana’s ecosystem, indicate a robust and diverse ecosystem. Stakeholders should understand the dynamics and potential of Solana’s ecosystem for potential collaborations and integrations.
