Messari stated that the Solana ecosystem continues to improve its network stability and grow its user base despite adverse market conditions. However, there have been noticeable drops in key metrics that show that the Ethereum challenger has had difficulty maintaining high network activity and volume because of ongoing security concerns.
Solana saw a decline in network usage and financial performance during Q2 after the rapid growth of 2021. Due to QoQ degraded network performance, revenue fell by 44.4% and the average daily transaction count dropped by 17.6%.
The number of active users who paid at least one transaction per daily reached an all-time record of 450,000 in May. This was compared to averaging 320,000 transactions per day during Q2. To address the persistent outage issues that disrupted network stability, Solana launched the initial stages of the Mainnet Beta Series at the end May. This led to an increase in activity.
For perspective, the average daily TPS dropped to as low at 700 in times of poor network performance. TPS rose to a record high of 3,000 after v1.10 was released. It averaged close to 2,300 per day.
Solana continued to follow a downtrend in terms of the number developers in the ecosystem. In June, there were roughly 8,000 active developers, almost half the number that was recorded in November 2021, when the entire crypto market surged in an optimistic environment.
Messari saw Solana in the top Layer 1 network, which has achieved a steady amount Total Value Locked. (TVL), equally distributed across different DeFi protocols.
The BNB chain has 50% of its TVL in PancakeSwap. Contrarily, not one Solana application was given the status of “too big for failure.” At the end of Q2, Serum, a well-known protocol, accounted for 10% of the TVL. Messari said that a greater diversity of TVLs could help to reduce ecosystem risk.
Solana’s TVL fell at an average rate (-68%) among peer groups, possibly due to its exposure to TerraUSD or the interruption of Wormhole/Terra transfers. The whole DeFi fell apart in the second quarter. Total TVL dropped from $228 billion down to $75 billion. This is a 67% drop in USD terms.
Contrary to the slowdown in DeFi volume growth, Solana-based NFT activities grew dramatically, with well-known marketplaces like Magic Eden and Serum-launched ecosystem drawing massive attention during the quarter.
In Q2, the number of NFTs created on the network grew by 46% QoQ to 7,000,000. Solana remained second in secondary NFT volume, just behind Ethereum.
The crypto research company expects that the upcoming releases on the mainnet of Neon EVM, Solana Mobile Stack and the development of Solana Pay will further increase ecosystem adoption. Users continue to be concerned about network reliability.
Gulfstream, Solana’s alternative to the mempool that handles pending transactions, is responsible for the notorious outages that have damaged the blockchain’s reputation and fundamentals. Gulfstream allowed bots to make arbitrary transactions, requiring block producers to verify all transactions before making any block.
Block production suffered in congestion because of the excessive number of junk transactions. This caused the network to experience lower performance during Q2.
Although the introduction of the V1.10 series has stabilized the network, there are still concerns in the community.
Marla Brooks – Financial Analysis
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