How is Solana now: Highlights from Messari’s Report | TKX Weekly

by @Guaaronnnn
editor @FriedWagyuu

Part I. How is Solana doing?

This article is based on — State of Solana Q2 2022
Thanks to Messari for the data and the insights

TL;DR

  • 17.6% decrease in the average number of daily transactions while daily unique fee payers reached an average of 305k.
  • The implementation of Mainnet Beta v1.10 Series improved the network’s reliability from the degraded network.
  • TVL in USD terms has a Q/Q decline of 68%, similar to other L1s.
  • Dramatic 46% growth on NFT activities, compared to Q1 2022.

Intro

In Q2 2022, Solana faced quite a few challenges while continuing to grow in some areas. Compared to Q1 2022, the macroeconomy experienced awful pain such as unprecedented high inflation, rising interest rate, the possibility of a recession, and quantitative tightening. In crypto, the $60 billion collapse of UST/Luna and the liquidation of Three Arrow Capital are not making the industry any better. Below is a quick overview of how is Solana doing in Q2 2022.

Network

In Q2, there is a 17.6% decrease in the average number of daily transactions, while revenue decreased by 44.4% due to degraded network performance. Despite market conditions and a decline in other metrics, daily unique fee payers (unique accounts that pay for at least one transaction per day) continued an upward trend at about 320k during Q2, compared to ~205k during Q1. The growth was consistent related to the growth in NFT activities, which include new minting, sales, and unique NFT buyers.

At the end of May, Solana implemented the Mainnet Beta v1.10 Series which improves stability and performance to address the network congestion. Before that, the average daily TPS fell to ~700 during times of degraded network performance. After the update, the average daily TPS was back to ~2,300 per day.

Ecosystem

TVL
Solana is no different than another layer 1 network, its Q2 TVL fell 68% in USD terms Q/Q. Although TVL in USD was down, the amount of $SOL locked in DeFi increased. At the start of March, there was ~63 million $SOL locked in DeFi and in the end, the number adds up to ~74 million. Hence, the decline in TVL stated in USD does not mean a decline in the locked tokens.

DeFi
Solana DeFi ecosystem is healthy in terms of application dominance. The top five DeFi protocols have an equal TVL distribution. All other protocols beyond the top ten make up ~50% of the TVL across the Solana DeFi ecosystem.

NFT
Solana NFT activity grew dramatically while the network is declining in usage. Daily new NFTs minted climbed to over 7 million, which is a 46.4% growth.

Developer Involvement
Events in Solana Lab’s Github declined 23.2% Q/Q.

Competitive Analysis

DeFi
Q2 was not a good quarter for the DeFi, the aggregate TVL declined from $228 billion to $75 billion, a 67% drop in USD terms. Solana’s TVL also experienced an average 68% decline compared with the peer group. Some portion of Solana’s decline in TVL may be because of its exposure to UST and the interruption of Wormhole and Terra transfers.

NFT
Solana continued to capture the market share of other L1s, while Ethereum still holds its top position of NFT secondary sales volume with an 85% dominance.

Key Events, Catalysts and Strategies for Ecosystem Growth

  • Neon, a Solana project building a smart contract layer that utilizes the EVM released its alpha. Once live on the mainnet, Ethereum developers will be able to integrate their applications on Solana.
  • OpenSea opened Solana NFT marketplaces.
  • Instagram announced support for Solana NFTs.
  • Magic Eden team received its $130 million Series B funding to expand marketplaces.
  • Solana Labs announced the Solana Mobile Stack (SMS) launch for Android and Saga. Saga is an Android smartphone that will natively incorporate SMS.

Summary

As the global environment has deteriorated, Solana experienced a challenging quarter. User activity, TVL, developer involvement, and other metrics had a sharp decline over the Q2 period. However, due to Solana NFT marketplaces’ exposure on OpenSea along with other catalysts, NFT activities have a decent growth which continued to capture other L1s NFT market share.

Part II. Market Updates

Braizil’s Largest Digital Bank Nubank Reaches 1M Crypto Users After Just a Month
The company originally planned to reach the 1m milestone within a year. We think the crypto adoption rate in South America will grow rapidly due to:
1. Weak currency against the dollar
2. Strong demand in cross-border transfer.

Cathie Wood’s Ark Invest Dumps $75M in Coinbase Stock
Ark Invest, the third-biggest shareholder in the U.S. largest crypto exchange Coinbase, sold over 1.4m shares of the company, worth almost $75 million. It happened after the SEC probed Coinbase.

Crypto industry lobbying grew 17% in Q2 despite the bear market
According to an analysis by The Block, despite market conditions being full of uncertainty, cumulative lobbying expenditures by crypto firms in the second quarter of 2022 reached $6.7 million. For comparison, the previous quarter saw a total of $5.7 million.

FTX in Talks to Buy South Korean Crypto Exchange Bithumb
FTX keeps expanding its empire during the bear market. Now FTX targets Bithumb, saying Bithumb is in talks to sell its stake to FTX, according to a report on Tuesday from CNBC.

IMF Says Crypto Sell-Off Won’t Hit Broader Financial Market
IMF said in a report that despite recent collapses, like Terra, Three Arrows Capital, nonetheless raised concerns about the global economy. But still, it said the continued rising popularity of crypto could mean wider financial market threats arise “quickly and suddenly.”

Part III. Fundraising News

Cardinal — Solana NFT Utility Protocol
Raised $4.4 million in a seed round led by Solana Ventures and Protagonist. Other backers include Animoca Brands, Alameda Research, Delphi Digital, CMS Holdings and others.

Aptos — Layer 1 Blockchain
Raised a $150 million round led by FTX Ventures and Jump Crypto. Other backers include Andreessen Horowitz, Apollo, Multicoin Capital, Franklin Templeton, Griffin Gaming Partners and Circle Ventures and others.

Hashflow — DEX
Raised $25 million in series A at a valuation of $400 million. Investors include Jump Crypto, Wintermute, GSR, LedgerPrime, QCP, Altonomy, Dragonfly Capital, Electric Capital, Kraken and others.

Halborn — Blockchain Security
Raised $90 million in series A led by Global growth investor Summit Partners. Other backers include Castle Island, Digital Currency Group, Brevan Howard, Third Prime, Sky Vision Capital and others.

Unstoppable Domains — Digital Identity
Raised $65 million in a Series A at a valuation of $1 billion round led by Pantera Capital. Other backers include Mayfield, Gaingels, Alchemy Ventures, Spartan Group, OKG Investments, Polygon, CoinDCX, CoinGecko and others

About TKX Capital

Website: TKX.Capital
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Note: TKX Capital do not offer any financial advice for retail investors and we have no affiliation with projects in this research.

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