Solana On-Chain Performance Q4 2023-Q1 2024

In this article we will analyze Solana on-chain and financial indicators and their performance in Q1 2024, as well as how meme coins attributed to the growth of Solana.

You can read more about how meme coins impacted Solana’s growth here.

What Is Solana

The Solana Blockchain stands out for its exceptional performance and low fees, achieved through several advanced technological solutions. Solana’s native coin is SOL. Here’s a detailed look at its primary components:

• Solana Architecture

Solana integrates a distinctive blend of Proof-of-History (PoH) and Proof-of-Stake (PoS) mechanisms. PoH establishes a chronological sequence for transactions before they are added to a block, drastically cutting down the time needed for transaction confirmation. PoS is utilized to reach consensus and maintain the Solana network's security.

• Solana Proof-of-History (PoH)

Proof-of-History sequences transactions in chronological order before they are grouped into a block. This method lightens the load on Solana blockchain validators, thereby boosting the network's overall performance.

• Solana Proof-of-Stake (PoS)

Proof-of-Stake permits SOL holders to delegate their coins to validators, enabling them to partake in the block creation process and consensus building.

• Solana Tower BFT (Byzantine Fault Tolerance)

This Solana crypto security feature safeguards the network against malicious activities and attacks, thereby enhancing the ecosystem’s reliability and trustworthiness.

• Turbocharged Replication

Solana crypto employs an efficient data replication method among blockchain nodes, ensuring the network’s high availability and reliability.

• Linear Scalability

Solana offers linear scalability, which means its performance scales with the increase in the number of nodes. This allows for high throughput even with a growing load.

• Objective of Solana

Solana aims to build an infrastructure capable of processing thousands of transactions per second with minimal costs. This capability makes Solana highly appealing for various decentralized applications and projects, as it strives to improve the efficiency and accessibility of decentralized systems.

Solana On-Chain Performance

Solana crypto experienced remarkable growth in Q1 2024, building on momentum from Q3 2023. The surge in on-chain and economic indicators positioned Solana as the fastest-growing L1 blockchain in terms of new addresses, DEX trading volume, TVL, and revenue. 

For example, daily active addresses on Solana grew by 145% from 571K in Q3 2023 to 1.4M in Q1 2024 and by 488% compared to Q1 2023. DEX trading volume demonstrated a 121% growth compared to Q4 2023 and more than 3K% compared to Q1 2023. 

TVL on Solana surged from $1.4B to $4.9B QoQ (+308%) while blockchain revenue (USD value collected by the protocol and token holders) skyrocketed to $48.8M by the end of Q1 2024 (611% quarterly growth). Table 1 summarizes Solana on-chain and economic performance in Q1 2024.

Sources: Solscan, Artemis, TokenTerminal

Solana price (SOL price) saw both an increase and fluctuations during this period.

Such dynamic growth of on-chain and economic indicators is attributed to the high interest in the blockchain, inflow of the new users and capital into the Solana ecosystem. 

Solana Growth: Role of Meme Coins

Meme coins are an important tool for onboarding new users into Web3 that helps them get acquainted with basic blockchain mechanics such as trading on decentralized exchanges, interaction with dApps and wallets. Thus, despite the lack of “intrinsic value”, meme coins may be useful for the industry. 

Meme coins have significantly contributed to the recent success of Solana, exemplified by the performance of such meme coins as Bonk (BONK), Dogwifhat (WIF), and Book of Meme (BOME). 

Bonk, launched in 2022, saw substantial price growth in late 2023, which spurred increased on-chain activity and record trading volumes on Solana-based decentralized exchanges. 

Dogwifhat, introduced in November 2023, quickly became the leading Solana meme coin by market cap, with notable price surges aligning with SOL's price highs. 

Book of Meme, launched in March 2024, further boosted Solana on-chain metrics with a dramatic increase in active addresses and trading volumes, culminating in record network fees. 

Example of the Solana blockchain is a good illustration of it because meme coins played a crucial role in blockchain renaissance and surge of its core metrics. 

Meme coins were not the only driver of Solana’s growth and we should not underestimate the role of other categories such as perpetual DEXs, liquid staking, lending protocols, and AI projects in network’s development. 

However, meme coins triggered rapid growth and accounted for the recent user base and transactions growth on Solana. 

Appealing concepts and opportunity to get a quick profit make meme coins popular among newcomers into crypto world who are not acquainted with DeFi yield farming strategies, lending opportunities, token presales and other less risky earning opportunities in the industry.

Users can get SOL, meme coins, and other coins on SimpleSwap.

Summary

In this article we addressed several key metrics when it comes to Solana on-chain analysis.

Daily active addresses increased by 145% QoQ and 488% YoY, while DEX trading volume grew by 121% QoQ and over 3,000% YoY. TVL rose from $1.4B to $4.9B (+308%), and blockchain revenue soared to $48.8M (+611%).

Meme coins played a significant role in this growth, attracting new users and capital to the Solana ecosystem. These tokens (BONK, WIF, BOME) helped onboard users to Web3 by familiarizing them with decentralized exchanges, dApps, and wallets. 

Meme coins played a crucial role in Solana’s rise during the last 2 quarters. Meme coin related activities boosted Solana’s on-chain stats like daily active addresses, transactions, and revenue.

While meme coins were a major driver, other factors like perpetual DEXs, liquid staking, lending protocols, and AI projects also contributed to Solana development. Meme coins' appeal to newcomers seeking quick profits highlighted their importance in recent expansion of Solana.