Solana: Q4 2023 was good, but here’s how FTX still had its way

Bitcoin Analysis
  • Solana’s performance significantly improved in Q4 2023
  • However, it saw a decline in some aspects due to activity associated with FTX’s Estate

A new report from Messari revealed that leading open-source blockchain Solana [SOL] saw ecosystem-wide growth in the last quarter of 2023. 

Fueled by a surge in the trading activity around memecoins housed within Solana, its native coin SOL “was one of the leaders of the Q4 crypto-market rally.” The coin ended the 90-day period with a market capitalization of $43.8 billion, marking a 423% increase quarter-over-quarter (QoQ) and over 1000% growth year-over-year.

For context, SOL’s price was $21.39 on 1 October 2023. By 31 December, it had climbed to a high of $102.  The hike in the coin’s value caused its market capitalization to rally above Cardano’s ADA, USD Coin [USDC], and XRP to rank as the fifth crypto-asset in terms of market capitalization.

Source: Messari

As SOL’s price appreciated, the chain saw a surge in network activity. According to the report, during the quarter under review, Solana’s network activity measured by non-vote transactions and fee-payers grew by 65% and 102%, respectively. 

The rally in the values of SOL and other memecoins on Solana over the quarter also led to an uptick in new demand for Solana. Due to this, the chain recorded a 176% QoQ hike in its daily count of average new fee payers in Q4. This cohort of users totalled 32,000 over the 90-day period. In Q3, they were less than 15,000. 

As expected, transaction fees rose as more users flocked to the chain. According to Messari, users had to pay an average transaction fee of 0.000025 SOL in Q4, marking a 175% hike from the 0.000009 SOL paid in Q3. 

Source: Messari

Regarding the network’s decentralized finance (DeFi) vertical, it saw astronomical growth. The report added that the chain’s total value locked (TVL) rose by 303% QoQ and 505% YoY to $1.5 billion. 

Of all the protocols built on Solana, lending platform MarginFi saw the most TVL growth in Q4 2023. The protocol’s TVL hiked by 1,404% during the three-month period. While it was once the sixth-largest DeFi protocol, it is now the top Solana DeFi protocol by TVL.

Additionally, the total volume of trades completed through Solana’s decentralized exchanges (DEXs) increased over the quarter. According to Messari,

“DeFi volume also grew notably, with average daily spot DEX volume increasing by 1,116% QoQ to $359 million.”


Is your portfolio green? Check out the SOL Profit Calculator


Still tethered to FTX?

Solana witnessed a minor decline in network security due to activity from FTX Estate. For example, the amount of staked SOL fell by 5% during the quarter, a dip primarily driven by a series of unstaking activity by FTX Estate. 

Source: Messari

Also, this SOL removal “hurt Solana’s Nakamoto coefficient, as Alameda/FTX staked to a wide spread of validators,” Messari added.

Source: Messari

A network’s Nakamoto Coefficient tracks the number of nodes that would need to collude to control the network and disrupt consensus. As 2023 ended, this totalled 22 on Solana, with the same down by 24% from the 29 recorded in Q3 2023. 

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