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As brat summer recedes from view, I wanted to open my reporter’s notebook and give you all a glimpse into some Solana-related threads I’m interested in following over the next few months.
Here, in no particular order, are six questions that I think are worth keeping an eye on:
Six Solana questions defining the rest of 2024
Has pump.fun really run out of road?
Solana’s price, DeFi volumes and validator revenue have all stumbled in the past couple weeks, and conventional wisdom seems to be casting blame on declining interest in memecoins. For better or worse, memecoins — particularly ones traded through the launchpad pump.fun — have been behind much of Solana’s boom in onchain volume over the past several months.
But, the thinking goes, the longshot odds of memecoins paying dividends, paired with a Justin Sun-backed competitor to pump.fun on the Tron blockchain, have left Solana’s memecoin ecosystem in a vulnerable state. It is undeniable that pump.fun’s revenue and number of token launches have fallen noticeably below their May, June and July levels.
I have my doubts about this story, however. In its downtrodden state, pump.fun is still booking $300,000-$400,000 in daily revenue, and so-called Sun Pump is seeing a fraction of its transaction volume. Pump.fun’s success as a business should not be undersold, even if the poor saps are only on track for $120 million in annual revenue (instead of $200 million). You could think about pump.fun’s relevance this way: When pump.fun was first coming out, it would sometimes be lumped into headlines alongside Fantasy.top. When’s the last time you heard anything about Fantasy.top?
How strongly-held are the SEC’s beliefs?
The suddenness of SOL ETF applications may only have been matched by the speed of their demise.
Things seemed full-steam ahead for potential spot Solana ETF issuers VanEck and 21Shares until the Cboe exchange suddenly removed 19b-4 forms from its website. The removal of the 19b-4, which must be approved by the SEC for ETFs to trade, came after the SEC privately reiterated its belief that SOL is a security, The Block reported. If SOL was outright declared a security, it’s generally assumed that it would become difficult for US-based investors to actually buy the asset.
Granted, this isn’t a change of heart from the SEC, which is still publicly alleging in its Coinbase lawsuit that SOL is a security. But as the US presidential election nears and the very-public FTX fiasco recedes from view, I’m curious to see whether political tides cause any shifts in the SEC’s stance.
Who will win the restaking race?
Ethereum restaking bloomed to become a several-billion dollar sector in the past year. With Solana’s continued growth in mindshare relative to Ethereum, it only made sense that we would see teams try to launch similar infrastructure on Solana.
Jito and Solayer appear to be the two serious contenders in becoming the EigenLayer of Solana. Solayer got its platform to mainnet first, while Jito has open-sourced its code (I’ve also been told semi-recently that the project expects Jito Restaking to launch by the end of the year).
So far, Solayer only boasts a little more than 30,000 restakers delegating roughly $30 million worth in restaked assets. It also only has an initial four AVSs live to use the restaking service, so it’s still early innings.
I bet we’ll see more Solana restaking announcements soon, particularly as pertains to what I call the restaking arms race: These platforms need protocols to build on top of them. Which one can draw a more vaunted lineup?
Will Firedancer go to mainnet?
It’s been years since Jump Crypto started working on the Firedancer Solana client — which is written in C, rather than Rust — and will supposedly be much more performant than the Agave and Jito-Solana clients that are currently on offer.
Having multiple clients will make Solana more decentralized and eliminate risks that stem from having essentially one validator client at the moment (Jito-Solana is very similar to the Agave client). Solana co-founder Anatoly Yakovenko has also said he’ll stop saying Solana is in mainnet-beta once Firedancer ships.
The client is reportedly slated for a 2025 release, but the lead-up could be a big deal too: In a best-case scenario, this could look similar to the excitement the Ethereum community ginned up around its 2022 “Merge” to proof-of-stake.
How will Solana’s new DAOs work?
Native token airdrop season appears to have wound down for the moment, leaving several projects sitting on large treasuries while figuring out how these tokens are to be used — which in many cases seems to be for governance.
Some projects, like Jito, are already forging ahead with Ethereum-like DAOs using “one token one vote” governance. Drift is toying with MetaDAO’s futarchy model for market-based governance, but it also has a more traditional DAO.
In general, I’d be curious to see whether the Solana ecosystem will innovate past the status quo for Ethereum DAOs, which, as anyone who’s followed or participated in them will tell you, aren’t the most functional of organizations. Or, since DAOs are widely unpopular and present potential legal risks, will Solana projects eschew them altogether?
What’s Solana’s next narrative?
Blockchain ecosystems need convincing narratives to tell investors and developers what their purposes are. A lack of clear narratives can lead to grumpiness and internecine conflict, which is arguably something we’re seeing play out in the Ethereum world right now with its squabbles over DeFi and foundation spending.
For the past several months, memecoins drove a rise in SOL’s price and onchain metrics. Professional investors grew more bullish on the token, issuers filed for SOL ETFs and Solana clawed itself out of the hole caused by FTX’s deep integration with the ecosystem.
But if memecoins and ETFs were to become dead in the water, it’s currently unclear what the next narrative pivot might be. In any event, there are a few testing grounds where these narratives might form: Colosseum’s Radar hackathon, Solana Labs’ second incubator cohort and most importantly, the Solana Breakpoint conference.
I asked Helius CEO Mert Mumtaz this question on a recent episode of the Lightspeed podcast, and he seemed unperturbed.
He distilled his thoughts later in an X post: “[S]olana’s narrative is simple: simple, fast, cheap place to build cool shit,” he wrote.
— Jack Kubinec
Zero In
The memecoin launchpad pump.fun recently passed $100 million in revenue, according to a Dune dashboard.
Pump.fun makes its money on swap fees and Raydium seeding. Even with its revenue recently stalling a bit, pump.fun achieved this milestone remarkably quickly. As a reminder, the platform launched in January.
Alliance DAO’s Qiao Wang wrote on X that he asked AI chatbots if there has “ever been a startup in history that went from conception to $100m revenue in half a year.” No one could give him an answer, Wang said, adding: “imagine if more web2 founders heard this extraordinary story. they’d pivot from ai to crypto tmrw.”
— Jack Kubinec
The Pulse
Smart contracts…who needs ’em? Not you, according to Helius’ Mert Mumtaz. On Sunday, he posted a late-night thread on X explaining “Solana has a program-based model vs. an interface model — meaning you can leverage a ton of existing programs to write client code only.” In other words, you can handle NFTs, tokens, transactions, token-gating, minting, bots and more using just Javascript, without ever touching Rust or deploying a smart contract.
Pushing back, @ajki76 challenged, “So, what are they building onchain, considering you said ‘most cases don’t require building programs at all?’” Mert clarified, “The smart contract already exists and is onchain — I’m saying you can use the existing ones without needing to create a new one.”
@kind3r.sol confirmed that this aligns with their experience: “I’ve been doing this for the past 2.5 years. Just deployed my first 3 lines of code Rust program a couple of weeks back out of necessity. But 99.99% of the interactions you can do by using existing (mostly open source) programs and compose their instructions in a single transaction.”
It’s a question of efficiency vs. creativity. Why burn time writing complex smart contracts when you can just as easily stand on the shoulders of existing onchain programs? Though as @DanMulligann rightly asked, “but does that encourage any sort of innovation or more of the same shit?”
— Jeffrey Albus
One Good DM
A message from Matty Taylor, co-founder of Colosseum:
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