Is SOL one of the most suitable tokens for long-term investment? Decrypting the multiple engines of Solana's ecological value explosion

Author: FLOW

Compiled: Tim, PANews

The crypto market has been on a downward trend since the end of January, mainly affected by macro uncertainty and weak sentiment. However, recently we have observed a new round of upward momentum in the market.

Although it is still in its early stages, there are various signs that we may be at the turning point in the development of cryptocurrencies. This trend led me to the idea of ​​writing a book about the current status of Solana's ecosystem.

To me, Solana is still one of the most powerful first-tier blockchains on the market. It is the fastest growing ecosystem in the crypto field, one of the few public chains that truly have natural growth advantages, and has even surpassed Ethereum in many on-chain indicators.

Without further ado, let's start.

The next direction to talk about:

1. Network status
2. On-chain activities
3. Ecosystem
4. SOL price analysis

Solana Network Status

When starting the analysis, let’s put aside the price factor and focus on fundamentals. It should be noted here that Solana, as a blockchain network, seems to be in its strongest development stage ever.

Solana network stability

In its early stages, Solana received numerous criticisms for network outages and instability. However, this seems to be a thing of the past. There has been no interruption in the network since February 2024.

The Lindy effect is a powerful force in the cryptocurrency field, and it is an important indicator of trust and reliability. I think this is the key reason why Ethereum has been favored by large institutions so far: since the main network was launched in 2015, the network has always maintained a record of zero full-network downtime.

Although Solana is still slightly underdeveloped in this regard, its data performance is still encouraging. As uptime increases, trust and reliability also increase, which is crucial.

Decentralization degree

Blockchain takes decentralization as its guiding principle, and this feature distributes power and decision-making among various nodes, making the network resilience. A simple indicator to measure the degree of decentralization is the Satoshi Nakamoto coefficient. The higher the value, the more decentralized the system. According to the latest data from CoinTelegraph, Solana performed outstandingly with the Satoshi Nakamoto coefficient of 21.

Another key metric of decentralization is client diversity. Having multiple validator clients can reduce the risk of a single point of failure, which is crucial to the mature development of blockchain. At present, only Ethereum has implemented an ecosystem where multiple independent validator clients coexist. At this stage, Solana only has one validator client, which is provided by Solana Labs (although the version of Jito Labs is essentially a fork and is not an independent implementation). However, two independent clients are in the process of development: Firedancer developed by Jump Crypto, and Sig created by Syndica. Once these clients are officially launched, they will significantly increase the level of decentralization of the Solana network by getting rid of their dependence on a single code base and introducing true client diversity.

SOL pledge market value

Solana has recently surpassed Ethereum to become the blockchain with the highest market value in staking. On the surface, this shows that Solana is currently in the lead in economic security. After the main network enables the penalty and confiscation mechanism, this value will be particularly important.

(PS: I know there are many controversies on the topic of "economic security" and involve a lot of simplified processing, but for the sake of this article, I regard the pledge market value as an effective indicator.)

Developer activity

Developer activity is another important metric that needs to be observed. Ultimately, it is the level of developers' activity that is building the future pattern of blockchain. Electric Capital's latest report shows that Solana has become the preferred ecosystem for new developers to settle in 2024.

Last but not least, some new initiatives aimed at improving Solana's performance at the communications layer, such as DoubleZero, are emerging, another important vertical area that needs to be closely watched in the future.

On-chain activity

Since the beginning of 2024, on-chain activities have been on a significant long-term upward trend, with many new projects emerging, and the DeFi ecosystem is also showing a booming trend. This can be confirmed by different indicators.

TVL

TVL has been rising from less than $1 billion at the end of 2023 to a record high of more than $15 billion in early 2025. Although TVL has fallen slightly since then, it has remained stable around $10 billion and has shown strong market resilience.

Stable Coin Market Value

Solana has also seen strong growth in stablecoin inflows over the past year. As of this writing, the market capitalization of stablecoins on Solana has reached an all-time high of $13.2 billion. This clearly demonstrates the continued growth in network adoption and trust.

Transaction fees

Judging from the total fee ranking last year, Solana ranks third largest L1 blockchain in terms of transaction fees, and the gap with Ethereum is very small, which once again confirms that it reflects the high activity and strong market demand on the network chain.

Ecosystem

The significance of blockchain existence is to provide the foundation for application construction and prosperity. Opponents may say that Solana's success is only attributed to the fanaticism of Pump.fun and Memecoin, but I think this view ignores the more important reason: Solana is the fastest growing ecosystem in the entire crypto field, and its development momentum is increasingly coming from real application scenarios.

In fact, I think we can even assert that in the long run, the Meme coin fanaticism that occurs on the Solana blockchain is actually more beneficial than disadvantages. This phenomenon is like acting as carrot bait, allowing Phantom wallet to successfully load into millions of mobile phones around the world. This approach effectively solves the "cold start problem" that all emerging networks will face, namely how to break through the bottleneck of the initial user base.

Based on the successful joining of the existing user group, Solana has sufficient advantages to support more applications with practical value and continue to promote its growth process.

DeFi is becoming more mature

The DeFi ecosystem on Solana is maturing. As mentioned above, Solana has now become the second largest Layer 1 blockchain calculated by TVL, and is one of the few public chains that can break through the historical TVL peak in 2025 and continue the previous round of cyclical growth momentum. This performance not only reflects the high stickiness of users, but also reflects their true market attractiveness.

The first wave of DeFi on Solana in 2021 is mainly experimental and driven by market hype. And now, its growth appears to be more sustainable, with a stronger foundation and a clearer market fit.

I think the agreements worth mentioning include Jito, Kamino, Marinade, Radium or Jupiter.

To show how fast Solana is developing, the official released some updates for May on X:

In addition, we are also witnessing the emergence of a new wave of DeFi primitives, among which ones worth paying attention to are:

• Real income platforms, such as: RateX, Exponent Finance, Sandglass or Pye Finance
• Realization of liquidity re-pled through Kyros
• New stablecoin base agreement with Perena, Global Dollar or KAST Card
• Revenue aggregators such as Lulo and Carrot
• Oracle based on Switchboard

There are many similar examples.

Solana also continues to attract existing protocols, with the most recent example being 1inch, which has just been launched on the main network.

The rise of DePIN

In addition to DeFi, we have also witnessed the rise of DePIN. According to Dune data, 46.5% of DePIN's total market value is currently concentrated on the Solana blockchain, and top projects such as Helium, Hivemapper and Render have been incubated.

They allocated more than $400 million to those involved in these projects, which is a huge amount.

Consumer application breakthrough

Although it is still in its early stages in the crypto space, there is a strong driving force trying to enter the consumer application space. It's a challenging track that takes a lot of time and trial and error to break through, but it's optimistic to see talent like Nikita Bier join Solana as a consultant.

Currently, crypto developers cannot find a more ideal platform than Solana. This blockchain network is attracting top talent and offers the most supportive initiatives: active ecosystem funds, intensive hackathon activities and a strong developer culture, where startups are truly surging. Data can also confirm this prosperity: According to Qw Qiao blogger analysis, Solana is about to surpass other platforms for the first time and become the blockchain ecosystem with the largest number of founders in Alliance.

This leads me to believe that among the many first-tier blockchains, Solana is most likely to be the birthplace of the first breakthrough crypto consumer application. If this scenario comes true, it will be a great benefit for the network. The subsequent development deserves close attention.

A strong community

So far, we have explored many metrics and tangible elements used to evaluate networks. But what I want to say is that Solana's biggest advantage is precisely invisible: its community.

It is often said that communities that have experienced darkest moments (such as the FTX crash) will eventually be reborn and become more tenacious, and I think that is part of the story. Another key factor is the Superteam community, which has performed outstandingly in cultivating talent and maintaining momentum, always invigorating the ecology.

In my opinion, this is one of Solana's secrets to success and it is simply unreplicable. No other blockchain project in the crypto field has this cultural heritage.

Institution is entering

Institutional interest in blockchain networks is also growing at a faster pace. A recent example is that BlackRock BUIDL Fund has expanded its business to Solana after Ethereum. There are many similar cases, but I think this is enough to illustrate the problem: traditional finance's confidence in on-chain infrastructure is increasing.

Additionally, Solana is likely to become the next crypto asset to obtain spot ETF approval in the United States. According to the current forecast of the Polymarket platform, the probability of its approval in 2025 is 77%. The adoption of ETFs will further gain official recognition as an investable asset, while consolidating Solana's market position as a network with high trust and integrity. This regulatory recognition is expected to open up new channels of participation for institutional and retail investors, attracting more incremental funds to enter the Solana ecosystem.

SOL price analysis

Judging from the price trend, SOL experienced its first hype craze between 2020 and 2021. But similar to most emerging protocols, its infrastructure was not yet perfect and the ecosystem was not yet mature at the time. As the cryptocurrency market enters a bear market in 2022, this heat fades quickly. The impact of the FTX exchange storm has made even worse, and many people believe that Solana is already a "death project".

Unlike most difficult recovery agreements, Solana made a comeback with a stronger stance. After about a year and a half of sideways consolidation, SOL broke through the price range for the first time, opening up a new bull market for the first time. In fact, it has become one of the few first-tier agreements since 2021, and this time it has established a real and powerful ecosystem support behind it.

The current situation is that SOL has rebounded strongly to around $170 after plunging nearly 67% from its all-time high in January. Although there may be some signs of overbought in the short term, the prospects are extremely explosive from the perspective of medium and long term trends.

In mainstream L1, SOL also showed significant relative strength. The current SOL/ETH exchange rate has formed a clear upward trend and is approaching its historical high.

What's next?

Of course, we cannot predict where the price will go now. Instead, what we can do is establish a framework to better evaluate investment opportunities from a risk and reward perspective. A simple heuristic I like to use is to compare fundamental changes with price changes in an asset from a certain point in time A to another point in time B.

What I'm seeing right now is that you can buy SOL at the same price in the market during the 2021 fanatic times. At that time, Solana was just a dream, neither achieving product market compatibility, and the DeFi ecosystem was just starting. Today, the development prospects of this network are bright. It has become the fastest growing blockchain in the cryptocurrency field, with real users, practical application scenarios, and growing institutional interests.

In addition, I also believe that the market structure is evolving, in which the underlying network will still be the area where most market value continues to accumulate.

From this perspective, here are my ideas:

As more applications and projects continue to develop on encrypted networks, coupled with the continued friendly regulatory environment and rising adoption rates, the value of encrypted networks will continue to grow. Ultimately, all investors around the world will want to get a share of this area.

In addition to Bitcoin, I think the first layer of blockchain will still be the core carrier of value precipitation (they are operating systems in the crypto world).

For all the reasons we mentioned earlier, I think Solana is in a very favorable position in the first layer of blockchain.

So, I believe that SOL remains one of the great investment opportunities for those who are long-term cryptocurrencies.

Finally, I will leave you a saying: Most people are still underestimating Solana, which is also a good thing.