Solana’s Breakthrough: How 2024’s Wins Shape 2025’s Opportunities

David Liang

Solana’s Milestone Year

2024 was indeed a milestone year for Solana. Solana’s continued infrastructure upgrades throughout the depths of the 2022-2023 bear market now make it significantly more resilient during congestion periods. Talented and committed builders continued to expand an ecosystem of feature-rich dApps, wallets, and new crypto native tools, only possible on Solana. From all-in-one dexes like Jupiter Exchange, trusted lending/liquidity/leverage protocols like Kamino Finance, pump.fun’s bonding curve innovations, to easy-to-use and intuitive wallets in Phantom / Magic Eden.

Per Defillama.com as of Nov 14th, 2024, Solana’s TVL sits at ~$7.85B USD, with 24H volumes of ~$7B USD.

Solana solidified itself as a reliable blockchain. Enhanced network stability, year-over-year growth in user active addresses and total volume, and groundbreaking strides in Maximal Extractable Value (MEV) rewards. Solana is a clear “major” by market cap, alongside Bitcoin and Ethereum ($100B market cap per Coingecko).

As we look to 2025, Solana continues to attract an ever-growing user base of institutional and retail users and support the rise of high-value applications on its platform. In this post, we will explore Solana’s journey through 2024, its anticipated growth in 2025, Figment’s role as a key player in driving innovation, and reliability and rewards for delegators. Solana’s current trajectory presents exciting opportunities as the premier, robust, high-performance blockchain.

2024: A Year of Uninterrupted Growth and Stability

After a challenging period in 2022, Solana emerged with renewed strength in 2024, maintaining continuous stability throughout the year. In 2022, Solana experienced 14 major or partial outages, halting mainnet block production and requiring social coordination between a majority of validators to resume. Notably in 2024, Solana had a single major network outage, in February 2024. Thanks to a series of technical upgrades, Solana’s resilience and efficiency with respect to stability are at their best ever.

Key updates, such as QUIC-based Transaction Processing Units(TPUs), stake-weighted Quality of Service(QoS), and localized fee markets have strengthened Solana’s resilience during periods of high blockspace demand volumes.

A Big Comeback: High On-Chain Activity Driving Solana’s Growth

One of the most remarkable aspects of Solana’s 2024 resurgence has been the exponential increase in on-chain activity. By mid-2024, Solana reached record-breaking levels in both active addresses and transaction volumes. In July alone, Solana recorded 54.33 million active addresses, a 151% increase from early 2024. Similarly, non-voting transactions spiked to 1.3 billion, underscoring the high demand for the network’s services.

Solana Decentralized Exchanges

Jupiter Exchange is Solana’s all-in-one dex for swaps, limit orders, perpetual futures, dollar-cost-averaging (DCA), and more. Their DCA is particularly interesting with customizable options to buy/sell a token over any amount of time with any amount of orders, is only possible due to Solana’s architecture.

Raydium hosts most new liquidity pools launched on Solana. Per defillama.com, Raydium 7-day spot volume as of Nov 13th, 2024, is $16.5B.

Bonding Curve Liquidity Pool (LP) Innovation

Love or hate memecoins, Pump.fun innovated with their bonding curve/mechanism. Once a pump.fun token passes the 69K market cap, Pump.fun provides the initial LP of 12k to Raydium and burns it. Previously, users needed to provide their own funds to LP in Uniswap-V2. The rise of so many new tokens on pump.fun drives heavy trading transaction volumes on Solana and heavily contributes to MEV opportunities. Per defillama.com, pump.fun is on pace for $370MM annualized fees.

Trading Clients

Bonkbot, the renowned Telegram trading client on Solana. Built by the Bonk community, they charge a 1% fee on all swaps with 10% of fees going to buyback and burning Bonk. Per defillama.com, they are on track for $240MM annualized fees.

Photon, the new, go-to trading client. Per defillama.com, on track for ~$470MM annualized revenue.

The Rise of MEV in Solana Staking

Maximal Extractable Value (MEV) is a contentious topic. Efficient markets will always discover and capture profit opportunities. Solana’s implementation has shown particular promise for its validators. MEV refers to the coordination of searchers, Solana validator clients, relayers, validators, and stakers to capture profit opportunities on the blockchain. These include: arbitrage between centralized exchanges and decentralized exchanges, dex-to-dex arbitrage, liquidations on lending markets, and more.

In 2024, MEV execution rewards in the form of validator tips contributed a substantial portion of validator rewards in addition to protocol inflation rewards. At Figment, we saw MEV make up 12.4% of total rewards in Q2 2024 alone.

Increased Rewards for Validators: A Key Incentive

For validators, the financial incentives provided by Solana are becoming more attractive than ever. Solana’s staking rewards framework, bolstered by MEV, offers a competitive edge over other Layer 1 protocols. Figment’s validator, for example, achieved an average Staking Reward Rate (SRR) of 7.12% in Q3 2024, which was ~13% above the network average.

Higher validator rewards have far-reaching effects on Solana’s ecosystem. As rewards increase, more validators are encouraged to participate in Solana’s proof-of-stake network, enhancing its decentralization and security.

Implications for Stakers

For those who stake their tokens to validators, the increase in MEV rewards presents an exciting opportunity for increased rewards.

Looking Ahead: 2025 Predictions and Growth Areas for Solana

As we look ahead to 2025, Solana is poised for continued growth and innovation. The network’s track record of stability, combined with its high on-chain activity and growing MEV rewards, sets the stage for a promising year. Here are some predictions and growth areas that could define Solana’s next chapter:

Continued Network Stability

Evolution of MEV

Liquid Staking and Liquid Restaking Opportunities on Solana

Jito Staking

Marinade Finance

Sanctum

Restaking allows stakers to utilize their staked assets to economically secure additional networks and earn additional rewards.

The Rise of Institutional Interest on Solana

With Solana’s resilience, reliability, and high transaction volumes fueling greater execution rewards for validators and stakers, it makes it a more compelling proposition for institutional entities.

Expansion of Use Cases

In 2024, Solana’s ecosystem expanded significantly with the integration of PayPal USD (PYUSD), a stablecoin that bridges traditional finance and blockchain technology. Looking ahead to 2025, the anticipated introduction of synthetic Bitcoin (sBTC) to Solana is poised to further diversify its use cases.

Figment’s Role in the Solana Ecosystem

Figment’s SSR of 7.5% relative to our validator operator peers means we are delivering additional value to our stakers. Execution rewards account for ~7-15% of total rewards (protocol inflation rewards + execution rewards = total rewards).

Figment is committed to sharing transparent and valuable data on staking rewards, network performance, and MEV extraction.

As we look to 2025, Figment’s role in Solana is only expected to grow, with a focus on providing even more robust infrastructure and staking solutions.