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Hello readers,
Solana had its worst quarter since Q4-23 in terms of onchain activity. As this played out, the SOL price dropped to $62, 78% off the prior cycle high.
At the same time, we’re starting to see some green shoots across Perps Markets, RWAs, and “the trenches.” Meanwhile, several important protocol updates are in a proposal stage, and Helius acquired Light Protocol in Q2 with the intent to build a privacy layer into Solana.
In this week’s edition of The Watch List, we share a full data-driven update on the Solana Network’s Q2 performance and what we’re looking for next.
As a reminder, you can click the data citation under each chart to open a comprehensive dashboard with the onchain data supporting this week’s report.
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.
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REV = Base Fees, Priority Fees, MEV (Jito Tips), and Vote Fee payments to access L1 blockspace. MEV (Jito Tips) accrue to SOL holders via staking. The remaining fees accrue to validators, with 50% of base fees burned.
The Solana Network did $51m in total fees in Q2 — the lowest since Q4-23. This was down 43% from Q1 and 78% y/y.
For context, the Ethereum L1 did $88m in fees in Q2.
The breakdown:
Base Fees: down 26% in Q2 and 8% y/y.
Jito Tips (MEV): down 50% in Q2 and 86% y/y.
Priority Fees: down 45% in Q2 and 75% y/y.
Vote Fees: down 25% in Q2 and 39% y/y.
Solana was the “homebase for speculation” this past cycle (along with Hyperliquid). The strongest apps on the network (Pump, Axiom, Raydium, Jupiter) all cater to retail traders — making onchain revenues extremely cyclical and dependent on speculative demand.
The chart also helps visualize when speculation was at its most extreme levels in the last cycle: late ‘24 into early ‘25.
Social interest and onchain activity on Solana have been in a downtrend since that period. However, it looks like this may have bottomed in Q2. We’re now beginning to see some green shoots within the “trenches.”
Notably, Pump Fun (Solana’s most popular app) generated nearly 1.5x the entire Solana REV in protocol fees during Q2.
Ultimately, we believe Solana needs to compete with Hyperliquid for perps traders + lead the tokenization of onchain equities (and other RWAs) to smooth out the extreme cyclicality of its onchain user base.
More on Perps and Solana’s growing RWA activity later in the report.
Real Onchain Yield = MEV (Jito Tips) paid to validators and passed onto SOL stakers (operator payments not included).
The average Real Onchain Yield (annualized) in Q2 was 0.10%, down 37% from last quarter, and 82% y/y.
For reference, Ethereum’s average Real Onchain Yield in Q2 was 0.17%. This was the first quarter that Ethereum had a higher Real Yield since 2023.
The 82% y/y decline signals how much “speculative froth” has left the ecosystem since the frenzy we saw in Q1 of last year (when multiple G20 presidents launched memecoins on Solana).
Total Onchain Yield = MEV (Jito Tips) + Protocol Issuance paid to validators and passed onto SOL stakers (operator payments not included).
The Total Onchain Yield (average, annualized) in Q2 was 5.79%, with 98.2% of that attributable to new SOL issuance. For reference, Ethereum’s average Total onchain Yield in Q2 was 2.68% (with issuance accounting for 94%).
For the quarter, the total onchain yield was down 6%, and 24% y/y.
GDP = Total fees generated by top applications on the chain (does not include chain fees).
The top Solana apps generated $358m in network GDP in Q2 (7x the L1 REV), down 33% from Q1, and 66% y/y.
Pump Fun (social/retail trading): $71m (down 31% in Q2, and 39% y/y).
Meteora: $68.7m (down 45% in Q2, and 61% y/y).
Circle (stablecoins): $59m (down 6% in Q2, but up 34% y/y).
Axiom (trading app): $30.4m (down 34% in Q2, but up 88% y/y).
Tether (stablecoins): $20.2m (down 2% in Q2, but up 62% y/y).
Jupiter (DEX aggregator & trading app): $17m (down 43% in Q2 and 67% y/y).
Phantom (wallet): $16.1m (down 44% in Q2 and 61% y/y).
Raydium (DEX & launchpad infrastructure): $12.9m (down 47% in Q2 and 87% y/y).
GMX (perps DEX): $11m (up 253% in Q2 and 183% y/y).
Orca (public DEX): $10.4m (down 28% in Q2 and 61% y/y).
For reference, apps on the Ethereum L1 generated $1.8b in GDP in Q2 (5x Solana).
Pump Fun generated nearly 1.5 times as much revenue as Solana REV in Q2. Yet SOL is currently priced at a 75x multiple to Pump Fun (33x on a fully diluted basis). We continue to believe there’s a dislocation there.
Real World Assets Onchain = tokenized representations of physical and traditional financial assets that are issued, traded, and managed on Solana. Stablecoins are tracked separately below. Data sourced from rwa.xyz.
In total, Solana currently has $3.6b of Real World Assets onchain, up 54% in Q2, and 571% y/y. For reference, this is 22.5% of the RWA’s on Ethereum.
Asset-backed credit and corporate credit account for 33.14%, up 9.3% in Q2 and 525% y/y.
U.S. Treasuries account for 31.3%, up 36% in Q2 and 239% y/y.
Private Equity accounts for 18.9%, up 247% in Q2 (there were zero private equity assets onchain at this time last year).
Public Equities make up 15.2%, up 114% in Q2, and 5724% y/y.
Commodities make up 0.64%, up 0.9% in Q2, and 797% y/y.
Solana averaged $56.6m in RWA trading volume/day in Q2, up 136% on the quarter and 4047% y/y.
For reference, Ethereum generated $27.8m RWA trading volume/day in Q2, albeit with 3.75x the RWAs onchain.
Given skeptics on CT concerning wash trading, we looked into the activity. We found that roughly 1-2% of trading volume appears to be “wash trading.” If interested, you can check out our dashboard covering Solana RWA activity here.
Raydium makes up 37.7%, up 251% in Q2.
Orca makes up 16.8%, up 2048% in Q2.
ZeroFi makes up 8.3%, up 9641% in Q2.
Meteora makes up 7.7%, up 69% in Q2.
AlphaQ makes up 6.5%, up 189% in Q2.
Unique Active Addresses = distinct wallet addresses that initiate at least one transaction per day.
The Solana Network averaged 2.02m daily active addresses in Q2, down 16% from Q1, and 37% y/y.
Active stake increased 0.24% in Q2 and 9.5% y/y. As of 6/30/26, 427.43m SOL were staked to the network, representing 73.6% of the circulating supply and 67.9% of the total supply.
Unlike Ethereum, the increase in SOL staked does not increase the amount of new issuance paid to validators. Instead, issuance declines 15% per year on a set, disinflationary schedule until it hits 1.5% per year. Therefore, if more SOL is staked and onchain activity does not increase, staking yields decline (as we saw in Q2).
The average Cost to Produce $1 of Real Economic Value was $9.67 in Q2, a 19% increase from Q1, and 129% increase y/y.
A rising Cost to Produce $1 of Real Economic Value indicates that more issuance (network inflation) was required to secure the network, relative to the real value produced during the quarter. It’s telling us that network costs/overhead increased in Q2, relative to REV.
For reference, Ethereum’s Cost to Produce $1 of REV in Q1 was $10.75.
Solana now has a total of $16.6b of stablecoins on the network, up 9% in Q2, and 53% y/y. This represents 5.23% of all stablecoin supply in crypto, placing Solana behind Ethereum, Tron and BNB.
The leading stablecoin issuers on Solana:
Circle/USDC: $7.7b (down 2% in Q2, but up 4% y/y).
Tether/USDT: $3.8b (up 7% in Q2 and 57% y/y).
World Liberty Finance/USD1: $1b (up 16% in Q2).
USDGO: $859.2m (up 1061% in Q2).
Paypal/USDPY: $718.2m (down 0.3% in Q2, but up 234% y/y).
Paxos/USDG: $693.3m (down 26% in Q2, but up 573% y/y).
Ethena/USDe: $543.6m (up 16359% in Q2, and 5378% y/y).
Solstice/USX: $505.3m (up 42% in Q2).
A few areas where we expect to see more stablecoin innovation on Solana:
LatAm Fintechs serving remittances, payroll, cards/interchange. A few promising examples include Rain, Morse, and Takenos.
U.S.-licensed fintechs offering new payroll solutions using stablecoins. We think this could come after the Clarity Act (40% chance of passage this year on Polymarket), and we continue to believe the winning stablecoin issuer will wrap services around the token.
Effective Stablecoin Velocity measures the daily turnover rate of each dollar of stablecoin supply onchain. This metric filters out noise from wash trading and circular transactions to arrive at true velocity, measured as net USD transfers per day/circulating supply. A rising value indicates increased economic activity on the Solana Network.
Stablecoin velocity averaged 0.064 during Q2, down 9% in Q2, but up 50% y/y.
The reading of 0.064 in Q2 indicates that 6.4% of the stablecoin supply “turned over” each day during the quarter. For reference, Ethereum L1 turned over 1.8% of its daily stablecoin supply in Q2.
As emerging Fintechs building on Solana merge with new regulations, we expect stablecoin velocity to steadily increase in the coming years and become less cyclical/reliant on “risk-on” trading/speculation.
Net Dilution Rate = Daily Protocol issuance less burned SOL/circulating supply (annualized). A positive Net Dilution Rate is dilutive to SOL holders (who are not staking).
SOL’s Net Dilution Rate (annualized) in Q2 was 4.15%, down 5% in Q2 and 11% y/y.
The drivers:
SOL Issuance: 6.07m in Q2 (down from 6.26m in Q1)
SOL Burned: 64.19k in Q2 (down from 67.7k in Q1)
Net Result: 6m new SOL issued in Q2 (annualized 4.19% inflation)
Note that, unlike Ethereum, more staked assets do not increase SOL issuance (which is paid to Solana validators). That means issuance is always declining on Solana (the network is preprogrammed to do so, with a 15%/year disinflation rate).
The impact on validators/stakers?
Staking yields will drop when more SOL is staked on the network, unless onchain fees make up the difference.
*Includes 11 public DEXs and 9 private DEXs.
Average (total) DEX volume in Q2 was $1.9b/day — down 41% in Q2 and 23% y/y. For reference, Ethereum L1 averaged $1.5b in DEX volume/day in Q2, and $2.7b/day including the L2s.
Private DEXs accounted for 38% of the volumes ($722.6m/day), but were down 62% in Q2. For more on Private DEXs, we recommend the Helius blog post and Jump Crypto’s recent thread on X.
Public DEXs averaged $1.2b/day in Q2, down 11% from Q1 and 52% y/y.
The top DEXs on Solana in terms of volume:
Meteora Public DEX: $666.6m/day (up 49% in Q2 and 21% y/y).
BisonFi Private DEX: $297.9m/day (down 48% in Q2).
Raydium Public DEX: $171.2m/day (down 43% in Q2 and 71% y/y).
Orca Public DEX: $134.4m/day (down 53% in Q2 and 41% y/y).
PumpSwap Public DEX: $103.9m/day (down 27% in Q2 and 45% y/y).
HumidiFi Private DEX: $100.4m/day (down 84% in Q2).
DeFi Velocity measures the turnover rate of each dollar within DeFi protocols. When it exceeds 1, it means the network is doing more volume/day than the total value locked in DeFi protocols.
DeFi Velocity averaged 0.356 in Q2, as the network turned over its TVL at an average daily rate of 35.6%. This was up 19% in Q2, but down 29% y/y.
Solana is all about “fast DeFi.” Speed and turnover are what drive network fees. It’s why Solana’s Real Yield was consistently higher than Ethereum’s in ‘24/25. We think Solana’s speed can ultimately make it a magnet for capital in risk-on environments. This makes SOL an extremely reflexive, high-beta asset.
This is particularly interesting as it relates to Real World Assets coming onchain. Solana currently has just 23% of the RWAs that Ethereum L1 has. But it generated 50% more trading volume on RWAs than Ethereum L1 in Q2.
In total, Solana generated $169b in Perp Volume in Q2 (26% of Hyperliquid), up 77% in Q2 and 68% y/y.
GM Trade has a 53% market share, with volumes up 770% in Q2 and 3,793% y/y.
Pacifica has a 42% market share, with volumes up 6% in Q2 (the project launched in late Q2-25).
Jupiter has a 2.7% market share, with volumes down 32% in Q2 and 77% y/y.
New Trading Tokens = number of tokens created on Solana launchpads.
In total, there were 2.69 million tokens created on Solana in Q2 — down 10% during the quarter and 15% y/y.
Pump Fun continues to lead the market, with 2.55m new tokens in Q2 (95% market share).
We’ve observed a notable increase in Pump Fun volumes, active users, graduated tokens, and protocol fees (+creator earnings) over the last few weeks, a signal that sentiment may have bottomed across the Solana ecosystem.
Data: The DeFi Report, Glassnode
SOL is currently trading within our “fair value” range and is in the “buy zone” based on its high-level KPIs, relative to the lows in ‘22 (when SOL was down 96% from its ‘21 peak).
Solana was the “home for speculation” in the last cycle, while onboarding more new crypto users than any other chain.
This allowed the network to:
Establish itself as the “place to build” by producing some of the fastest-growing and most profitable crypto apps (Pump, Axiom, Jupiter, etc.).
Stress test network infrastructure (successfully).
While the developers may not be “chewing glass” as they were back in ‘22, the network is certainly going through its latest reset.
In terms of roadmap items, here are a few we’re keeping an eye on:
SIMD-0550: Solana’s current inflation rate declines by 15%/year on a set schedule. SIMD-0550 would increase this rate to 30%/year. The proposal estimates that all SOL would be issued in 2029, rather than in 2032 if it goes through. The trade-off will be a lower nominal staking rate (estimated 2.25% after three years).
SIMD-123: Today validators receive 100% of block fees, MEV, and priority fees. This proposal would allow validators to set a block-revenue commission to be paid to delegated stakers. If passed, this would create more competition among validators by incentivizing delegated stake (by paying commissions) + drive real economic activity to stakers.
Confidential Transfers & Balances: allows for token transfers without revealing the amounts and balances, with the ability to audit the data. This is especially relevant for stablecoins, tokenized stocks/RWAs, payments, treasury movements, and institutional DeFi. On June 10th, Helius acquired Light Protocol to build a “canonical privacy layer for Solana.”
Looking forward, we see five key pillars that could determine Solana’s success in the next expansion:
Consumer/retail trading use cases. For years, crypto-native VCs have funded onchain “gaming” use cases. But there is no actual gaming in crypto. The “game” is retail trading. And it’s arguably the most popular use case in crypto. As noted in the report, Pump Fun has been a bright spot for Solana so far in this bear market. The team is now focused on improving the mobile experience to make it a mainstream social/trading app (rather than a crypto-native desktop terminal).
Perps markets. Solana needs to compete with Hyperliquid here. Notably, Solana’s top perps DEX (Drift) was exploited on April 1, in which nearly half the TVL was hacked. Since that time, we’ve seen a resurgence in Perps activity on the network (all-time high volumes in Q2), led by GM trade. Still, Solana combined perps volume in Q2 was just 26% of Hyperliquid’s.
Onboard TradFi. To be “Nasdaq on blockchain,” Solana needs Nasdaq’s assets. That means it needs to onboard asset issuers that want to tokenize their assets (equities, bonds, etc). Finding an incentive model that works for the issuers is likely the largest barrier after regulation. This will take some time.
Establish itself as the leading public blockchain for fintechs building with stablecoins, especially in emerging markets such as LatAm.
Continue to win the “developer wars.” The Solana Foundation operates like a well-run tech company compared to its crypto counterparts. For this reason, Solana tends to have a stronger developer pipeline, sourced through a global “hacker house” program that seeks out and helps onboard developers to Solana. Continued organization and investment in this area will be critical to the network's ongoing success. For reference, Solana full-time developers are currently down 32% (Ethereum is down 29%).
We were contrarian buyers of Solana in late 2022/early 2023, establishing a core position at a cost basis of $15.39, which we exited at 10x + gains in late ‘24/early ‘25.
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Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.