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Hello readers,
The Solana Network appears to be entering a cyclical reset. Demand to speculate onchain continues to decline, while new use cases and TradFi onboarding have yet to fill the gap. Operating performance weakened significantly in Q4, with REV declining 43% to its lowest levels since Q3-23. The Real Onchain Yield dropped to 0.46% during the quarter, down 56%. Meanwhile, fundamentals deteriorated alongside user activity, and operating costs rose in relation to user fees.
In this week’s version of The Watch List, we share a full data-driven update on the Solana Network’s Q4 performance.
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.
Let’s go.
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 $91.1m in total fees in Q4 — the lowest since Q3-23, and down from $222.7m last quarter. For the year, the network generated $1.4b in Real Economic Value, down 1.4% compared to last year.
For context, the Ethereum Network did $141m in fees in Q4 and $763m in 2025.
The breakdown:
Base Fees: down 32% in Q4, but up 43% in 2025
Jito Tips (MEV): down 75% in Q4, but up 8% in 2025
Priority Fees: down 51% in Q4, but up 15% in 2025
Vote Fees: down 27% in Q4, but up 32% in 2025
Solana was the “homebase for speculation” this 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 the demand to speculate.
With social interest in crypto at six-year lows, it’s difficult to see the current trend reversing in the near term.
Data: Into The Cryptoverse
In the long term, we believe Solana needs to lead the tokenization of onchain equities (and other RWAs) to smooth out the extreme cyclicality of its onchain user base. Given that the Clarity Act has faced challenges recently, this will take some time.
Data: The DeFi Report
Real Onchain Yield = MEV (Jito Tips) paid to validators and passed onto SOL stakers (operator payments not included).
The Real Onchain Yield (annualized) in Q4 was 0.13%, down 74% from last quarter.
A declining share of MEV indicates less state contention/demand to speculate during the quarter.
Total Onchain Yield = MEV (Jito Tips) + Protocol Issuance paid to validators and passed onto SOL stakers (operator payments not included).
The Total Onchain Yield (annualized) in Q4 was 6.7%, with 93% of this coming from new SOL issuance. This was down from 7.64% in Q3, due to a 55% decline in priority fees and MEV.
GDP = Total fees generated by top applications on the chain (does not include chain fees).
The top Solana apps generated $485m in network GDP in Q4, down 47% from Q3. The primary drivers:
Pump Fun: $96m (down 19% in Q4)
Circle: $85m (up 6% in Q4)
Axiom: $55m (down 61% in Q4)
Jupiter: $46m (down 37% in Q4)
Raydium: $31m (down 79% in Q4)
Jito: $23m (down 76% in Q4)
For reference, apps on the Ethereum L1 generated $2.3b in GDP in Q4.
Unique Active Addresses = distinct wallet addresses that initiate at least one transaction per day.
The Solana Network averaged 2.2m daily active addresses in Q4, down 19% from Q3, as demand to speculate onchain continued to decline.
Active stake increased 3.5% in Q4. As of 12/31/25, 421.7m SOL were staked to the network, representing 75% of the circulating supply and 68% of the total supply.
Unlike Ethereum, the increase in SOL staked does not reduce 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.
The average Cost to Produce $1 of Real Economic Value rose to $11.76 in Q4, a 105% increase over Q3.
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 are rising relative to network fees.
If Solana were a company, it might consider cutting costs/reducing overhead in an environment like this.
Solana now has a total of $15.4b of stablecoins on the network, up 4.4% over Q3. This represents 5% of all stablecoin supply in crypto, placing Solana behind Ethereum, Tron, and BNB.
The leading stablecoin issuers on Solana:
Circle/USDC: $9.9b (down 1% in Q4)
Tether/USDT: $2.1b (down 10% in Q4)
Paypal/USDPY: $870m (up 95% in Q4)
Paxos/USDG: $870m (up 80% in Q4)
Solstice/USX: $306m (up 83% in Q4)
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 0.22 during Q4, up 282% over Q3. However, the increase is largely attributable to the massive volatility experienced around the 10/10 liquidation event.
The reading of 0.22 in Q4 indicates that 22% of the stablecoin supply turned over during the quarter. For reference, Ethereum L1 turned over 3% of its supply in Q4. The Ethereum L2s combined to turn over 5% of their stablecoin supply.
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 Q4 was 4.57%, down 5.5% from Q3.
The drivers:
SOL Issuance: 6.45m in Q4 (down from 6.8m in Q3)
SOL Burned: 63,764 in Q4 (down from 76,247 in Q3)
Net Result: 6.38m new SOL issued in Q4 (annualized 4.57% inflation)
Private DEXs saw massive growth on Solana in Q4. Total volumes averaged $2.2b/day (48% of all DEX volumes), up 50% over Q3.
Meanwhile, public DEXs averaged $2.5 B/day in Q3, up 5% from Q3. Combined, DEX volumes were up 15% during the quarter.
The top DEXs on Solana in terms of volume:
HumidiFi Private DEX: $1.4b/day (up 105% in Q4)
Raydium: $985m/day (up 6% in Q4)
Meteora: $700m/day (up 27% in Q4)
Orca: $473m/day (down 24%)
Tessera Private DEX: $303m/day (up 57% in Q4)
SolFi Private DEX: $245m/day (up 25% in Q4)
Pump Swap: $133m/day (down 44% in Q4)
Pump Fun: $88m/day (down 24% in Q4)
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 was up 22% in Q4, as the network turned over its TVL at an average daily rate of 46%. Most of this activity can be attributed to extreme volatility around the 10/10 liquidation event.
New Trading Tokens = number of tokens created on Solana launchpads.
In total, there were 2.1 million tokens created on Solana in Q4 — down 24% from Q3. Pump Fun continues to lead the market, with 1.6m new tokens in Q4 (75% market share).
Meteora was the bright spot in Q4, growing 18% while capturing a 21% market share.
In terms of “fair value,” SOL is currently trading below its realized price (proxy for “cost basis” of all coins on the network) of $145 — producing an MVRV of 0.95.
At the bottom of the ‘22 bear market, SOL traded down to 22% of its realized price. We’re not expecting to see that again in this cycle, but we do think that SOL will trade significantly below its realized price at some point. And we think the realized price is ultimately trending toward the $90 - $110 range.
We also expect SOL to trade back to its long-term 200-week moving average at some point. That number is currently $103.
Solana began 2025 with a bang. It’s where Trump launched his memecoin. It’s where most new crypto users were onboarded this cycle. And it’s where the fastest and most profitable applications were launched in this cycle.
However, it ended the year with a whimper.
With that said, the Solana Network has come a LONG way from December ‘22 — when the entire industry was punching down on the ecosystem while forecasting the flight of developer talent to Ethereum.
That didn’t happen. Instead, Solana came back stronger than ever. But there is still work to be done.
For Solana to continue to mature, it needs to do three things, in our opinion:
Double down on 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 valuable use case in crypto (just ask Pump Fun, Raydium, Axiom, Jupiter, etc). That said, the game should not be rigged in favor of insiders. For this reason, we’d like to see innovation in user protections against sniping/front-running, and a crackdown on pump-and-dump scams.
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.
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.
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.
Now we’re patiently waiting for the next “fat pitch.” If you’d like to be notified when we see it + gain access to our portfolio, you can sign up for TDR Pro here.
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And Stay Curious.
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.