Solana’s Next Chapter: Laying the Foundation of Internet Capital Markets

Introduction

Solana entered 2025 from a position of quiet confidence. Having lived down the baggage from the FTX collapse, it staged an incredible comeback during the 2024 memecoin boom, cemented its cultural relevance, and re-established itself as the leading, high-performance general purpose blockchain.

The network now faces a different challenge: converting that dominance into lasting market significance. What began as a speculative resurgence has evolved into a sustained phase of technical and economic consolidation. Solana’s core developers have used this momentum to harden the network’s infrastructure while ecosystem teams work to translate activity into durable economic depth.

The chain’s recent trajectory reflects less a rebound than a transformation, one defined by the maturation of its technical architecture and the translation of speed into sustained economic gravity. The network is now evolving toward a cohesive vision of “Internet Capital Markets,” a system capable of supporting the full spectrum of digital financial activity, from retail speculation and consumer apps to enterprise-grade infrastructure and tokenized real-world assets.

This evolution is underpinned by three mutually reinforcing dynamics:

• Technical resilience: a maturing core stack defined by stability and continual performance improvements to help the network overtake Web2 and traditional finance benchmarks.

• Economic traction: accelerating onchain activity reflected in record decentralized exchange (DEX) volumes, network and application fee generation, and stablecoin velocity, all of which translate performance into real network value.

• System integration: the alignment of Solana’s technical architecture, market microstructure, and developer ecosystem into a cohesive framework for Internet-scale financial activity.

The following report examines how this convergence is reshaping Solana’s role in the broader blockchain economy. It traces the network’s evolution across the validator and consensus layer, the redesign of its execution and fee structures, and the changing dynamics of onchain activity, from DEX and perpetual futures volumes to stablecoin flows, staking, and institutional participation. Taken together, these developments highlight how Solana’s technological ambition and economic momentum are beginning to reinforce each other, positioning the network as a leading contender to power the emerging architecture of Internet Capital Markets.

Key Takeaways

• Solana continues to evolve toward its Internet Capital Markets (ICM) vision, with forthcoming upgrades such as Agave 3.0, Firedancer, and Alpenglow expected to meaningfully improve bandwidth, latency, and validator performance.

• Iterative improvements across the validator stack, including scheduler optimization, higher compute unit (CU) limits, and runtime efficiency gains, have reinforced network stability and throughput at scale.

• Ongoing development in networking (DoubleZero), execution (ACE and APE), and consensus (Alpenglow) positions Solana to support low-latency, high-frequency market infrastructure suitable for consumer and institutional use cases.

• Solana maintains one of the highest staking rates in crypto (~75% of circulating SOL, the network’s native token), yet liquid staking token (LST) adoption remains limited at ~6% of staked SOL, highlighting untapped potential for capital efficiency.

• Solana leads all blockchains in economic activity, ranking first in DEX volumes, network fees, and application-generated fees, but continues to lag in total value locked (TVL) and stablecoin supply, reflecting high capital velocity but lower long-term capital retention.

• Perpetuals markets on Solana have grown but still trail offchain venues and the dominant chain for this activity, Hyperliquid. Jupiter and Drift remain Solana’s leading onchain perps platforms, while new entrants aim to gain market share through novel validator-integrated and high-performance designs.

• The memecoin cycle gave rise to token launchpads like Pump.Fun, which standardized onchain issuance and retail participation. Second-generation platforms such as MetaDAO Metaplex, and Believe are expanding token issuance beyond speculation into creator and business financing.

• Institutional adoption is accelerating: since June, over $90 million in equities have been tokenized on Solana with over $1 billion in transfer volume, underscoring the network’s growing role as a venue for tokenized real-world assets.

• Developer momentum remains a key moat, with Solana ranking as the No. 1 ecosystem for new developers in 2024, boasting 83% year-over-year growth in active contributors.

• Digital Asset Treasury Companies (DATCOs) have become an emerging source of institutional SOL demand. Eighteen active Solana DATCOs collectively hold ~18 million SOL (~3.1% of supply), integrating treasury management, staking, and validator participation.

• SOL exchange-traded funds (ETFs) are expected to launch soon, potentially with staking approval at inception. These products would significantly broaden institutional access and reinforce Solana’s legitimacy as a core digital asset.

Technical Roadmap

Solana’s developer community is focused on upgrading its stack to continue improving network performance across all aspects of the chain. Upgrades primarily address two specific needs. First is the need to “Increase bandwidth and reduce latency (IBRL),” so that Solana outcompetes other blockchains and is on par with, or even better than, Web2 and traditional finance standards. Second is to improve Solana’s market microstructure so that any application can build on Solana without worrying about its users having to compete with other applications’ users for inclusion or priority in blocks.

Continual iteration and improvement of Solana’s underlying stack is a feature, not a bug. It is a recognition that Solana’s long-term success is far from guaranteed and that the chain operates in an increasingly competitive environment with other chains vying to outperform it. As Anza Labs, which maintains the primary Solana validator client, put it in its 2025 roadmap release, “Complex systems are not optimized by one magic fix but rather the accumulation of thousands of micro-advancements.”

Agave Client Updates

Agave is Solana’s primary validator client, managed by the Anza team and forked from the initial Solana Labs validator client. Anza was formed by team members from Solana Labs to build an improved Solana validator client that launched in early 2024. Agave 2.0, released November 2024, was a foundational update to the prior Solana Labs validator client code, introducing significant streamlines to the codebase. So far in 2025, Anza has released three updates to the Agave client: versions 2.1, 2.2, and 2.3. As laid out in Anza’s 2025 roadmap, these updates focus on “increasing bandwidth and reducing latency…for Solana to stay competitive.” Modifications have centered on a few major elements of the Solana stack, including transaction scheduling, block propagation, data storage, and hashing performance.

One of the most important components under optimization is the Transaction Processing Unit (TPU) scheduler, which manages how transactions are ordered and processed by validators, and previously served as a bottleneck to increasing network throughput. Over the course of the past year, Agave developers have introduced a set of smarter scheduling algorithms, called a “greedy scheduler,” to prioritize higher-value transactions. At the same time, improvements to Turbine, Solana’s block propagation protocol, have improved the network’s propagation efficiency. This matters because, as block sizes increase with higher CU limits (covered below), efficient propagation ensures validators stay synchronized and user experience remains smooth.

A sign of progress, since the release of Agave 2.0, Solana slot times have stabilized considerably, with median slot duration consistently reaching the network’s target of 400 milliseconds. Additional work is being done to overhaul execution overhead, like the status cache for faster transaction lookups; improve blockstore insertion to handle higher data throughput more efficiently; and deploy faster hashing algorithms like ahash to replace slower defaults. Collectively, these updates reinforce Solana’s ability to handle sustained growth in throughput while preserving low latency and reliability.

Looking ahead, the Agave client 3.0 went live on testnet in August with mainnet release expected in Q4. Agave 3.0 includes preparations for Alpenglow, an update to Solana’s consensus protocol (covered below), that will shorten transaction finality from ~12.8 seconds to ~150 milliseconds. The release also introduces a cache overhaul delivering 30–40% faster transaction processing, expanded compute and cross-program invocation (CPI) limits, and relaxed entry constraints that improve liveness and set the stage for asynchronous execution. Additionally, validator restart times are reduced to ~3.5 minutes with snapshot and recovery optimizations. Together, these changes make Solana more parallel, performant, and operationally resilient.

AlpenGlow

Alpenglow is a significant update to Solana’s consensus protocol, and according to Anza, “the biggest change to Solana’s core protocol since, well, ever.” It was developed by researchers from ETH Zurich (a Swiss university; no relation to Ethereum), who in 2024 highlighted potential vulnerabilities in Solana’s consensus design. Following their research, the Anza team invited them to develop an improved consensus mechanism addressing the issues they identified. Validators approved the Alpenglow update on Sept. 2, with developers targeting rollout on the Solana mainnet by early 2026 and possibly as early as the community’s annual Breakpoint conference in December.

Solana’s consensus combines two key mechanisms: Proof of History (PoH) and TowerBFT. PoH acts as a decentralized clock, producing a verifiable sequence of hashes that timestamps transactions and establishes their order. TowerBFT builds on this timeline by having validators vote to include blocks and progressively lock in their choices, ensuring safety and finality once enough votes accumulate. Together, PoH provides a clock for Solana’s global validator set, while TowerBFT enforces agreement and prevents forks (for a full overview, refer to our 2022 Ready Layer 1 report on Solana).

Alpenglow introduces two major upgrades: Rotor and Votor. Rotor revamps block propagation by upgrading Solana’s multi-hop Turbine design with a streamlined, single-hop model. Stake-weighted relay nodes distribute blocks directly to all validators, cutting latency, simplifying data dissemination, and laying the groundwork for future bandwidth incentives.

Votor replaces the role of TowerBFT and PoH in finality with an offchain voting system. By eliminating the need for onchain votes, Votor improves Solana’s architecture. Importantly, it reduces the costs of running a validator on Solana. Under Solana’s current design, validators are required to submit a vote transaction for every block, accounting for ~1 SOL in daily costs, a significant drag on validator profitability. Under Alpenglow’s latest design (subject to change before release), validators must now submit a “Validator Admission Ticket (VAT)” every epoch (~2 days on Solana), costing 1.6 SOL. This represents a ~20% drop in validator operating costs from vote transactions. These fees will be fully burned, whereas only 50% of current vote fees are burned, helping to offset SOL inflation. While this only represents a marginal decrease for now (see further research here), members of the Anza team have indicated they plan to explore additional reductions in VAT costs once Alpenglow is implemented.

Additionally, Alpenglow addresses a longstanding type of validator misbehavior. Some Solana validators intentionally wait slightly longer than the 400 millisecond target slot time. They do this to increase the number of transactions they can choose from and make more money on each block. While this practice is not explicitly disavowed by the Solana protocol, it slows down the network. By introducing a “skip vote” function, Alpenglow will enable validators to actively disincentivize such timing games by voting to skip blocks that take too long to be propagated. The ongoing updates to compute unit limits (covered below) should also help by improving validator profitability, so they have less motivation to stall. Please refer here for an overview of validators and transaction inclusion delays.

Votor features two concurrent voting mechanisms, a fast finalization method, and a slow finalization method. Fast finalization requires 80% or greater of stake to approve a block in the first voting round, while slow finalization requires only 60% or greater of stake to do so. Validators will be incentivized to include fast-finalization certificates, potentially introducing another source of rewards, but the exact economic/reward design has not yet been determined. The removal of onchain voting computational overhead, coupled with improved block propagation, significantly improves Solana’s block finality from 12.8 seconds to 100-150 milliseconds (depending on whether the fast or slow finalization method is used). This will make Solana one of the fastest blockchains by finality and another step closer toward enabling application UX on par with Web2 and traditional finance speed.

Alpenglow also improves Solana’s security model, shifting away from the more common fault tolerance against 33% of adversarial validator stake. Instead, Alpenglow uses a “20+20” approach where the network is resilient to disruptions even if 20% of stake is controlled by adversarial actors and an additional 20% is unable to participate in consensus due to non-malicious reasons.

Alpenglow represents both a tailwind and a risk for Solana. The upgrade improves network fault tolerance, speeds up finality from seconds to sub-second levels, and lowers barriers to validator participation and profitability. These enhancements collectively strengthen Solana’s position as an institutional-grade blockchain, better suited for financial and consumer applications, enterprise use cases, and developers building on time-sensitive trading infrastructure. Faster finality reduces settlement risk and enables market participants to operate with greater confidence that transactions will be irreversible almost immediately.

Still, consensus upgrades are inherently delicate. Altering the core of a network’s technology stack introduces non-trivial risks to liveness. Given Solana’s prior downtime issues, the Anza team is acutely aware of this risk and has built credibility over the past year through a series of successful Agave releases, each shipping meaningful performance improvements without compromising stability. This track record offers reassurance but does not remove the complexity of what lies ahead.

If executed successfully, Alpenglow is arguably comparable in practical importance to Solana as Ethereum’s 2022 Merge. It would affirm Solana’s ability to continue innovating at the consensus layer while preserving stability and could prove decisive in cementing its reputation as a high-performance blockchain ready for scaled institutional adoption.

Firedancer

As covered in our prior Solana update, Firedancer is a second Solana validator client in development by Jump Crypto. The team is building a new Solana validator client from the ground up, written in C++ rather than Rust. From a performance perspective, Firedancer focuses on improving Solana's throughput and efficiency, potentially enabling the network to handle over 1 million transactions per second (TPS), far surpassing the current average of around 2,000-4,000 TPS during peak times. It achieves this through optimized code that better utilizes hardware resources, reduces latency, and speeds up block finality.

Firedancer is a critical step toward improving Solana’s resilience by reducing reliance on a single client. Today, Solana’s validator set overwhelmingly runs the Agave client, meaning that a single bug or vulnerability could trigger widespread downtime. By adding Firedancer as an independently built client, the network reduces the risk of correlated failures, much like Ethereum benefits from having multiple production-grade clients.

Frankendancer, a lite version of the full Firedancer client, went live on Solana mainnet in September 2024 during the community’s Breakpoint conference. Because Firedancer is being developed incrementally, not every component of the protocol has been rebuilt. To bridge that gap, Frankendancer runs key Firedancer systems, including high-performance networking, block distribution, signature verification, and block packing, while relying on Agave for the runtime and other unfinished functionality. Even though it is the current iteration, the client has demonstrated impressive performance. In August, a Solana validator using the Frankendancer client produced a series of blocks with TPS greater than 100k.

Initial Frankendancer adoption following its release was slow, partially due to its lack of integration with the Jito block engine that lets validators earn MEV rewards. Following the integration of the Jito block engine with the client in April 2025 and the launch of a stake delegation program by the Firedancer team, adoption has picked up, and greater than 20% of active stake now runs on Frankendancer. The Firedancer team has stated that 20% is the upper adoption limit for now while they continue to audit and test the client to ensure it introduces no issues.

Firedancer development is not happening in a vacuum, a fact that introduces several complications for the team. First, Firedancer must conform to the existing Anza client to ensure they can run alongside each other. As outlined above, the Anza team continues to introduce updates to the validator client at a rapid pace. As a result, the Firedancer team is building toward a constantly shifting target. For this reason, much of Firedancer development over the past few years has focused on conformance with the Anza client. For example, Firedancer significantly optimizes Solana’s PoH and Tower BFT mechanisms. With the rollout of Alpenglow, those mechanisms may no longer be as relevant by the time Firedancer hits mainnet. Additionally, Firedancer performance improvements that outpace the Anza client will be useless if validators running the Anza client cannot keep up and could introduce stress for other actors in the block building process, such as remote procedure call (RPC) providers. The Firedancer team must keep these constraints in mind while attempting to improve network performance.

An underappreciated aspect of the rollout is the interplay between Firedancer and Anza. While each team is focused on driving adoption of its own client, they are also ensuring interoperability, engaging in a form of friendly competition. This rivalry pushes the teams to iterate more quickly, as reflected in Anza’s rapid release cadence in recent months, while allowing each to benefit from the other’s innovations. In practice, this dual-client environment strengthens Solana on two fronts: it improves technical robustness while fostering a culture of accelerated innovation.

Firedancer’s full release and adoption will mark an important milestone for Solana, making it one of the few layer-1 blockchains outside of Ethereum to support multiple independently developed validator clients. This redundancy will not only improve the network’s resilience by reducing single-client risk but also bring significant performance enhancements across the validator stack.

SOL Staking and Emissions

Staking

Solana has historically had a very high staking ratio, with 68% of total supply (75% of circulating supply) currently staked, thanks to a lack of minimum staking requirements, quick unbonding periods of ~2 days, attractive staking yields ranging from 5%-10%, and accessible wallet infrastructure that makes native staking easy for even the least sophisticated participants.

High staking rates, however, have yet to translate into similar levels of LST adoption, limiting SOL’s onchain productivity. Only ~6% of staked SOL is deployed in LSTs. This pales in comparison to chains like Ethereum, where 35% of staked ETH is deployed in LSTs (despite only 30% of total ETH being staked). The very benefits that have led to high levels of staking on Solana have also hampered rapid LST adoption.

JitoSOL remains the ecosystem’s dominant LST, accounting for greater than 1/3 of total LSTs. Jito provides the most widely adopted MEV block building infrastructure on Solana; more than 90% of SOL is staked with validator clients that use Jito’s block builder. Binance’s LST SOL offering, bnSOL, has seen a surge in adoption over the past year, growing from 2% to 24% of LST market share. However, this has had a limited impact on SOL LST deployment in the ecosystem, with a majority of bnSOL capturing Binance CEX users that do not then deploy the LST onchain. This can be seen on Solana’s largest lend/borrow market, Kamino, where there is only $12k bnSOL versus nearly $500 million of JitoSOL across markets.

Driving LST adoption remains a focus for core developers and application teams to increase the total amount of SOL that can be productively used across the ecosystem. Solana-focused digital asset treasury companies and the likely soon-to-be-approved Solana ETFs (covered below) represent one near-term tailwind for staking and LST adoption. Already, several Solana DATCos have partnered with LST providers or launched their own SOL LST to attract stake to their validators and increase the yield of their SOL holdings through DeFi deployments.

SOL Inflation and Staking Rewards

Solana’s base inflation rate (the annual increase in supply through staking rewards) stands at ~4.2%. It is scheduled to decrease by 15% every 180 epochs (epochs are around two days, so roughly every year) until reaching a terminal rate of 1.5%. In addition to freshly minted SOL, validators also earn rewards from base/vote fees, priority fees, and MEV. As a result, the actual staking APY is often greater than the inflation rate, averaging ~6.5% over the past 90 days and nearly 8% year-to-date.

SOL staking APYs have consistently hovered in the 6%-8% range over the past year, spiking during periods of significant market activity. Inflation, coupled with rewards from onchain activity, has led Solana to have a consistently higher staking rate than Ethereum. However, high staking rates driven by inflation rewards are a highly contested point of debate in the community. In March, Solana validators rejected a proposal to change SOL emissions to a dynamic rate under SIMD-0228. The Solana improvement document proposed adjusting SOL inflation based on the proportion of SOL staked across the network. Lower staking ratios would increase emissions, and higher staking ratios would decrease them. At current stake levels of ~67%, this model would have more than halved Solana’s inflation rate.

Inflation rewards are an initial bootstrapping mechanism for proof-of-stake ecosystems to entice validators to join and secure the network. A consistent and predictable inflation rate is also important to ensure validators can plan their operations over longer time horizons. As these networks mature, however, inflation should not be the primary incentivization mechanism. They can be replaced by rewards from real economic activity represented through base and priority fees, as well as non-malicious forms of MEV. As my Galaxy Research colleague Zack Pokorny has argued, high staking rates also disincentivize DeFi activity by introducing an artificially high hurdle rate. This is especially important for Solana, which has lagged in DeFi adoption despite the high levels of activity on the chain.

While SIMD-228 failed, the fact that it came so close to being passed highlights the possibility that the SOL inflation schedule is not set in stone. (The proposal had strong support early in the voting process, but a last-minute rush of ballots prevented it from achieving the needed supermajority). In April, for example, Galaxy Research submitted a proposal to maintain a terminal 1.5% SOL inflation rate but have validators vote on the rate of future deflation (that is, the rate at which the inflation rate slows, currently 15%). Expect additional proposals over the coming year, especially if Solana maintains robust activity at the application level, reducing the need for economic incentives through inflation.

Block Compute Unit Limits and Efficiency

Compute Unit Limits

Solana has implemented two new Solana Improvement Documents (SIMD) this year, focused on increasing block compute unit (CU) limits. Block CU limits represent the maximum amount of computational work that can be done in an individual block, comparable to Ethereum’s gas limit. It also serves as an objective measure of time, with the optimal CU limit equal to the time it takes a validator to receive, order, and execute a block (roughly 400ms at current slot times).

Raising the block CU limit is one way to increase transaction throughput by increasing the total amount of computational work that a validator can include in a block. This enables the network to process more transactions or handle a higher number of complex operations per block, which can help reduce congestion and lower average transaction fees during periods of high demand. For now, other block size variables, including max writeable account units, max vote units, and max block accounts data size delta, will remain the same.

When the network launched in 2020, Solana blocks had a block limit of 48 million CUs. In April of this year, Solana implemented SIMD-0207, increasing block CU limits by 4% to 50 million. Then in July, Solana implemented SIMD-0256, increasing block limits by an additional 20% to 60 million as part of the Agave v2.2 release. Already, another proposal, SIMD-0286, is under consideration to increase block limits from 66% to 100 million CUs, which would be the largest single increase to date. Testnet activation is expected in the coming weeks, and mainnet implementation could come in Q4 with the Agave 3.0 update. It may even be possible that CU limits are removed altogether, as recently proposed in published SIMD-0370. However, this idea remains a point of debate in the developer community.

Beyond improvements to network performance, raising block CU limits could also improve validator profitability. A recent study by validator service provider Rated demonstrated that a doubling of the CU limit to 100 million could lead to an increase of 172-460 SOL in daily revenue for the top 10 validators on Solana. This is just a rough estimate, because raising the CU alone does not guarantee that blocks will be fully packed without sufficient network demand or that fees will remain where they are as block supply increases. As the above chart shows, CUs per block have remained around the 40 million level despite recent increases in CU limits. If those limits begin to get filled, however, validators stand to make more money.

At the same time, raising CU limits can introduce operational challenges. For now, raising CU limits to the proposed levels mainly requires optimizing software so validators can handle the increased compute and block propagation demands. Upgrades so far have stayed within safe bounds, avoiding negative effects on the existing stack, while ancillary service providers have updated their systems to keep pace. Over a longer horizon, however, if block capacity rises too quickly, validators may need to upgrade their hardware to handle the added computational load, while RPC providers and centralized exchanges (CEXs) will also need to keep pace. Another bottleneck is block distribution: ensuring complete blocks are delivered from the leader node to the rest of the cluster on time. The Anza team is addressing this by optimizing block propagation with the introduction of a networking enhancement called XDP and ensuring that block packing prioritizes critical resources without overwhelming the network (covered above in the Alpenglow section).

Compute Unit Efficiency

In addition to raising CU limits, Anza is optimizing CU efficiency to increase the number of transactions that can be included for a given CU limit. In early 2025, Anza released the Pinocchio Library, a streamlined, CU-optimized framework for developing on Solana. Think of it as a super-efficient recipe book for creating apps on Solana’s blockchain. It’s written in a simple, lightweight way that doesn’t need extra baggage, making apps run faster and use less of Solana’s computing power. This replaced the original Solana Program Library (SPL), helping developers build smoother, more efficient apps that don’t slow down the network.

Complementing this effort, Anza developers are working to implement P-token, which leverages the Pinocchio library for a new token program implementation. P-token introduces 90%+ savings in compute usage for token program calls. Findings by the auditor Neodyme indicate that the use of P-token during a week of testing in August reduced total CU usage by ~12%.

Together, these upgrades highlight two complementary strategies. On one hand, Solana is expanding the supply of blockspace by raising CU limits, allowing each block to carry more transactions. On the other hand, Anza is simultaneously improving the efficiency of that blockspace through tooling like the Pinocchio library and the forthcoming P-token program. This dual approach means that Solana is not only scaling raw capacity but also ensuring that each unit of capacity is used more effectively.

Internet Capital Markets Infrastructure

Advances in Solana’s network architecture over the past year yielded significant improvements in overall chain performance. But they have also revealed additional constraints in the system that need to be addressed for Solana to realize its vision as the home of “Internet Capital Markets.” Specifically, beyond IBRL, Solana’s core and application developers are now devoting increased attention to modifying Solana’s market microstructure. As outlined in Solana’s Internet Capital Markets Roadmap, published in July, these updates focus on making Solana a host to the world’s most liquid markets; improving transaction time-to-inclusion and finality; enabling a geographically decentralized validator set that does not impede network performance; and making application-controlled execution (ACE) a reality.

Some of the updates necessary to realize this vision are described above, including updates to the Anza client, the introduction of Firedancer, and Alpenglow. Additional updates/integrations under development include:

DoubleZero

DoubleZero is a next-generation communication infrastructure built specifically for blockchains, bypassing the public internet to deliver faster and more reliable connectivity between validators. Rather than routing messages over traditional, unpredictable internet paths, DoubleZero operates over a dedicated mesh of fiber and network links optimized for high throughput and low latency. The design aims to transform how data moves across the validator layer, making block propagation, voting, transaction delivery, and consensus coordination more efficient.

Key capabilities and innovations include:

• Filtration: DoubleZero filters out redundant or invalid transactions before they reach validators, reducing the burden on signature verification and avoiding wasted compute cycles. In practice, duplicate traffic accounts for a large volume of incoming data; in some tests, ~75% of inbound transactions were dupes.

• Lower Latency and Jitter: By replacing public internet paths with high-performance fiber, DoubleZero reduces the average delay and variability in message delivery. This enables more precise timing for consensus, faster vote propagation, and tighter slot schedules.

• Support for Larger Blocks: As Solana increases CU limits per block, block sizes in bytes grow too. Over public internet paths, big blocks can take too long to distribute, hurting throughput. DoubleZero’s bandwidth is designed to accommodate much larger blocks, removing one of the barriers to scaling throughput.

• Improved Geographic Reach: Validators in regions with poor internet infrastructure (e.g., parts of Africa, Latin America, Asia) often suffer latency penalties or network instability. DoubleZero’s direct connectivity helps make these locations viable, supporting broader decentralization.

• Multicast Routing: Multicast enables efficient one-to-many data distribution across validators. Instead of sending identical data packets from one validator to many peers (which duplicates bandwidth use), multicast lets a single packet be propagated through the network and branching paths, minimizing waste. In practice, this means that block data, votes, and transaction messages can reach all validators faster and with far less redundant traffic. Benefits include reduced network load, lower latency for block propagation, and improved bandwidth efficiency for validators.

• RPC and MEV Infrastructure Boosts: Ancillary actors like RPC and MEV providers, as well as searchers, benefit from faster and more consistent communication. For instance, multicast routing and reduced bandwidth waste ensure that transaction bundles and data are delivered more efficiently.

Validators using DoubleZero will be charged an initial 5% fee on validator block signature rewards and priority fees paid out in SOL. Post-launch, DoubleZero may also implement a 5% fee on Jito tips for validators if it can demonstrate a 5% increase in Jito tips because of its use. The team is making the bet that the performance enhancements DoubleZero introduces will generate significantly more value than the costs of joining it.

As with all new system integrations, however, DoubleZero would also introduce risks to Solana’s resilience if fully adopted by the network. A malfunction of DoubleZero could hurt Solana's liveness. DoubleZero has implemented some safeguards to prevent this, such as the ability for validators to fall back to the public internet if DoubleZero suffers an outage (a backstop that was tested successfully). But Solana developers are still wary of introducing reliance on a nascent network stack.

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DoubleZero launched on mainnet on Oct. 2 and has already attracted over 30% of the total Solana stake. While validators using DoubleZero will see an immediate performance improvement, no matter how much stake is on the network (thanks to advantages like filtration mentioned above), a critical threshold will be to get more than two-thirds of Solana stake for Solana core developers to begin raising protocol limits like shorter slot times and larger blocks.

Asynchronous Program Execution

Asynchronous Program Execution (APE) would decouple block voting from transaction execution to reduce protocol latency. Today, validators must both verify and execute all transactions in a proposed block before voting on it. This creates bottlenecks because execution is computationally intensive and must be completed prior to voting and propagating that vote to other validators. APE would remove that requirement, allowing validators to vote once they confirm that transactions are correctly ordered and structurally valid (a much less resource-intensive process), while allowing transaction execution to be completed asynchronously.

By shifting execution out of the consensus-critical path, APE could enhance Solana's overall throughput and resilience under load. In the current synchronous model, high-compute transactions, such as those approaching or exceeding the 60 million CU limit, can delay block production, leading to slot misses and network congestion during peak events like highly anticipated token launches. APE aims to address this by enabling validators to achieve consensus with execution handled afterward using available compute resources. While demand-dependent, this model could propel real-world TPS closer to Solana's theoretical maximum of over 65,000, as execution backlogs are processed asynchronously without halting the chain.

Beyond performance gains, APE stands to promote greater decentralization and validator accessibility within the Solana ecosystem. Synchronous execution demands high-end hardware to keep pace with real-time processing, which favors larger operators. With APE, the lighter consensus phase should lower these barriers by allowing lower-tier hardware to participate. APE is still in development, with several important SIMDs (0159, 0191, 0192, 0290, 0295, 0297, 0298, 0301) in process. It is expected to be rolled out on mainnet following Alpenglow’s release in 2026, although timing could change as Solana core developers debate its exact implementation.

Application Controlled Execution

As Solana transitions from optimizing raw speed to solving deeper market design challenges, Application Controlled Execution (ACE) is a primary area of focus. ACE aims to give applications control over transaction ordering and settlement logic rather than leaving sequencing entirely to validators and block producers, enabling new onchain market microstructures.

When many applications build on the same L1, they compete for transaction inclusion/priority in the same block, introducing complexities for applications with specific ordering or inclusion requirements for their applications to function effectively. The problem on Solana is most often exemplified by the risks that market-makers face operating on the chain due to their inability to deterministically cancel maker orders before takers pick them off. This exposes them to potential losses and forces them to widen spreads.

Two primary ACE solutions are being implemented, one by Jito and the other by Temporal. Both are being implemented outside of the core Solana protocol. However, it is possible that in the future, ACE is enshrined in the core protocol with designs from Anza or Firedancer.

• Block Assembly Marketplace (BAM): BAM is a new block building architecture developed by Jito. It requires a set of discrete BAM Node operators that run alongside Solana’s validator set and are responsible for transaction ordering instead of the validator. Using Trusted Execution Environments (TEEs), BAM nodes obscure incoming transactions from outside observers while providing an attestation of the exact order in which they received transactions and how they ultimately ordered them. This transparency can be helpful for addressing malicious MEV on the network by highlighting validators that are engaging in detrimental MEV behavior like front-running or sandwiching. For ACE, BAM introduces the concept of plugins, a software feature that allows applications to specify ordering logic for transactions processed by a BAM node. In this way, applications, not validators, can determine the ordering of transactions, achieving ACE. An initial implementation of BAM went live on Solana mainnet on Sept. 25. Initial plugins that would enable ACE are expected to roll out in the coming months.

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• Application Market Queues (AMQs): Developed by Temporal, a Solana research and development firm, AMQs enable applications to opt into an application-controlled execution mechanism of their choosing prior to submitting them to the block leader. Applications using AMQ queue predefined transaction types rather than executing them immediately, allowing them to batch transactions over a set period and assign their own priorities before submitting them for block inclusion. This introduces a slight delay in execution, initially set at one slot, but with plans to decrease the delay over time.

ACE, as a concept, is still early in its development and implementation. There is still considerably more testing needed to understand its downstream effects and actual efficacy. Notably, if ACE is implemented as an out-of-protocol solution, it may lead to fragmentation. If one ACE solution (BAM nodes, for example) fails to gain broad adoption, applications may benefit from ACE only for set periods of time when validators running a specific ACE software are the leader. While competition among ACE standards is important for identifying the best solution, it could impose additional development costs on applications that want to leverage the market-structure improvements but must update their application logic to cater to all the different ACE solutions in deployment. If successful, however, ACE would solve a major issue for Solana applications – the need to provide their own customized ordering logic on a generalized L1.

Multiple Concurrent Leaders

Multiple Concurrent Leaders (MCL) is one of Solana’s most ambitious protocol upgrades. Its core objective is to break the bottleneck of single-leader block production by allowing several validators to propose portions of a block at the same time. This parallelization would reduce latency, increase throughput, and dilute the influence of any single leader over transaction ordering. From a resilience perspective, MCL would reduce censorship risk. If one leader withholds or filters transactions, others proposing alongside it can ensure those transactions still make it into the block.

MCL is a longer-term upgrade, both due to its technical difficulty as well as debate over whether it should be included in the protocol roadmap at all. The latest roadmap suggests integration may not come until 2027 or later. In the near term, developers’ focus is on implementing Alpenglow and advancing ACE in production. These steps will lay the groundwork for MCL by strengthening consensus and enabling richer market microstructures. Expect further details on design and rollout to emerge once these near-term upgrades are proven in production.

Slashing

Slashing is one of the primary penalty mechanisms used by proof-of-stake (POS) systems to prevent malicious validator behavior. Simply put, validators that break protocol rules can lose some of their stake (be “slashed”) if they don’t follow the protocol’s rules. Solana, despite using POS, has not implemented formal slashing since its launch and instead relied on “social slashing” (ostracism and blacklisting of wayward validators) to ensure accountability.

Over the past year, however, Anza developers have begun laying the groundwork for formal slashing on Solana with three SIMDs – 180, 204, and 212. Collectively, these SIMDs would formalize processes to identify relationships between validators and their stake, verify slashable offenses, and determine the amount of stake that should be slashed. All three slashing-related SIMDs are under review, with ongoing testnet trials and possible implementation in 2026.

Implementing slashing on Solana will improve network security by introducing direct economic penalties for malicious or negligent validator behavior, such as double-signing or failing to validate blocks, thereby deterring attacks and aligning incentives more closely with standard PoS mechanisms seen on chains like Ethereum. This should enhance overall trust in the protocol. However, it might worsen validator participation if penalties are too severe or lead to correlated slashing events (e.g., widespread outages punishing multiple operators at once), increasing operational risks and costs for smaller validators.

Technical Outlook

If you’re not paying attention, it’s easy to miss the vast scale of ongoing development and experimentation happening across the Solana stack. Notably, this is not just being driven by improvements from core developer teams like Anza. The validator operator and developer ecosystem is maturing, and the opportunity to enhance revenue and profitability is motivating non-core developers to innovate and introduce their own solutions. All are focused on the same objective: to make Solana the best-performing and most usable chain for any application to drive adoption and usage.

If successful, Solana one year from now may look very different at the core protocol level than it does today. Validators will face tougher enforcement with slashing; execution will occur asynchronously, reducing validator requirements; applications (not validators) will control transaction ordering; and the network will run on purpose-built pipes instead of the public internet. These should result in tangible improvements to Solana’s performance, and it is very possible that by this time next year, Solana will have reduced slot times to 200 milliseconds, increased non-vote TPS from 1k-2k to 2k-4k, and reduced finality from 12.8 seconds to 150 milliseconds.

This transition does not come without risks. Every new implementation increases the complexity of the system and will require infrastructure providers across all layers of the stack to adjust accordingly. The risk of outages, which Solana has largely shed as a stigma, is the primary concern, but so is the possibility that new implementations worsen rather than improve network performance. If this were Solana’s first rode, undergoing such a massive shift, one might be concerned. But the ecosystem has experienced radical changes in the past, emerging stronger than before.

Critically, while these technical upgrades are impressive, they do not address the demand side of the equation. Below, we dive into activity on Solana, evaluating developments at the application layer, the necessary driver of Solana activity.

Solana Activity Overview

As Solana’s core developers move forward with upgrades to the underlying tech stack, it’s important to benchmark the network’s performance relative to other leading blockchains. The sections below provide an overview of key metrics, including decentralized exchange (DEX) volume, network fees, application fees, total value locked, and stablecoin market cap compared to other leading blockchains. As part of this analysis, we also highlight key developments likely to shape each of these verticals. This analysis helps ground Solana’s standing in the broader blockchain ecosystem ahead of its next wave of major upgrades.

DEX Volumes

In 2022 and 2023, Solana averaged less than 5% of total monthly blockchain DEX volumes. Chain downtimes, its affiliation with the failed FTX exchange, and a collapse in non-fungible token (NFT) volumes fueled skepticism of the chain’s durability and longevity. Those following the chain closely, however, saw a very different narrative playing out as core developers dug in and deployed updates across the networking and execution stack to improve performance. All that was needed was a spark, which came toward the end of 2023 as memecoins became a central driver of activity across all blockchains.

Solana, with its updated tech stack, quickly found product-market fit as the go-to chain for cheap and fast trading. In July 2024, Solana overtook every other chain in overall DEX volumes for the first time. Since then, it hasn’t looked back, ranking as a top two chain by DEX volumes consistently and the No. 1 chain seven out of nine months so far in 2025. Solana’s share of total monthly DEX volumes across all chains averaged more than 25% in 2024 and has risen above 30% in 2025. DEX volumes relative to fully diluted valuation (FDV) provide a useful lens into how efficiently a blockchain’s market capitalization translates into actual economic activity. High trading volumes compared to FDV suggest that a chain’s valuation is underpinned by real transactional demand and liquidity depth, whereas low volumes relative to FDV could signal speculative pricing detached from fundamental usage.

Despite consistently leading in DEX volumes, Solana trades at a far lower multiple to its peers. On a trailing 90-day basis, Solana has cleared $4 billion in average daily DEX volume, leading all chains. However, Solana’s DEX volume to FDV multiple sits at just 32, one-third the peer average of 109 and one-fourth of Ethereum’s multiple. Importantly, this isn’t a one-off anomaly. Solana’s multiple has consistently lagged the pack for nearly two years.

Skeptics argue that Solana’s low multiples reflect speculative DEX flows due to memecoin activity, which may not be as sticky as other types of DEX trading. That is a valid concern as evidenced by the collapse in NFT volumes following the 2021 hype. Indeed, while Solana’s DEX volumes have expanded sharply over the past year, the month-to-month swings highlight how speculative this activity remains. Much of the recent growth has been driven by memecoin trading and fast-moving retail participation, which tend to boost turnover without guaranteeing long-term stickiness.

But speculative frenzy isn’t always a weakness. Ethereum’s early volumes were dominated by initial coin offerings (ICOs) while Binance Smart Chain boomed on DeFi yield farms. Many users who arrive for speculative reasons eventually stay for more durable applications as they emerge. But speculation alone also creates fragility when volumes rely too heavily on hype cycles.

The next phase of growth will depend on whether Solana can convert this speculative energy into sustained flows. A shift toward more stable forms of trading, such as stablecoin swaps, perpetuals, and other DeFi primitives, would signal that the ecosystem is maturing beyond short-term speculation. Until then, Solana’s DEX volumes are best understood as dynamic but volatile — a reflection of the chain’s growing relevance and the speculative nature of its user base.

That maturation may be playing out in real time. Despite aggregate Solana volumes continuing to trend higher, memecoin trading accounts for an increasingly small share of total volumes. As highlighted in the recent Galaxy Research report “The State of Memecoins,” memecoins have declined from >50% of all Solana DEX volumes in Q4 2024 to 20% to 30% in Q3 2025. Instead, SOL/USDC DEX swaps account for a larger portion of onchain trading. In fact, Solana is the only chain that hosts higher onchain volumes in its own token-USD pair than Binance.

The increase in SOL-USD pairs is notable because it’s largely a result of a new trading primitive found only on Solana called “proprietary AMMs,” or “prop AMMs” for short. Prop AMMs are a type of DEX venue that uses private, protocol-owned liquidity usually managed by professional trading firms, rather than relying on public liquidity providers like traditional AMMs (e.g., those using constant-product or concentrated liquidity models). Instead of deterministic onchain bonding curves, prop AMMs employ dynamic offchain quoting engines that monitor external markets, oracles, and conditions to generate time-sensitive, signed quotes. These quotes are then embedded into transactions via Solana aggregators like Jupiter or Titan. Most Solana DEX volumes are routed through aggregators, enabling prop AMMs to integrate smoothly and capture market share by offering best execution. This setup enables active liquidity provision, where pricing adjusts in near real-time independently of trade flow, often concentrating liquidity around oracle prices for efficiency.

Additionally, prop AMMs solve an important market microstructure issue for market makers on Solana – the inability to prioritize maker cancel orders ahead of taker orders. As discussed in the technical section above, this is a focus for ongoing updates to the protocol under ACE. It is key for keeping tighter spreads (and has been embedded as default logic into leading perps platforms like Hyperliquid). Prop AMMs accomplish this through a clever optimization of oracle updates. Transactions on Solana are prioritized based on their priority fee or tip per CU. Prop AMMs have significantly reduced the amount of CUs required for an oracle update, allowing them to bid a higher priority fee/tip per CU, without breaking the bank, and increasing the chances of landing at the top of block. This has been highly effective in bringing down spreads on pairs like SOL-USDC (track an estimation of live spreads on the pair here).

Prop AMMs are still a young phenomenon, and their full impact on Solana’s market structure is evolving. While they are primarily used for aggregator-driven flow, future use cases include perpetuals markets. Additionally, others are already building on them to further improve efficiency. In September, for example, Solana DEX aggregator DFLow introduced a new transaction type that routes trades through the best prop AMM at the time of execution rather than when the transaction was submitted.

Outlook:

Solana has firmly entrenched itself as the dominant onchain trading venue for DEX volumes. This growth has largely been driven by an explosion of memecoin activity over the past two years, and that will likely continue to be a primary driver of activity in the near term. The memecoin boom has had broader advantages for the ecosystem. It has acted as a stress test for Solana infrastructure, showcasing meaningful improvements in reliability compared to prior cycles. Crucially, activity also pulls in developers. Teams want to build where the users are, whether by deploying applications or by creating more accessible onramps and tooling that lower barriers to entry. From that perspective, memecoin-driven activity may be less of a distortion and more of an accelerant. By drawing capital, users, and now developers into the ecosystem, it helps cement Solana’s position as the preferred venue for low-fee, high-throughput trading.

Perpetuals Exchanges

Despite dominating spot DEX volumes, Solana has not achieved similar dominance in perpetuals trading. This undermines one of protocol founder Anatoly Yakovenko’s original visions for Solana as “Nasdaq onchain.” Liquidity leaking out when traders move to non-AMM perps venues highlights a structural problem for Solana.

The above chart highlights the extent of the issue. Solana’s share of onchain perpetuals volume peaked in late 2024 but fell sharply after Hyperliquid’s November 29 token generation event (TGE). Since then, Solana’s perps market share has compressed from ~17%to ~6%, even as absolute perps volumes on Solana continue to climb. Hyperliquid’s liquidity depth and CEX-like execution created a flywheel that Solana-native exchanges have struggled to counter. Perpetuals markets are liquidity-driven. Once deep order books consolidate on a venue, they attract more traders, further deepening liquidity. This liquidity flywheel creates a moat that is difficult for challengers to overcome, even with superior technology or incentives.

The threat is most clearly illustrated by Phantom, Solana’s leading wallet provider, announcing a direct integration with Hyperliquid in July (covered by Galaxy Research here). Phantom has long been a pillar of the Solana ecosystem and a primary distribution channel for retail users. Even though it had already expanded beyond Solana, Phantom’s decision to make Hyperliquid the default in-wallet perpetuals venue reflects two things: (1) the superior liquidity and execution available on Hyperliquid compared to Solana-native venues, and (2) the effectiveness of Hyperliquid’s builder codes program, which allows third-party applications to profit-share seamlessly by tapping into its liquidity layer.

Since the integration, Phantom has facilitated nearly $12 billion in perpetuals trading volume through Hyperliquid, generating over $6 million in fees, more than 10% of Phantom’s total fees during this period. And Phantom is not alone. Leading Telegram trading bots like Axiom, which accounts for a large percentage of retail memecoin trading volume, have also integrated Hyperliquid as their default perps trading venue. This is material volume that otherwise could have accrued to Solana-native venues. Phantom’s Hyperliquid integration also shows how liquidity advantages become self-reinforcing. Phantom’s integration directs more flow to Hyperliquid, deepening its order books, which in turn attracts even more traders.

Within the Solana ecosystem, perps competition is equally intense. The two leaders are Jupiter and Drift. Jupiter, which uses a pooled liquidity model, has dominated market share since launching in January 2024, while Drift has gained ground with a hybrid central limit order book (CLOB) model and zero-fee campaigns. Smaller players have struggled to carve out a durable share. The result: Solana perps liquidity is primarily split across two venues, even as the chain competes against an external juggernaut in Hyperliquid. Teams must not only fight to retain users but also compete for new ones.

That in no way means the competition is over. As highlighted in the technical overview above, unlocking perpetuals markets that can match the performance of Hyperliquid and centralized exchanges is a primary focus of teams across the ecosystem. Incumbents and new entrants are working actively to make Solana the dominant perps trading venue through a mix of incentives and technical updates. Drift, for example, has removed fees on BTC and ETH trades and just recently announced an architecture upgrade to improve speed, liquidity, and UX. Ranger is an aggregator that routes trades across Solana’s leading perps venues. Even Solana’s founder, Anatoly Yakovenko, recently experimented with a proof of concept for a perps exchange (it bears repeating that this was a proof of concept, not a real product).

Several perpetual exchanges will also be launching on Solana over the coming year with distinct designs from the incumbents. Two notable players are Bulk and Bullet.

BULK

Bulk leverages Solana’s distributed validator set without being constrained by its block time. It aims to deliver sub-20 millisecond order matching on par with Hyperliquid and top-tier CEXs. BULK does this through an innovative architecture that embeds an execution layer directly into the Solana validator stack, bypassing the traditional consensus layer for faster processing.

Once launched, Solana validators will run a fork of the Agave client called bulk-agave, which provides a deterministic matching engine as well as margining/liquidation engines, a custom order propagation layer (which incorporates many of the innovations introduced through Alpenglow), and other features needed for a full exchange operation. A key advantage of this design is that all user funds and custody remain native to Solana as SPL tokens (the network’s equivalent of Ethereum’s ERC-20 tokens), ensuring non-custodial control without the need for bridges or sequencers. This maintains decentralization while enabling easy composability with the broader Solana DeFi ecosystem. By keeping everything on Solana, BULK avoids the fragmentation and risks associated with app-chains or L2s, allowing for deeper integrations and reduced counterparty risks for traders and liquidity providers alike.

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Beyond the promised performance improvements, Bulk introduces a unique validator-centric incentive model. Bulk’s model is simple but significant. Validators that adopt the Bulk-Agave client receive 30% of all taker fees the exchange generates. On the surface, this looks like an isolated feature, but it reflects a broader shift in how crypto projects structure incentives. Protocols have been steadily moving away from funneling revenues to issuers or external parties and instead are redirecting them back into the systems that directly secure or grow the network. Hyperliquid set the tone by committing over 90% of exchange revenues to HYPE buybacks via its Assistance Fund. More recently, stablecoins such as Hyperliquid’s USDH and Ethereum-native USDM have designed treasury yields to accrue in ways that benefit the chain itself (either through reinvestment in growth or payments to validators) rather than to the issuer. Bulk extends this logic further, paying application-level revenues directly to validators. For Solana validators, this creates a promising new means of diversifying income alongside block rewards and MEV.

Bullet:

Bullet is a new Solana network extension (Solana’s term for a Layer 2) in development by members of the Zeta Markets team (a former onchain CLOB built on the Solana L1). As a network extension, and like Ethereum’s Layer 2s, Bullet has its own runtime but leverages Solana for settlement, consensus, and data availability. Bullet is designed specifically for high-performance trading. Its architecture separates execution from settlement. Trades are matched and processed in Bullet’s low-latency environment, while custody and final settlement remain on Solana. This enables sub-millisecond order propagation and throughput that rivals centralized exchanges, without sacrificing Solana’s non-custodial model.

Unlike BULK, which embeds an exchange engine directly into Solana’s validator stack, Bullet takes a more rollup-like approach. It introduces a sequencer layer to handle execution, but does not operate its own validator set. Instead, it posts results back to Solana for finality and security. This mirrors the Ethereum L2 design space, where sequencers drive performance gains while Ethereum validators enforce settlement.

The success of Bullet will depend on whether it can attract liquidity and sustain deep order books while delivering the promised performance improvements. If it succeeds, Bullet could become a natural venue for high-frequency and professional traders who require low latency but still want the benefits of onchain settlement.

Perpetuals Market Outlook

The perpetuals market is still in the “grow-the-pie” period. While Solana’s market share is declining, it continues to see overall volumes grow, reaching a new high as recently as October. Solana’s advantages remain its growing developer ecosystem and large user base. But the decisive battlegrounds will be in distribution, incentives, and liquidity consolidation. The long-term winner will be the venue that combines all three, and the barriers to success for Solana’s offerings are steep. Hyperliquid’s primacy aside, it seems like every few weeks a new “revolutionary” perps market is announced. To maintain and grow market share, Solana teams will need to introduce the same 100x performance improvements that drove the chain’s initial success and adoption following its launch.

Network and Application Fees

While DEX and perpetuals volumes provide a clear picture of Solana’s rank as a trading venue, they capture activity rather than value. To assess how well that activity translates into sustainable economics, it’s important to examine network and application fees.

Network Fees

Network fees are paid to validators for verifying and executing transactions, compensating them for the costs of securing the chain. On Solana, every transaction pays a base fee, with the option to add priority fees or tips through Jito’s block engine to increase the likelihood of faster block inclusion.

In February, Solana validators approved SIMD-0096, changing Solana’s fee mechanism to allocate 100% of priority fees to validators rather than burning 50% as was previously the norm. Today, half of base transaction fees are burned (reducing supply and benefiting all holders of SOL, the network’s native token); the other half, plus 100% of priority and tip fees, flow directly to validators. In practice, this structure compensates validators for the cost of running high-performance infrastructure and offsets issuance through the burn mechanism. Validators typically redistribute their share of fees to delegators that stake SOL with them, though the exact split is left to each validator’s discretion.

Each blockchain handles network fees differently. Ethereum, for example, burns the entire base fee of every transaction (a policy adopted in 2021 with the EIP-1559 upgrade), while validators receive priority tips and block rewards from issuance. Solana’s approach is similar in spirit but differs by splitting its base fee 50/50 between supply burns and validator rewards.

Critics once argued that Solana’s ultra-low fees meant the network could never generate meaningful revenue. Even with high throughput, the naysayers claimed, low fees produced little real economic value. Recent data shows the opposite. Activity on Solana is translating to sustained increases in fee generation. Unlike Ethereum, which commands high revenue through expensive blockspace and fewer transactions, Solana has deliberately targeted a low-fee, high-throughput model. That design requires orders of magnitude more transactions than its peers to achieve fee dominance across the industry, and it’s increasingly successful.

This approach carries two important benefits. First, applications can scale freely without developers having to worry that high network costs will price out users or hamper adoption. Second, users can interact with the ecosystem far more frequently — experimenting, trading, and engaging daily — without breaking the bank. In other words, Solana’s dominance in fee share is powered not by charging maximum rent per unit of blockspace, but by scaling breadth and velocity of usage in a way that is accretive to builders and users. While newer L1s and L2s have similarly low fees, none have managed to attract the level of activity or user base required to turn cheap transactions into meaningful economic capture.

On a trailing annualized 90-day basis, Solana is on track to generate nearly $900 million in annualized network fees, the highest among leading blockchains and almost double the figure for Ethereum. Other chains with similarly low transaction costs, such as Sui, TON, and Avalanche, have yet to translate their fee models into comparable revenue at scale. This comparison underscores Solana’s ability to convert high levels of user activity into meaningful network fees, distinguishing it from Ethereum, which relies on high-value blockspace scarcity, and from peers with similar low-fee models that lack Solana’s scale of adoption.

One interesting dynamic is the changing composition of Solana’s network fees. Since the introduction of Jito’s block engine in 2022, Jito tips have historically accounted for a larger percentage of validator rewards vs. priority fees. In August, however, priority fees overtook Jito tips as a larger source of validator rewards. This is likely a result of declining memecoin trading volumes as a percentage of overall DEX trading volumes (covered above). While Jito has designed a mechanism for validators to share tips programmatically with stakers, Solana has no in-protocol mechanism to programmatically share priority fees. As a result, the increase in priority fees as a percentage of total validator rewards has mostly hurt stakers.

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SIMD-123 will introduce an in-protocol mechanism for validators to share priority fees with delegated stakers. This should increase validator transparency and enable validators to customize how and what rewards they share with stakers, opening the door for new validator sharing agreements. Revtech, for example, has stated it is exploring a possible model where the staking pool would share with stakers a greater percentage of more variable rewards like priority fees and Jito tips (which also come with more upside), while retaining the majority of base fees and inflation rewards to ensure a consistent revenue stream that allows it to more predictably forecast margins. Additionally, the update will open the design space for validators to enable stakers to dictate how rewards are shared, even allocating a percentage for reinvestment back into the Solana ecosystem or in public goods. Two of the five SIMDs necessary to implement SIMD-123 (SIMDs 180 and 185) have been implemented, while SIMDs 232, 291, and 249 are still waiting for activation. The feature is expected to be released in Q1 2026.

Application Fees

Network fees show how much value accrues to the base layer, but they don’t tell the full story. Much of the economic activity on a blockchain happens at the application layer, where users interact with DEXs, perpetual futures trading venues, payment processors, oracles, and other crypto applications. If network fees measure demand for blockspace, application fees measure the demand for the products that sit on top of that blockspace.

Application fees compensate the application (and its stakeholders), with fees typically flowing to the application development team, liquidity providers and market makers, the protocol treasury/DAO, front ends and referrers, or token stakers through revenue-sharing mechanisms. These fees are independent of the L1’s base or priority fee, even when a single user action pays for both. Unlike network fees, application fees are usually sized to economic value (e.g., 10–30 basis points of volume) rather than compute bandwidth consumed.

This formula makes application fees one of the clearest signals of real product-market fit. Application fees reflect what users are willing to pay for services. Strong, recurring app revenues not only validate the businesses being built onchain but also benefit the base layer as sustained application demand leads to persistent blockspace usage, which drives network fees and validator income.

Here again, Solana has shown notable outperformance, leading in application-generated fees for 11 consecutive months from October 2024 to August 2025, and producing over $5 billion in application fees year-to-date.

Looking at trailing 90 days’ annualized fees, Solana applications are annualizing over $6 billion in fees, surpassing Ethereum’s $5 billion and outpacing every other chain by an even wider margin. Solana is turning into a primary breeding ground for businesses that users are willing to pay to use. Again, an important caveat here is that Solana’s outsized network and application fees are skewed by speculative memecoin trading activity that may not be sustainable over longer time horizons.

Indeed, a look at top fee-generating applications on Solana versus Ethereum (above) shows a stark contrast. Whereas Solana’s top applications primarily consist of memecoin launchpads, trading bots, and DEXs, Ethereum’s are mainly DeFi lend/borrow applications. Additionally, the competing blockchain landscape is fluid and increasingly competitive. Perpetuals trading on Solana, for example, has lost significant market share to Hyperliquid that otherwise would have contributed to Solana’s fee base. Binance Smart Chain has seen a resurgence in activity over the recent months to the detriment of Solana’s meme ecosystem.

Still, the scale of Solana’s application fees is difficult to dismiss. While Solana’s application fees may be concentrated in memes today, their magnitude and persistence suggest the ecosystem is maturing into a platform capable of supporting real, sustainable businesses.

Solana’s Internet Capital Markets

Solana’s growth over the past two years can be best understood as the early construction of its longer-term Internet Capital Markets vision. Memecoins provided Solana’s first real stress test and product–market fit (for a more in-depth review of Solana’s memecoin vertical, please refer to this recently published in-depth report by my colleague Will Owens).

At the application layer, memecoins also helped proliferate the launchpad mechanism, which has since become a defining feature of Solana’s application ecosystem and onchain markets more broadly. Pump.Fun is the clearest example. Its premise was straightforward: enable anyone to deploy a token. In doing so, Pump translated the developer-driven experimentation of the memecoin era into a repeatable framework for onchain asset creation. The simplicity of this structure lowered technical barriers for users and provided a common template for other developers to build upon.

It has inspired numerous imitators – each experimenting with bonding-curve parameters, liquidity schedules, or social integrations – while also expanding the design space for token issuance itself. Developers began adapting the same mechanisms to serve new purposes, from community fundraising and creator monetization to early-stage project financing, assisting Solana’s transition from speculative culture to programmable capital formation.

Projects like MetaDAO, Metaplex, and Believe have adapted the launchpad model for real businesses to launch. Time.Fun allows highly sought individuals or subject-matter experts to easily earn money for their time. Pump has expanded into the creator capital markets vertical, introducing a streaming platform and opening the design space for creators to monetize their activity. Collector Crypt brings the collectibles and trading card world onchain.

Together, these applications illustrate how Solana’s launchpad architecture is evolving from a tool for speculative token creation into a generalized system for onchain capital formation. Not all these efforts will succeed, but the underlying experimentation is critical. Solana’s near-term priority is to continue innovating its base infrastructure to keep lowering friction for developers, ensuring that experimentation remains viable at scale. This constant iteration is what attracts builders and users and ultimately drives long-term adoption that brings real businesses onchain.

This pattern extends well beyond launchpads or financial primitives. DePIN networks such as Helium and Hivemapper now anchor millions of users by connecting real-world mobile and mapping infrastructure to onchain incentives, while new entrants like DAWN and Daylight apply the same model to broadband and renewable energy. Mobile has emerged as another unique pillar. The Seeker handset, Solana’s second-generation phone, surpassed 100,000 preorders within a month of its debut. The device features a directly embedded native dApp store and secure key management. AI, gaming, and payments are also emerging verticals, leveraging Solana’s high-throughput, low-cost environment to test consumer-facing applications that would be prohibitively expensive or slow elsewhere.

Underlying all of this is a rapidly expanding developer ecosystem. Organizations such as Colosseum, Solana’s Global Superteams, Turbin3, and many others run global hackathons and accelerator programs that continuously onboard builders and teams. According to VC firm Electric Capital, Solana ranked as the No. 1 ecosystem for new developers in 2024, with 83% year-over-year growth in active contributors. This sustained inflow of talent reinforces Solana’s flywheel of experimentation.

The same iterative process is beginning to attract experimentation from the traditional finance world as well. Since June, more than $80 million in equities have been issued on Solana, with nearly $1 billion in total transfer volume, according to RWA.xyz. While Solana ranks fourth by total value of tokenized stocks, it leads all chains by trading activity, indicating genuine usage rather than isolated pilots. Galaxy Digital made it possible for individuals to trade their GLXY shares on Solana through Superstate (see our prior writing on the topic here), underscoring the network’s emerging role as a credible venue for real-world assets. As regulatory clarity improves, this trend is likely to accelerate, positioning Solana as a leading platform for tokenized equities and other regulated instruments.

Solana’s path forward is far from uncontested. Competing ecosystems are innovating quickly in parallel, often capturing specialized niches. Coinbase’s Ethereum L2, Base, for example, has emerged as a leader in social and creator-focused applications with applications like Farcaster and Zora. Maintaining Solana’s momentum will require not only technical execution but also continued success in translating that performance edge into differentiated app-layer adoption.

Ultimately, Solana becoming the home for Internet Capital Markets will not be driven by a single product class or vertical. It’s dependent on the ecosystem’s ability to rapidly test, iterate, and scale across multiple domains—from cultural assets to infrastructure networks to regulated finance—while competing in an increasingly sophisticated multi-chain landscape.

Total Value Locked and Stablecoins

Volumes and fees capture the depth of activity on Solana, but another lens is how much capital is anchored in the ecosystem. This is best reflected through total value locked (TVL) and stablecoin market cap. TVL measures the assets users commit to lending, liquidity provision, and staking. It’s a signal of confidence in keeping capital deployed over time. Meanwhile, the stablecoin market cap provides another lens into net-new liquidity injected into the ecosystems.Solana’s TVL and stablecoin market caps took a massive hit following the FTX collapse in November 2022. The crash in SOL’s price, coupled with a loss in confidence in the chain, saw TVL shrink from more than $14 billion at its peak to less than $500 million at the trough. Beginning in 2024, however, the landscape steadily improved and both metrics hit new all-time highs in 2025. Nevertheless, Solana continues to lag Ethereum, the dominant crypto DeFi ecosystem, on both scores. As Galaxy researcher Zack Pokorny highlighted in his State of Crypto Leverage Q2 2025 report, Ethereum commands 78% of all DeFi lending supplies while Solana’s share only stands at 5.43%.

While Solana leads in DEX volumes, network fees, and application fees, its FDV-to-TVL multiple is twice that of its peers, and its FDV-to-stablecoin market cap is roughly in line with the peer average. But Solana’s ecosystem is less about idle pools of capital than about capital velocity. High throughput and low fees create conditions where assets can move continuously between protocols, generating sustained fee flows and supporting new applications. This is exactly what the metrics discussed earlier – DEX volumes, network fees, and application fees – demonstrate.

Stablecoin velocity data reinforces this view. While Ethereum maintains the largest base of stablecoins, its velocity is low, reflecting capital that is primarily parked in DeFi protocols or used as collateral. Solana, by contrast, consistently shows higher turnover than Ethereum, with each stablecoin dollar transacting multiple times a month. This sustained velocity helps explain why Solana can generate outsized DEX volumes, fee revenues, and application activity despite trailing Ethereum in absolute TVL. In effect, Solana’s stablecoins are working harder, circulating rapidly across trading, payments, and applications, a dynamic that aligns with its broader positioning as the chain optimized for throughput and activity.

Conversely, while Solana excels at capital turnover, it lags in sticky capital commitments. Ethereum’s dominance in TVL underscores its strength as the base layer for long-term collateral, reserves, and institutional DeFi. If Solana’s activity proves too dependent on short-cycle flows like trading and speculative surges, its fee and application leadership could be vulnerable to shifts in market sentiment. The challenge for Solana is to prove that its capital velocity can coexist with deeper, more durable capital bases, transforming active flows into lasting commitments.

There are some signs that the tides may be shifting. In 2025 alone, Solana has more than doubled the amount of stablecoins issued onchain. The initial surge was due to the launch of the TRUMP memecoin in January, which had USDC as its primary liquidity pairing, and led to an influx of more than $5 billion in that stablecoin over the course of the month. While growth slowed in the months directly following this influx, since July, stablecoin issuance has begun to pick up again.

This resurgence has been propelled by a confluence of factors, including regulatory clarity from the U.S. GENIUS Act and global frameworks like the EU's MiCA, which have bolstered institutional confidence and facilitated stablecoins as a bridge between traditional finance and crypto. Aggressive minting by issuers such as Circle, which added over $7 billion in USDC on Solana throughout the year, combined with product launches on Solana like yield-bearing stablecoins (e.g., USYC and USX), has expanded supply and liquidity. Inflows are expected to persist, fueled by capital from digital asset treasury companies as well as major initiatives like Sky's (formerly MakerDAO) Keel project, set to deploy up to $2.5 billion into Solana DeFi, and emerging Solana-specific stablecoin issuers like Perena.

Perhaps the most compelling driver of increased flows is a broader shift across the stablecoin landscape focused on “stablecoin alignment.” Circle and Tether collectively earn an estimated $500–600 million annually on Solana’s $14 billion stablecoin base from interest on the Treasury bills backing USDC and USDT. Those returns flow to the issuers. In other words, none of that yield currently accrues to Solana or its ecosystem.

This structural “yield leakage” has spurred calls for stablecoin alignment, evidenced most recently with the launch of Hyperliquid’s USDH and MegaETH’s USDM. More than 95% of Solana stablecoin supply sits in USDC or USDT, compared to roughly 10 % of Ethereum’s stablecoin base that circulates through yield-bearing tokens. As Perena founder, Anna Yuan, has argued, the imbalance underscores Solana’s need for both cash and fixed-income forms of money. Instant, non-yielding stablecoins for payments and liquidity, and productive, yield-recycling assets for DeFi.

That shift is beginning. Native issuers such as Jupiter (JupUSD), Phantom (CASH), Sphere, and Perena are building compliant or synthetic stablecoins designed to recycle yield back into Solana via liquidity incentives, treasury contributions, or native yield distribution. If successful, these initiatives could transform Solana’s high-velocity stablecoin base into a self-reinforcing source of liquidity, yield, and ecosystem alignment — turning capital that once funded competitors into capital that compounds within Solana itself.

ETFs and Digital Asset Treasury Companies

Digital Asset Treasury Companies (DATCos)

Regulatory clarity has paved the way for investors to gain exposure to crypto assets through traditional investment vehicles like exchange-traded funds and digital asset treasury companies (see Galaxy Digital’s prior research on DATCos here).

There are 18 Solana DATCos. Collectively, they hold 3.5% of the total SOL supply, or over 20 million SOL. This is less than the shares held by bitcoin (4.6%) and ether (4.6%) DATCOs. The discrepancy exists partially because Solana DATCos launched later than many of their BTC and ETH counterparts and have also seen less trading volume, limiting their ability to issue equity to accumulate more SOL. DATCos are controversial entrants to the crypto landscape. Critics often view them as speculative vehicles designed to capture hype rather than create value. While that may be true for some, the model also introduces several important benefits, especially for networks like Solana.

At their core, DATCos are operating businesses that hold digital assets on their balance sheet and make an explicit bet that those assets will appreciate over time. For an asset like BTC, this thesis mostly involves passive exposure – holding BTC and waiting for it to rise in value. But for blockchains like Solana, the dynamic is different. The value of SOL is tied to the level of real economic activity onchain.

This means that when a DATCo chooses Solana as its base asset, it has a strong incentive to support and expand the network’s underlying economy. Over time, this can manifest in several ways:

• Deploying SOL for productive use in staking, liquidity provisioning, or DeFi participation.

• Investing in ecosystem growth by funding infrastructure, developers, and applications that drive adoption.

• Running operations onchain and creating a tangible proof-of-concept that enterprise activity can be conducted directly on Solana.

A prime example is Forward Industries (FORD), which Galaxy helped launch and invested in (not to be confused with the 122-year-old automaker), used Dflow (discussed above) to purchase and custody a portion of its SOL holdings, staked its entire balance with Solana validators, and enabled issuance of its equity natively on Solana via Superstate for custody and secondary trading (note it was initially listed on Nasdaq). Following the launch of DoubleZero, FORD spun up a validator node on the network. FORD’s chairman, Kyle Samani, has indicated the company ultimately intends to conduct all business operations on Solana, from internal accounting to shareholder services, showcasing what it looks like for a corporate entity to operate fully onchain.

That said, DATCos introduce several risks. Primarily, there’s the risk of speculative feedback loops, where asset prices rather than underlying fundamentals drive the business model, amplifying volatility during market drawdowns. Additionally, there is the possibility of governance capture. As DATCos accumulate and stake significant amounts of SOL, they could exert disproportionate influence over validator selection or governance outcomes, potentially tilting the ecosystem in a direction it might not go otherwise.

DATCos represent a potential evolution in how corporate entities can interact with crypto networks. For Solana, they offer a pathway to deeper integration between financial activity and real economic use, where businesses don’t just speculate on SOL’s price, but actively contribute to its velocity and utility.

Exchange-Traded Funds (ETFS)

In September, the U.S. Securities and Exchange Commission (SEC) approved generic listing standards for commodity-based trust shares, opening a fast track for ETFs of certain digital assets (for more on this topic, read Galaxy Research’s report here). Solana qualifies under these standards and is a top candidate to be one of the next crypto ETF launches. Bloomberg ETF analyst James Seyffart has estimated approvals could come sometime this month.

SOL ETFs resemble DATCos in that both serve as vehicles to expand investor access to SOL. But they differ meaningfully in design and purpose. Whereas DATCos are operating entities that may actively deploy capital in the ecosystem, ETFs are passive investment products designed to give traditional investors price exposure to SOL.

Bloomberg’s Seyffert has said that SOL ETFs could be approved to allow for staking at launch, and on October 28 this was verified with the launch of the Bitwise SOL ETF. This is a major improvement to the ETF model. Staking not only helps secure the network but also introduces an underlying yield component, ensuring ETF holders are not diluted relative to native stakers and making the product more compelling from a total-return standpoint.

The introduction of SOL ETFs could significantly broaden Solana’s investor base by enabling participation from registered investment advisers (RIAs), institutions, and retail investors who either can’t or don’t want to directly invest in crypto. Beyond accessibility, ETFs carry a symbolic importance. Their approval represents a form of legitimacy that can shift market sentiment toward recognizing SOL as a core digital asset — akin to the narrative inflection that followed the BTC and ETH ETF launches. This legitimacy can, in turn, reinforce confidence among developers, investors, and enterprise partners building in the Solana ecosystem.

Their success is far from guaranteed. SOL is not bitcoin, nor is it ETH, and its investment case is less familiar to traditional allocators. Real adoption will require significant education and storytelling from the community, explaining Solana’s technological edge, ecosystem growth, and real-world utility beyond speculation (much as this report attempts to do). Additionally, the structure introduces its own set of risks and limitations. Because ETFs are passive vehicles, they won’t directly drive onchain activity unless staking is approved and integrated. Moreover, ETF flows tend to be cyclical and reflexive. Large inflows in bullish markets can amplify upside momentum, while outflows can exacerbate downside volatility. Finally, as with DATCos, custodial concentration poses an operational risk. If ETF providers or custodians collectively control a large share of staked SOL, it could inadvertently increase validator centralization or governance influence.

Solana’s Policy Push

While not directly related, it’s also important to recognize that Solana’s policy and regulatory engagement has grown increasingly sophisticated and coordinated, benefiting the ecosystem and crypto more broadly.

The launch of the Solana Policy Institute in March formalized these efforts, serving as a hub for education, research, and advocacy aimed at ensuring policymakers understand Solana’s technology and its potential to support open, compliant financial systems. Led by crypto policy veterans Kristin Smith and Miller Whitehouse-Levine, the Institute works to bridge the gap between builders and regulators, lobbying lawmakers, submitting policy comments, and hosting educational briefings on issues like validator economics, staking, and market structure.

Beyond the Solana Policy Institute, ecosystem teams like Jito have played an active role in advancing these initiatives, both through direct lobbying support and by funding broader industry coalitions advocating for clear crypto regulation. Together, these efforts reflect a coordinated push across the Solana ecosystem to ensure that, as capital and policy converge around crypto, Solana has a seat at the table helping define the rules.

Conclusion

Solana’s progress in recent years underscores a simple but powerful reality: it has emerged as a differentiated and major player in the blockchain ecosystem, not just because it scales, but because it’s now coupling that performance with maturity, ecosystem depth, and institutional relevance. Solana has transitioned from a high-speed network into a full-fledged financial and technological platform — one capable of supporting complex market structures, institutional-grade infrastructure, and consumer-scale applications.

The developments across its core stack — from the Agave and Firedancer clients to Alpenglow, DoubleZero, and Application-Controlled Execution — represent an ambitious upgrade cycle, akin to Ethereum prior to the Merge. These are not isolated technical milestones. They are the product of a coherent strategy to make Solana the high-performance foundation for an open, programmable financial system. The network’s ability to translate this technical progress into sustained activity — visible through record DEX volumes, leading network and application fees, and growing institutional adoption — signals that its ecosystem is maturing at breakneck speed.

Execution risk remains high. Each new layer of optimization compounds system complexity and requires careful coordination across validators, developers, and infrastructure providers. But Solana’s recent track record of stable releases and continuous performance improvements has restored credibility. The chain has not only outgrown its “comeback” narrative, but it is now setting the competitive benchmark for throughput, reliability, and economic velocity across general-purpose blockchains.

Still, competition is intensifying. Ethereum continues to consolidate its institutional foothold, new high-performance L1s are emerging with differentiated execution environments, and app-chains, rollups, and modular architectures are fragmenting liquidity and developer attention. Solana’s success is not guaranteed. Beyond users and capital, the network is fighting for mindshare — for recognition that its design philosophy points to the future of onchain markets.

As Dune’s Paul Atreides said, “Our enemies are all around us and in so many futures they prevail. But I do see a way. There is a narrow way through.” Solana now walks a narrow way, balancing innovation with execution. If it maintains the discipline and pace of the past year, Solana could become the driving force that brings the global financial system onchain — turning blockchains from a parallel experiment into the infrastructure of the next financial era.