Solana's Crisis of Faith: Fundamentals Are Unbeatable, So Why Is the Price "Flat"?

Original Title: "The Faith Crisis of SOL Guards: Unbeatable Fundamentals, Why Is the Price 'Lying Flat'?"
Original Author: CryptoLeo, Odaily
Reference Link: Grayscale Report

 

As a loyal SOL guard, I am now starting to lose a bit of faith in SOL.

Looking at the token price, this cycle may not be over yet. But among the top market cap tokens, BTC, ETH, BNB, and even XRP all hit all-time highs in the second half of 2025, while only SOL, after reaching a price peak of $295 in January, has not broken its previous high (despite a months-long Solana Meme coin craze during this period).

Why has SOL been slow to rise? It could be due to the token inflation mechanism, the Meme craze shifting to other networks, or possibly liquidity issues and lack of confidence from whales. Another point to note is that Solana always seems to be one step behind others in catching up with the hype.

(Group chat screenshot)

Some time ago, Grayscale released a Solana report titled "Solana: Crypto's Financial Bazaar," which analyzed Solana's technical aspects, network ecosystem, total token supply, and value metrics, providing a bit of confidence for "SOL guards." Odaily has summarized the key points of the report as follows:

Solana Fundamentals: Technology, On-chain Activity, Trading Volume

According to the report, compared to other networks such as Ethereum, BNB Chain, Tron, Cardano, and Sui, Solana has a significant advantage in the depth and diversity of on-chain activity. In terms of users, trading volume, and transaction fees, the Solana network leads with more users and economic activity, which equates to higher network value.

On-chain Data and Trading Volume

As shown in the figure below, SOL ranks third in market cap, but ranks first among similar blockchains in daily active users, daily trading volume, daily transaction fees, and transactions per second.

Ecological Applications and Network Revenue

The Solana network also hosts many industry-leading applications, such as:

1. Raydium DEX, a core component of Solana DeFi infrastructure. Since the beginning of the year, Solana DEX trading volume has exceeded $1.2 trillion, surpassing any other blockchain ecosystem. In addition, Solana's leading DEX aggregator Jupiter is also the largest aggregator by trading volume in the crypto industry;

2. pump.fun, a long-standing top token issuance platform, with about 2 million monthly active users and daily revenue of about $1.2 million;

3. Helium, a DePIN project focused on mobile hotspots. Helium allows users to contribute network capacity to build a nationwide mobile access point network. These services are usually cheaper than centralized alternatives. Helium currently has 1.5 million daily active users, 112,000 hotspots, and has established partnerships with major telecom companies such as AT&T and Telefónica.

The above applications represent only a small portion of Solana's 500+ applications. In addition, as a blockchain that almost possesses all the functions of other mainstream networks, Solana ranks third in NFT trading, fifth in stablecoin trading volume, and seventh in tokenized assets. Other recent use cases include Pokémon card collectibles trading and on-chain issuance of tokenized stocks.

Evaluating the Solana ecosystem should consider both the blockchain itself and the economic activity of its hosted applications. These data change over time, but the Solana ecosystem generates about $425 million in fees per month, with annual revenue exceeding $5 billion. Grayscale believes that fees are the most direct indicator of total demand for a blockchain and its applications, and these figures all indicate huge demand for Solana.

Solana's Advantages: Second Only to Ethereum in Developer Scale, Suitable for All Users

Universal Technical Advantages

In addition to fundamental analysis, Grayscale also mentioned that SOL's strong data is due to its fast, low-cost transactions and seamless user experience. The network produces a new block every 400 milliseconds, and transactions reach final confirmation in about 12-13 seconds. In addition to high throughput, transaction costs have remained relatively low:

Solana uses "local fee markets" technology, which limits fee competition to specific applications. So far this year, the average transaction fee paid by users is only $0.02, partly due to this feature, and the median daily transaction fee this year is only $0.001. Solana's transaction speed and cost-effectiveness are faster and cheaper than similar blockchains. The upcoming Solana upgrade, Alpenglow, is expected to reduce final confirmation time to 100-150 milliseconds.

Solana's user experience mainly benefits from its "monolithic" (single-chain) design rather than a layered design (avoiding the need to bridge assets between network components), and the wallet infrastructure led by Phantom. In recent years, Solana network outages have also been significantly lower than the industry average, which is also the basis for user adoption.

In addition, Solana smart contracts do not rely on the Ethereum Virtual Machine (the system used by Ethereum and many other smart contract platforms, including BNB Chain, Polygon, and Avalanche). Instead, it uses the unique architecture of the Solana Virtual Machine (SVM). Applications based on SVM cannot be easily ported to non-SVM blockchains, resulting in stable user stickiness.

Second Only to Ethereum in Number of Developers

Currently, more than 1,000 full-time developers are working on Solana and SVM applications, and in the past two years, the growth rate of developers focused on Solana has surpassed any other smart contract platform (as shown below), second only to Ethereum. Over time, this human capital can contribute to Solana's continued innovation.

Long-term Store of Value for SOL Tokens (Inflation, Token Performance, and Competitor Challenges)

It is well known that due to the FTX collapse, the price of SOL tokens fell from a peak of nearly $260 in November 2021 to just $2 in December 2022. After FTX's bankruptcy, many retail investors were uncertain about Solana's future, although a large number of SVM developers remained on Solana at the time.

But starting at the end of 2023, the SOL token began to recover, significantly outperforming the FTSE/Grayscale Smart Contract Platform Crypto Index.

Currently, the supply of SOL tokens grows at a rate of about 4% to 4.5% per year. All else being equal, this can be seen as a reason for value dilution for token holders. Depending on network conditions, SOL stakers can earn a nominal return of about 7%, but after adjusting for inflation, the "real" return is about 2.5% to 3%. Currently, about two-thirds of outstanding SOL tokens have been staked.

Grayscale states that SOL provides utility within the Solana network and may receive additional corresponding financial returns, but their value is related to the scale of the network. Like other smart contract platform tokens, the investment thesis for SOL centers on the potential growth of the Solana network. As with other assets, the price of SOL tokens does not always change with network fundamentals. But if the Solana network grows over time—with more users, more transactions, and more fees—investors can expect the SOL price to rise.

Grayscale believes: Solana presents itself as a "fast, low-cost blockchain open to everyone." But its specific design leaves room for competitors to capture or retain market share in certain use cases.

For example, other blockchains sometimes offer faster and/or cheaper transactions by operating more centralized networks (e.g., using only a small number of active network nodes). Even if centralization may bring risks, users may favor this convenience. Other blockchains may compete with Solana by keeping their networks permissioned (i.e., only allowing approved users and/or approved activities).

On the other hand, compared to Bitcoin or Ethereum, SOL tokens may be less suitable as a long-term "store of value" monetary asset. This partly reflects SOL's relatively high nominal supply inflation: scarcity is a key feature of any long-term store of value. But a more important factor may be the network's ability to resist third-party interference. For digital assets as a long-term store of value, users need confidence that they can transact in almost all future scenarios. One way to support this outcome is to maintain low node requirements to keep the network highly decentralized and easy to replicate. Solana's efficiency comes at the cost of relatively high hardware and bandwidth requirements, so many network nodes run in data centers. In theory, over time, this could become a source of centralization and a vector for third-party interference with the network.

Of course, these are complex and unresolved issues, and investors' views on whether crypto assets can serve as a long-term store of value may change over time.

Conclusion

Finally, Grayscale believes that the three most important indicators for measuring on-chain activity are users, trading volume, and transaction fees. In these metrics, Solana is currently the leading network for on-chain activity. Although the Solana network faces many strong competitors, the depth and diversity of Solana's on-chain economy provide a solid foundation for SOL's valuation, which is also a necessary condition for its further growth in the future.

Strong network performance, a huge user base, leading trading volume and transaction fees, a rebirth from the ashes, and dominance in the Meme craze. In addition, Solana has a massive SOL treasury for support. Apart from the inflation mechanism, SOL seems to have no major black marks seriously affecting its token value. Clearly holding the "protagonist script," yet it has not reached new highs for a long time. As this article ends, the SOL token price has fallen back to $185, and SOL guards are truly out of options.