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Following a challenging 2022 due to macroeconomic challenges, Solana’s performance saw a significant improvement in the first quarter of the year. Data indicated that its market capitalization rose by over 118% quarter-over-quarter alongside the overall market.
Additionally, various ecosystem advancements stimulated fee payer and transaction activity throughout Q1.
Solana’s Performance in Q1
Previous network outages raised discussions regarding potential insolvency. However, its performance became more stable after enhancements such as QUIC, priority fees (local fee markets), and Stake-Weighted Quality of Service (QOS). In Q1, the layer one blockchain network experienced notable growth across DeFi, NFTs, and GameFi sectors.
As per the latest Messari report, the total value locked in Solana, expressed in USD, increased by 23.5% quarter-over-quarter. Conversely, the TVL expressed in SOL decreased by 40.7% during the same timeframe, suggesting that “the asset price increases in USD versus new capital inflow influenced TVL.”
Liquid staking derivatives (LSDs) continued to bolster the Solana ecosystem, with Marinade Finance, Lido, Jito, and JPool each achieving a TVL growth of 100% or more during the quarter. These four LSDs also secured positions within the top 20 by TVL.
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Other protocols, including Orca, Raydium, and Solend, experienced substantial TVL growth in tandem with the broader market recovery.
A similar pattern was observed within Solana’s NFT ecosystem. Data from Messari showed that the total number of daily new NFTs rose from 2.6 million to 2.9 million quarter-over-quarter, marking an increase of nearly 12%. NFT sales volume in the secondary market, measured in USD, climbed by almost 36%.
This contrasts with the DeFi sector, where sales denominated in SOL increased by 20% before surging, indicating that “sales activity was not solely driven by asset price increases in USD.”
During the first quarter, the number of unique buyers surpassed that of unique sellers. The total count of buyers reached 889,000, while sellers were recorded at 887,000.
Aftermath FTX Implosion
Solana’s close connections with Sam Bankman-Fried’s crypto empire – which invested in nine of its projects from December 2020 to March 2022 – proved detrimental for the network. This sparked speculation about a developer exodus.
However, with the introduction of an increasing number of applications this year, their user base also expanded. This trend contributed to the growth and stabilization of active programs within the Solana ecosystem. Consequently, the number of unique active programs rose from 58,000 in Q1 2022 to 96,000 in Q1 2023.
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