In recent months, Solana has captured significant attention in the cryptocurrency world, both for its growing on-chain activity and the challenges it faces in gaining approval for exchange-traded funds (ETFs) in the United States. As daily active addresses on Solana crossed the 2 million mark, driven by popular decentralized applications (dapps) like Raydium, Pump.Fun, and Jito, industry experts remain skeptical about the potential for altcoin ETFs beyond Bitcoin and Ethereum. Despite regulatory hurdles and uncertain demand for altcoin ETFs, Solana's robust ecosystem and innovative dapps continue to attract users and generate substantial transaction volumes.
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Solana's On-Chain Activity Soars: Raydium, Pump.Fun, and Jito Lead the Charge
Solana has witnessed a significant uptick in on-chain activity over the past several months, driven by a surge in daily active addresses and user engagement with decentralized applications (dapps) such as Raydium, Pump.Fun, and Jito. According to on-chain data, Solana's daily active addresses recently crossed the 2 million mark, based on a 7-day moving average.
Raydium has emerged as the top fee generator among Solana's dapps, reflecting its prominence in the decentralized exchange (DEX) market. In July, Raydium recorded an impressive $30 billion in trading volume, positioning it as the second-largest DEX by volume after Uniswap. This substantial trading activity resulted in Raydium generating over $65 million in fees in July, a sharp increase from the $33 million recorded in June, as per DefiLlama data.
The success of Raydium shows the growing demand for efficient and cost-effective trading platforms within the Solana ecosystem. The DEX's ability to handle high volumes of transactions with low fees has made it a favorite among users seeking liquidity and trading opportunities.
Pump.Fun has capitalized on the rising interest in memecoin trading, attracting a considerable user base due to its user-friendly interface and Solana's low transaction costs. Since its launch in March 2024, Pump.Fun has facilitated the creation of over 1.5 million memecoins, including tokens themed around political figures and celebrities.
In July, Pump.Fun generated $28 million in fees, marking its highest monthly fee collection since launch. The platform's ability to support the rapid creation and trading of memecoins has contributed significantly to Solana's on-chain volume, drawing tens of thousands of new tokens to the network each week.
Jito: Dominating the MEV Space
Within the niche of maximal extractable value (MEV), Jito has maintained its position as the leading protocol on Solana. Jito's off-chain blockspace auction system allows traders to submit transaction bundles with bids, enhancing the reliability and efficiency of transaction execution.
In July, MEV tips collected by validators using the Jito client reached approximately $36 million, representing a 26% increase from June. The surge in on-chain trading has also led to a rise in MEV tips paid to Solana validators operating via Jito. On July 28 alone, daily MEV tips surged to $3.2 million, making it the highest fee-generating day on Solana.
It is important to note that these fees represent the value being paid through the MEV platform and are not the actual revenue for Jito stakers. Jito's recorded revenue for July stood at $1.4 million, according to data.
The recent surge in on-chain activity and daily active addresses on Solana highlights the growing adoption and utilization of the network. Dapps like Raydium, Pump.Fun, and Jito are driving this growth by offering innovative solutions and user-friendly platforms that cater to the diverse needs of the crypto community.
Solana's ability to handle high transaction volumes with low fees has positioned it as a competitive player in the blockchain space, attracting a wide range of users and developers. As the ecosystem continues to evolve, the sustained growth of these dapps will likely contribute to further increases in on-chain activity and user engagement.
Solana's recent surge in on-chain volume and daily active addresses is a strong indication of the network's growing popularity and the success of its leading dapps. Raydium, Pump.Fun, and Jito are at the forefront of this growth, each contributing significantly to the overall ecosystem through innovative features and efficient transaction handling. As Solana continues to attract users and developers, the network is well-positioned to maintain its upward trajectory and solidify its place in the competitive blockchain landscape.
Solana, Cardano, and Other Altcoins Face Uphill Battle for ETF Approval and Investor Interest
In the rapidly evolving world of cryptocurrency, the potential approval of spot exchange-traded funds (ETFs) for altcoins like Solana and Cardano in the United States remains a contentious issue. Despite the success of Bitcoin and Ethereum ETFs, experts argue that other crypto assets face significant hurdles, both in gaining approval and attracting investor interest.
Katalin Tischhauser, head of investment research at Sygnum Bank, recently highlighted the regulatory obstacles in an interview. Tischhauser emphasized that the primary barrier to approving altcoin ETFs in the U.S. is the lack of trading venues deemed acceptable for market surveillance by the Securities and Exchange Commission (SEC).
"The SEC has a duty to protect against market abuse, fraud, and market manipulation," Tischhauser explained. "For products it approves, the SEC surveils the underlying market by looking at regulated market venues, such as the Chicago Mercantile Exchange (CME), to ensure fair, transparent, and manipulation-free trading practices."
The availability of CME futures for Bitcoin and Ethereum served as a workaround, allowing the SEC to approve ETFs for these assets. However, the SEC currently views crypto exchanges as "unregulated securities exchanges," creating a significant barrier for altcoin ETFs.
Even if regulatory issues are resolved, Tischhauser remains skeptical about the demand for altcoin ETFs. "We do not think ETFs beyond Bitcoin and Ethereum would meet much demand," she stated. "Ethereum’s name recognition is only half of Bitcoin’s, and other tokens (such as Solana) have minimal name recognition outside the crypto market."
The market data supports this view. Since their launch in January, spot Bitcoin ETFs have attracted $17.7 billion in inflows, demonstrating strong demand. In contrast, spot Ethereum ETFs have experienced slower growth, with aggregate outflows dominating the first week of trading, primarily due to the exodus from the Grayscale Ethereum Trust.
BlackRock's Perspective
BlackRock's investment chief for ETF and index investments, Samara Cohen, and the asset manager’s head of digital assets, Robert Mitchnick, echoed Tischhauser's sentiments in July. Cohen noted that a spot ETF for altcoins such as Solana is unlikely in the near term, while Mitchnick stated, "I don’t think we’re gonna see a long list of crypto ETFs."
The Grayscale Solana Trust (GSOL) provides further evidence of limited demand for altcoin ETFs. Despite a high premium, the GSOL fund manages only $78.6 million in assets, a fraction of the $6.3 billion managed by the Grayscale Ethereum Trust.
However, not everyone shares this bearish outlook. Matthew Sigel, head of digital assets research at VanEck, expressed optimism in a July 31 interview. "We disagree with the notion that Bitcoin and Ethereum will be the only ETFs," Sigel said. "The market in Europe already boasts a variety of crypto ETPs, including single coin and basket options."
VanEck aims to lead this innovation in the U.S., having filed for a Solana ETF with the SEC on June 27. Sigel believes that as the market matures, demand for diversified crypto ETFs will grow.
The shifting dynamics of the market further complicate the picture. On Aug. 1, aggregate flows for spot Ethereum ETFs turned positive again, with Grayscale’s ETHE fund experiencing its smallest outflow, bringing the total aggregate inflow to $28.5 million for the day.
While the potential for altcoin ETFs remains uncertain, the ongoing debate brings attention to the complexity of the cryptocurrency market. Regulatory challenges, market demand, and evolving investor preferences all play crucial roles in shaping the future of crypto ETFs. As the industry continues to develop, stakeholders will need to navigate these complexities to unlock new opportunities for investment in digital assets.
