Following a challenging 2022 that was impacted by macroeconomic headwinds, Solana saw significant improvement in its performance during the first quarter of the year. Data shows that its market cap increased over 118% QoQ, in line with the broader market.
Additionally, several ecosystem developments contributed to increased fee payer and transaction activity during Q1.
Q1 Performance of Solana
Previously, Solana experienced network outages that raised concerns about potential insolvency. However, with upgrades such as QUIC, priority fees (local fee markets), and Stake-Weighted Quality of Service (QOS), its performance stabilized. In Q1, the layer one blockchain network saw substantial growth across DeFi, NFTs, and GameFi verticals.
According to the latest Messari report, the total value locked (TVL) in Solana, denominated in USD, increased by 23.5% QoQ. However, TVL denominated in SOL was down by 40.7% during the same period, indicating that asset price increases in USD vs. new capital inflow drove TVL.
Liquid staking derivatives (LSDs) continued to support the Solana ecosystem, with Marinade Finance, Lido, Jito, and JPool increasing their TVL by 100% or more during the quarter. These four LSDs also made it into the top 20 by TVL.
Other protocols such as Orca, Raydium, and Solend also experienced massive growth in TVL, in line with the wider market rebound.
A similar trend was observed in Solana’s NFT ecosystem. Messari’s data showed that the total number of daily new NFTs increased from 2.6 million to 2.9 million QoQ, representing a nearly 12% surge. NFT sales volume in the secondary market denominated in terms of USD was up by almost 36%. This is in contrast to the DeFi market, where sales denominated in SOL increased by 20% before skyrocketing, indicating that sales activity was not purely accrued by asset price increases in USD.
Meanwhile, the number of unique buyers exceeded the number of sellers during the first quarter. The total buyer count was 889,000, while sellers were recorded to be 887,000.
The Aftermath of the FTX Implosion
Solana’s strong ties with Sam Bankman-Fried’s crypto empire, which invested in nine of its projects from December 2020 to March 2022, turned out to be a disaster for the network, igniting rumors of developer exodus. However, the launch of more and more applications in 2023 has helped increase and stabilize active programs in the Solana ecosystem. As a result, there were 58,000 unique active programs in Q1 2022, which increased to 96,000 in Q1 2023.