Solana Monthly Analysis – February 2022

Though Solana (SOL) didn’t stand out as one of the best-performing assets in February, it fared decently in the market. Outside the market, the Solana ecosystem completed several milestones last month, most notably the number of validators surpassing 1,500. Based on the major relevant metrics, here is a deeper look at how Solana performed in February.

Market Metrics

Market Capital

Solana’s market capital, a derivation of the dollar value, has pretty much moved in sync with Ethereum’s this year. The dips and spikes between the two smart contract platforms have correlated largely this year.

At the beginning of the year, the Solana ecosystem had a market cap of $52.28 billion but underwent two plunge phases touching a monthly low of $25.63 billion on 24^th January. Markedly, Ethereum came to its monthly bottom in market cap on the same day, falling to $270.63 billion, down from $433.90 billion at the start of the year.

Solana market capital (since the start of the year) in USD and ETH. Source: CoinGecko

Market movements between the two smart contract platforms also plotted similar shapes in February. Solana and Ethereum reached monthly peaks within three days of each other, 07^th and 10^th February, respectively. Further, they touched monthly lows on the same day, the 24^th.

Solana’s market capital grew by only 1.8% last month on account of the fluctuations from the start of last month ($30.89 billion on 01^st February). Comparatively, the market capital on the last day of February was down 39.85% from its figure at the start of the year

Circulating supply

Solana’s circulating supply has been expectedly rising since the start of the year. It has been on this path, continual from as far back as early August last year.

Solana circulating supply against price since the start of the year. Source: Messari

Conversely, the price of Solana’s native SOL token has been falling with a rising circulating supply. At the start of the year, the number of tokens actively available for trading was 309,483,654.95, with a $179.16 SOL price. When the supply grew to $315,099,684.83 on 01^st February, SOL’s price had plunged to $110.09.

Token, Transactions, and Account Metrics

Daily Non-Vote Transactions

The Solana blockchain has registered north of 61.712 billion transactions since its launch. Only 21.46% of these transactions represent the ‘actual’ non-vote transactions.

At the start of the year, the number of non-vote transactions was 50.14 million, but this figure fell to the lowest it has been all year on 22^nd January, reaching 10.36 million transactions. However, the tally peaked at 46.19 million on 30^th January, barely over a week later.

Solana Transaction Charts February. Source: SolScan

Since then, the transactions total has been consistent, with the numbers largely staying above 40 million, though they slightly fell below this level in the latter phase of February. Most recently, Solana registered short of this figure (39.39 million non-vote transactions on 05^th March.

Daily Active Wallets and Daily New Token Accounts

Solana has an inherent correlative flow between the count of daily active wallets and new token accounts (hold token balances) created per day. The difference between the two is that, while one wallet can create multiple token accounts, one token account can only be associated with a single wallet.

On 01^st January, there were 511,060 active wallets on Solana, and the number of additional associated token accounts created on the day was 291,100. By the start of February, the daily active wallets count had grown to 732,690, establishing a steadily falling trajectory since then.

Solana Account Charts February. Source: SolScan

For the tally of new token accounts per day, figures in January dipped on the 22^nd but grew almost threefold in a week to a monthly high on the 29^th, from 223,750 to 606,830. Moving into February 2022’s highest count was set on the 9^th, 674,880, and the least additional token accounts on any day were recorded on the 22^nd – 361,900.

Tokens

The Solana blockchain has an SPL token program (standard) that specifies a common execution of fungible tokens (SPL tokens) and non-fungible tokens (NFTs). Here’s how the two SPL-defined tokens have performed so far this year.

Solana Token Charts February. Source: SolScan

Daily New SPL tokens (excluding NFTs)

The count of new SPL tokens on Solana has shown inconstancy over the last two months, primarily testing the range between 100 and 200 new tokens per day.

Only on a single occasion did the count surpass 300 tokens all year, clocking 302 new tokens on 20^th January, up from 109 tokens (the monthly low) on 1st January. February started with an apex of 261 new tokens, and the count hit a trough on the 24^th, registering 108 additional tokens.

Daily New NFTs

With dominance from projects including Solana Monkey Business and Degenerate Ape Academy, more than 5.4 million NFTs have been minted on Solana as of today.

In the first month of the year, the count of new NFTs was highest on 29^th January (89,700) and lowest on 1^st January (23,040). Last month, the lowest daily increase was observed on 20th February, 36,910 NFTs. On the 25^th, the figure crossed above 90,000 for the first time this year, when 95,990 NFTs were minted.

Daily SPL Token Transfers (including NFTs, excluding wrapped SOL)

As transactions in Solana more often than not encompass multiple token transfers; generally, the magnitude of the transfers on the network is usually of a much greater magnitude than that of active token accounts.

This year, the Solana blockchain set and reset the all-time peak in said token transfers in the consequent peaks of January and February. There were 8.32 million transfers on 24^th January and 10.67 million on 16^th February.

The corresponding count of active token accounts during the respective peaks was 591,680 and 463,620 transfers. Notably, the February apex (higher) saw fewer accounts involved in the token transfers than the previous month’s. January’s biggest dip (3.54 million) happened on the 24^th, and February’s (3.59 million) was registered on the 22^nd.

Daily SOL Transfers (including SOL and wrapped SOL)

This metric reached an all-time high on 16th February – 21.76 million before falling to a monthly low of 8.22 million on the 22^nd. This was only the second time the daily SOL transfers exceeded 15 million; the other was 24^th September last year.

The peak came around pretty late in the first month of the year – the 11.58 million transfers registered on 28^th January. On the extreme end, the 3.6 million transactions recorded on the 22^nd dug deep to levels last seen in August 2021.

Network Metrics

Daily Network Fees for non-vote Transactions (USD)

Fabled for its cheaper fees, Solana has been touted to become a future consumer-scale blockchain.

Through its proof of history consensus, the blockchain boosts the performance of its proof of stake consensus mechanism. This translates into the elements (low fees and scalability) that suggest possible widespread adoption in the future.

So, exactly how much does it cost to complete transactions on Solana? The total fees paid for all non-vote transactions sits at 58,669.03 SOL, translating into an average of 0.0000052 SOL per user on the network.

On 22^nd January, Solana recorded its historically lowest fees yet – users paid a total of 54.27 SOL to push transactions across the network. Comparatively, the highest figure paid in the same month was five times greater than the lowest; the network registered on 25^th January, 260.23 SOL.

Solana Fees Chart February. Source: SolScan

Unlike in January, during which the fee figures fell below 150 SOL on more than one instance, February numbers maintained above that level all month, predominantly exceeding 200 SOL in several daily counts. The fee charged was highest on the 7^th and lowest on the 24^th, 249.61 SOL and 151.88 SOL, respectively.

Daily Active Vote Accounts

Vote accounts on Solana are critical to its operation as they are linked to on-chain validators. A change in the number of active vote accounts, say an increase, will represent an equivalent spike in network activity (an increase in the stakes/ staking weights delegated to the validator nodes on the network).

In general, the sum of active vote accounts per day has maintained a steady historically rising trend. At the beginning of the year, there were 1,355 vote accounts, a figure that improved to 1,456 by 31^st January – growth by 101 accounts.

Solana Daily Active Vote Accounts Chart February. Source: SolScan

Coincidentally, across February, the numbers also grew in the same measure. From 1,462 vote accounts on 01^st February, a spike of 101 was logged as the network clocked 1,563 accounts on the 28^th.

DeFi performance

Market share

Going as far back as September last year, Solana ranked as high as third (occasionally falling to fourth place in some instances) in DeFi market share only behind the Binance Smart Chain and niche leader Ethereum.

However, an increasingly dominant Terra and the surging Avalanche and Fantom blockchains started testing Solana’s position towards the end of last year. Solana had given way to Terra and Avalanche by the end of December, ranking fifth with a 4.69% representation.

With its share falling further, the network clocked a 4.64% market share on 01^st January, as it was displaced to sixth place, this time by Fantom (4.66% at the time). Today, Solana still ranks sixth but has its DeFi market share, 3.45% is not showing any signs of looking up.

Total Value Locked

While February was a mildly fluctuating month in Total Value Locked (TVL) on Solana, there were some extreme swings. For instance, the network lost in excess of $1 billion in TVL within a single day, falling from $8.63 billion down to $7.5 billion between 02^nd and 03^rd February.

However, after that, Solana mounted a one-week mini-rally that saw its total TVL rise to a monthly peak of $8.68 billion on the 10^th. Since then, the network again charted a declining path, eventually bottoming out on the very last day of the month – $6.9 billion.

The TVL story had been pretty much the same in January. The chain clocked a peak early in the month – $11.57 billion on 3^rd January, but lost over $4 billion, to sit at a $7.54 billion trough on 25^th January.

Solana TV chart February. Source: DeFi Llama

Currently, Solana has a TVL of $6.79 billion, which is down 17.32% over the last month. Since the Solana ecosystem lacks an outstandingly dominant DeFi protocol, its top five ranked protocols have a difference of hardly $150 million in TVL.

But then again, as one would expect, the said protocols are ‘guilty’ of captaining the overall decline in value locked on the Solana ecosystem. Four of the five protocols have lost more than 10% in value on the month at the time of writing – Serum (-16.64%), Raydium (-25.15%), Solend (-17.29%), and Quarry (30.77%).

To learn more about Solana, visit our Investing in Solana guide.