Solana Slows Whilst Rally Keeps Running
Any business that has to turn away customers because it is too busy has a good problem on its hands. Over the past week, Solana has been experiencing this very problem. Solana’s trading volumes, and overall network usage, has ballooned to record numbers over the past few weeks. However, recently transactions on Solana have been failing at an increased rate and have been hindering user experience. Suspected meme token arbitrage trading bots are contributing to the network’s congestion and failing transactions. The bots increase volume and revenue on the chain. However, they also use up significant blockspace on their quest to generate profits. Crypto developer, Andre Cronje, who is responsible for creating many popular crypto protocols, sided with Solana and suggested chain congestion is a consequence of adoption and success.
Solana’s founder, Anatoly Yakovenko, did say that developers are currently working on fixing the issue, with the 1.18 Solana update coming on 15 April. Several Solana-based projects decided to delay their token and product launches in hopes of a quicker fix being put in place. Others, like Tensor, a Solana-based NFT marketplace, successfully powered ahead with their airdrop and token launch.
Meanwhile, one of the primary reasons for the continuing meme token mania on Solana has been the introduction of a platform called Pump. The application was created in early March and allows anyone to create a Solana token within a minute for the total cost of less than $4. The tokens created on Pump are “scam proof”. This is possible by removing the creator’s ability to remove liquidity and steal buyers’ funds. This, in combination with no team or pre-sale allocations, leads to them being popular to trade. On Pump, a bonding curve determines each token’s price based on the remaining supply available for purchase. Once demand for the token pushes its market cap above $69,000, it uses $12,000 of the provided liquidity and launches the token on Solana’s Decentralised Exchange Raydium.
Pump has been successful in capturing the meme token zeitgeist, but also from a revenue perspective. According to DefiLlama, Pump generated $2.7 million in revenue last week. Sunday alone accounted for over $500,000 of that total. This has led to Pump being the 15th highest fee-generating protocol across all major chains. Even with Solana slowing down, nothing is stopping Pump.