How Solana's On-Chain Trading Ecosystem Is Thriving
An exploration of Solana's highly profitable trading ecosystem, which is generating significant revenue through innovative tools and strategies.
How Solana's On-Chain Trading Ecosystem Is Thriving
Solana's on-chain trading ecosystem is producing unexpectedly high revenues. This success can be attributed to the unique architecture of the Solana network and the wealth of opportunities it presents to traders.
A Prosperous Sector
Within the cryptocurrency landscape, Solana's trading-related activities rank as the third most lucrative category, right behind stablecoins and Layer 1 inventions.
- Major Revenue Sources: Solana's trading activities consistently account for 75-90% of the network's transaction fees, well above those of Ethereum and other chains like Base and Arbitrum.
- Distinct Approach: The unique dynamics of Solana's fee structure and user engagement set it apart from competing networks.
Coinbase's analysts, David Duong and David Han, emphasized this perspective in a recent report, highlighting the remarkable profitability of Solana's trading ecosystem compared to its rivals.
"Solana's trading-linked activity regularly accounts for 75-90% of [Solana] transaction fees, substantially higher than that of Ethereum and other networks like Base and Arbitrum," Duong commented. “The magnitude of revenue generated by Telegram trading bots is surprising, even exceeding that of pump.fun,” the analysts noted.
Innovations and Trends
Coinbase has recently introduced cbBTC, allowing the trading, lending and borrowing of Bitcoin on the Solana network, a crucial enhancement to support decentralized finance (DeFi) on this blockchain.
- Revenue Figures: For context, Tether's USDT and Circle's USDC have reported revenues of $93 million and $28 million, respectively, while protocols like Photon and pump.fun generated over $6 million in the last week alone, surpassing key DeFi competitors.
Factors Driving Usage
Most of the traction in Solana’s ecosystem can be attributed to the excitement surrounding memecoins — volatile cryptocurrencies that typically lack utility but drive significant trading volumes. The pump.fun protocol has made Solana a hotspot for this type of trading.
“Traders are like, ‘Why would I go trade on a centralized exchange? They have all their funds already on the Solana chain,’” stated Tristan Frizza, the Founder of Zeta Markets.
Conclusion
Solana is quickly establishing itself as a standalone ecosystem within the cryptocurrency sector, driven by its unique capabilities and vibrant trading community.
