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Howdy!

It was a big weekend for me, as I got to see my Buffalo Bills take down the Kansas City Chiefs. Taylor Swift did not make an appearance sadly, but I think I’ve gotten over it.

Today we have Binance and Coinbase’s SOL business, a REV god candle, and what to make of all these bullish signals.

Coinbase, Binance spend and pocket a lot of SOL

It's often said that the real money in the gold rush was made by selling shovels.

You could argue that’s the case in crypto right now as well: As Solana eyes an all-time high, it’s the crypto exchanges — where users gain access to their magic internet money — raking in most of the revenue.

Despite the growth of decentralized exchanges relative to centralized ones, Coinbase is still lapping up a lot of the US crypto market, while Binance remains dominant in the east. These exchanges take in funds from trading fees and from their Solana validators, but onchain sleuths have also found the two exchanges to be wasting some of their funds with inefficient transaction processes.

Coinbase and Binance make money in roughly similar ways: When users trade, they take a cut. Their take rate varies but can be quite high (Coinbase charged me $0.99 in fees when I set up a $10 bitcoin order, for instance). Solana accounted for 9% of Coinbase’s transaction revenue for the first half of this year which would add up to roughly $167 million for the exchange, per its most recent financial disclosures. That figure has likely risen in the second half of the year, as Solana continues to showcase impressive price action.

Both exchanges also run Solana validators. Despite charging their stakers an 8% commission that is at the upper end of what most big validators charge, Coinbase and Binance still run the second- and sixth-largest validators, respectively. Operating a validator — which votes on transactions to keep the Solana blockchain running — is quite lucrative for Coinbase and Binance these days.

Assuming a Solana network reward of 8% annually, Coinbase would bring in around $19 million annually at current prices, and Binance would net $13 million. Those numbers would be especially elevated this week: Tips and fees validators brought in last week topped $110 million last week, an all-time high by more than double, according to Blockworks Research data. 

It’s perhaps a market inefficiency that Coinbase and Binance, despite offering lower yields than competitors, still dominate staked SOL supply. This highlights the demand for platforms that simplify crypto’s technical complexities.

Interestingly, Coinbase and Binance are perhaps spending more SOL than they should as well.

Coinbase wasted $19,000 in the past week overpaying for computing resources on the Solana network, according to a Dune dashboard. Essentially, Coinbase is overpaying on priority fees by not specifying the exact amount of compute units (which can be thought of like Ethereum gas) it intends to use.

Binance has hiccups on its own part. Blockworks Research’s Dan Smith identified a Binance USDC transfer that paid $8 in priority fees — far higher than what the exchange should be paying for a stablecoin transaction that isn’t competing for blockspace like a memecoin would, for instance.

Do shovels still earn a lot of dough? Of course. But their sellers still have plenty of issues to work out.

— Jack Kubinec

Brought to you by:

Renaud Partners is the premier go-to-market consulting firm for early-stage Solana teams.

We’ve been deeply involved in the community since 2021, supporting some of the best known projects in the ecosystem.

We help teams with their go-to-market, brand positioning, social and PR, and fundraising strategy.

We also work across other ecosystems including Monad, Base and TON.

If you're a team looking to expedite your marketing success, let’s talk: [email protected] or @rockin_renaud on telegram.

We got a Solana REV god candle this week:

When Solana’s weekly tips and fees spiked to over $50 million in October, it seemed like a local top, and an impressive one at that. Last week, Solana more than doubled its previous record, processing $111 million in REV.

The metrics boom may all be based on memecoins, but boy oh boy are people trading a lot of them on Solana right now.

— Jack Kubinec

Brought to you by:

Renaud Partners is the premier go-to-market consulting firm for early-stage Solana teams.

We’ve been deeply involved in the community since 2021, supporting some of the best known projects in the ecosystem.

We help teams with their go-to-market, brand positioning, social and PR, and fundraising strategy.

We also work across other ecosystems including Monad, Base and TON.

If you're a team looking to expedite your marketing success, let’s talk: [email protected] or @rockin_renaud on telegram.

Everything’s coming up Solana! The network’s victory lap is in full stride as the data points keep rolling in: $7 billion in daily DEX trading volume, a record 150+ million monthly active addresses, and over 300K new tokens minted in just seven days. Solana now commands 45% of all on-chain DEX volume, with $41 billion in weekly trades outpacing Ethereum and all of its L2s combined. NFT adoption? Solana leads there too, capturing 49% dominance with 66,000 weekly users. Throw in a surge to $7.6 billion in liquid staking token market cap and nearly $300 million bridged from other chains this week alone, and it’s hard not to wonder: Has Solana's reign finally begun in earnest?

Bearish

Still, critics question the quality and sustainability of the network’s growth. Poster @kaidentheai implied that Solana’s affordability has made it a magnet for questionable projects, suggesting its popularity is only soaring because "...it’s too expensive to scam on ETH lmaoo.”

Others would rather dismiss the hype as overlooking the broader context of failures in the space, with @whereislamb0 observing, “The rise of SOL from $8 to its all-time high is a classic case of survivorship bias. There are far more stories where things went the opposite way.” User @Hercules_algo was even more blunt: “Everyone but meme pump and dumpers still think [Solana] is trash.”

Community dynamics continue to fuel the saltiness of Solana’s detractors, with @HeadsCloak admitting, “Bro I hate Solana degens,” and @andyeswecan lamenting, “There’s waaaay too much drama on this Solana blockchain for anyone to take it seriously. Every single big launch comes accompanied with fud, scandal, pvp... it’s just exhausting.”

Even begrudging acknowledgements were backhanded at best: “Even though I hate Solana, I wanna congratulate my degenerate casino buddies in that chain. Remember, gambling is an addiction, seek help,” quipped @0x_Hank.

Bullish

Meanwhile, Solana supporters have taken to reveling in what many see as the culmination of years of persistence. “Solana is leading the supercycle,” declared @AgriDexPlatform. “To me, $SOL is like a baby I've watched grow, fall, and grow again,” said @streamflow_fi.

Optimism runs deep, with @streamflow_fi adding, “Not surprised at all. We all knew at some point that it’s destiny.” @SolanaDali was similarly bullish, speculating “We are going soo much higher.”

Comparisons to Ethereum are never too far behind, with @thetemerian quipping, “Imagine going from total DeFi and mindshare dominance to this in just 3-4 years. F in the chat for Ethereum.” User @RoastM4ster9000 was more direct, crowing, “ETH maxis bout to overdose on copium watching SOL flip their network faster than they can say 'but muh decentralization.’”

Others, like @DLophem, emphasized Solana’s reach, noting, “Solana is taking over all the volume and users—not just in trading, but in its dApps & analytics tools as well.” And according to Solana co-founder @rajgokal, “In the last 2 years, Solana went from untouchable toxic sludge to the default venue for launching digital assets on the internet.”

— Jeffrey Albus