Howdy!

The market is down so bad the Solana community started talking about network fundamentals again.

Today, we’ve got part three of Solana’s story, SOL’s LST ratio, and the pros and cons of SIMD-0228:

Solana underdogs: The comeback

This is part three of a series on Solana’s rise, fall, and comeback. Click to read part one and part two.

By early 2023, you'd be forgiven for thinking that Solana was finished. Certainly, it had been left for dead by much of the wider industry. But the network's story did not end there. Instead, it accomplished one of the most remarkable recoveries in Web3 history — not fueled by institutional backing or VC largesse, but by a committed community and a new wave of experimentation that would redefine what Web3 stood for.

The first and perhaps most important shift came in Solana’s branding. Early on, Solana positioned itself as an institutional blockchain. It was supposed to be a high-speed network for the next generation of DeFi power users — it likened itself to a “decentralized Nasdaq” at the time. But the institutional money was gone, and many of the polished financial products built atop these promises had crumbled. In their place, a grassroots, community-driven movement began to fill the void, leaning hard into the irreverent culture of the internet: self deprecating humor, in-group copy pastas, and most of all — memes.

Solana became the people’s chain.

The shift was crystallized by the rise of Bonk, a memecoin launched in late 2022. Unlike most corporate-backed projects, Bonk was distributed widely to the community, embodying a playful but deeply resonant ethos. It brought new users to the ecosystem and restored some of the energy that had been lost in the fallout from FTX. As the perceived value of memes gained social purchase, the air became electric once more with the promise of crypto's “next big thing.” Sensing this change in fortunes, a trio of English entrepreneurs — Noah Tweedale, Alon Cohen, and Dylan Kerler — opened pump.fun in January 2024. It was a cultural force. The platform made it easier (and cheaper) than ever to create and trade tokens with near-instant execution. This democratization fueled an explosion of speculative but highly engaging onchain activity.  

Simultaneously, Solana was making serious technical strides. Blinks introduced a new paradigm for seamless, native blockchain transactions where users could transact right from their X feeds. Firedancer, a new validator client developed by Jump Crypto, entered development with the goal of improving network stability and reducing the risk of outages. State compression technology allowed for dramatically lower costs for minting and storing non-fungible assets. Smart wallets leveraged account abstraction to replace traditional seed phrases with multifactor authentication. 

Over a few short months, the resurgence of Solana's creator community gained rapid narrative clarity. Builders who had stuck around through the worst of the bear market now had better infrastructure, lower costs and a more engaged retail community at their disposal. SOL's price, which had languished under $10 in the aftermath of FTX, climbed steadily. By early 2024, the asset was back above $100, and its DeFi and NFT ecosystems were thriving once more.

Sentiment had changed. By the time the price surpassed its pre-FTX all-time high, Solana had transformed into one of the most vibrant, unpredictable and community-driven networks in Web3 history. It proved that ecosystems don’t live or die by their backers, but by the resilience of their builders and users.

Our industry often discards fallen projects. When sentiment shifts and capital moves on, we tend to declare a network dead, reallocate resources and chase the next trend. But Solana did something rare: It survived, adapted, and thrived — not because it was favored to, but because its community refused to let it die. In a space where narratives are written and rewritten at breakneck speed, Solana proved that being an underdog is sometimes the best advantage of all.

— Jeffrey Albus

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9.1%

That’s the percentage of staked SOL that now corresponds to a liquid staking token.

9.1% is a few percentage points higher than a few months ago, but Solana’s stubbornly low LST adoption is interesting given that with the implementation of SIMD-0096, LSTs now tend to pass along more staking rewards than natively staked SOL does.

To me, this seems like evidence that stakers aren’t very rational in the short term — or at least that they don’t follow their staking yield very closely.

— Jack Kubinec

Voting on SIMD-0228 is expected to begin within days. The proposal seeks to replace Solana’s existing emissions curve with a market-based mechanism. You can find a breakdown of the proposal here. For now, here’s an overview of the arguments for and against:

Arguments for SIMD-0228

• As things currently stand, SIMD-0228 would reduce Solana’s inflation/emissions. Reduced emissions reduces the amount of SOL that can be siphoned away by taxes and validator commissions. 

• If staking rewards are reduced, then there’s less incentive to stake SOL and more reason to use the asset in DeFi.

• High staking yields could be an obstacle to SOL ETF adoption, especially if staking ETFs don’t get the SEC’s approval.

Arguments against SIMD-0228

• Lower emissions would make a number of smaller Solana validators unprofitable, which would reduce the network’s decentralization.

• Fluctuating SOL staking rewards could create risk and drive away institutional demand.

• There hasn’t been enough data collection on how SIMD-0228 will impact the network.

— Jack Kubinec

For Builders Who Don’t Just Talk — They Ship.

This conference is for the engineers, founders, and devs building the next cycle’s backbone. If you’re scaling infra, rewriting DeFi, or experimenting with new primitives, Permissionless IV is where you stress-test your vision.

Speaker applications? Open.
Hackathon devs? Your ticket is covered.

June 22-26 | Brooklyn, NY

A message from Leah Wald, CEO of Sol Strategies:

P.S. Leah will be speaking at the Digital Asset Summit in NYC! Grab your tickets now, and use the code LIGHTSPEED10 for 10% off at checkout.