Solana: We love, and hate you.

Solana, a leading Layer-1 blockchain, has been front and centre in 2024. Surging demand, largely driven by hot dogs, US presidents and cute dogs and cats has caused the network to slow to a crawl. But what has actually happened that led to a >75% of non-vote Solana transactions failing and where to from here?

At Vikara, we have a love-hate relationship with Solana. We appreciate the Layer 1 and its ecosystems ability to onboard the masses as exemplified by wallet numbers and size (Charts 1 and 2).

Daily first signers totalled over 2m on March 17, a record (Chart 1), as meme coins exploded.

Chart 1 – Solana Daily First Signers (December 2020 – March 2024)

Source:; note: Daily First Signers is the total number of unique first signers to transact which can be used as a proxy for human users

Further, there are now ~30 million Solana users, with 89% having less than 1 SOL, or less than ~$200 in their wallet, pointing to increasing mass adoption (Chart 2).

Chart 2 – Solana Daily Active Users


While Solana is clearly growing its user base, it continues to experience a multitude of issues. Below are some of the issues we’ve experienced recently:

  • Network congestion (more on this below) which inhibits ability to transact or stops/slows ability to send tokens in/out or across the ecosystem
  • Swaps on dexes failing (this is well known and has been an issue for years) although dexes like Jupiter are a significant improvement in our experience
  • Dexes not recognizing tokens in wallets
  • Staking platforms noting that oracle pricing data is not reliable as it’s stale
  • SolScan (data analytics platform that provides access to real-time information on the Solana blockchain) not loading
  • Occasional network outages and re-starts (this introduces the centralized vs decentralized issue but that is for another time)

That said, Solana has many fan boys and girls and we get why. The SOL token itself is up over 20x since the last cycle bottom with memes having made many thousands, and some millions of dollars. The meme craze has been bringing both liquidity and people into crypto. But its transitory in our opinion, meaning liquidity just moves from one meme to the next outside a select few or to a new chain when degens get tired of or frustrated with Solana, leading to lower volumes (Chart 3).

Chart 3 – Solana Network USD Volumes (Jan 1 2024 – April 10 2024)

Source: DefiLlama

As the network seized up, volumes dropped, returning to pre-March meme mania levels, with volumes with week of April 8 averaging ~$900m versus the peak of $4bn in mid-March. Even without network issues, we this was inevitable, although it was likely brought forward.

Regarding Solana’s network congestion, they are blaming the congestion and significant increase in failed transactions (>75% of non-vote Solana transactions failed on April 4 for example) on high network demand, driven by significant increases in volumes shown in Chart 3.

The Solana team notes that the ongoing network congestion is not a result of a fundamental design flaw but rather an implementation issue, which is a much easier fix. Austin Federa of Solana Labs summarized of issue on an X post: Solana Labs Post. A fix is slated to be implemented on April 15.

This isn’t new. In late 2017, Ethereum experienced similar issues when one project called CryptoKitties clogged the Ethereum network, delaying transactions, and causing a pile-up of unprocessed transactions, with unprocessed transactions rising more than 6x that month.

While many in Solana have been focused on memes, there are many great projects in segments ranging from depin and gaming to RWAs and commerce, some of which we own in the Vikara fund. We’re viewing these short-term issues as a buying opportunity for these types of long-term projects as Solana continues to be one of the leading blockchains.


Mark Riccio, CFA
Vikara Capital

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