In recent weeks, the Solana ecosystem has experienced a significant surge in activity, driven largely by the listing of meme coins like Goat, Pnut, and Act on major exchanges. According to data from Blockworks Research, since October 19, 2024, Solana's daily on-chain fees have consistently exceeded those of Ethereum. On October 24, Solana's revenue even surpassed $10 million, highlighting the intense interest and capital flowing into its ecosystem.
This isn't Solana's first moment in the spotlight. Earlier this year, it gained traction with DePin projects, and now, meme coins have taken center stage. But where exactly is this high yield coming from? And how sustainable is this growth?
Understanding Solana's On-Chain Fee Structure
Similar to Ethereum, Solana's on-chain revenue includes base transaction fees, priority fees, and MEV tips. After Ethereum's EIP-1559 implementation, base fees are burned, while MEV tips go to validators. Solana has a comparable mechanism: a fixed percentage of base fees is burned (initially set at 50%), with the remainder distributed to validators.
When comparing on-chain revenue between Ethereum and Solana, it's important to include all burned base fees in the total.
Specifically, Solana's on-chain revenue consists of:
- Base fees
- Priority fees
- Tips (e.g., via Jito)
- Voting fees
Data shows that while base and voting fees have remained relatively stable, priority fees and tips have grown exponentially since March 2024.
Priority fees are paid by users to expedite transactions, often added directly during trade execution. Tips, such as those facilitated by Jito, are extra payments to validators, typically for MEV-related transactions.
The rapid growth in these two categories indicates increased network activity, congestion due to DeFi operations, and a greater willingness among users to pay for faster transactions. It also reflects more MEV opportunities for validators through optimized transaction ordering.
Is Meme Trading the Sole Driver?
Data reveals that transactions on Solana include meme trading (via Pump.fun and other platforms), project tokens, LST tokens, stablecoins, and SOL transfers. Project tokens encompass various categories, including DePin and SocialFi.
Over the past two months, meme-related transactions have grown from 48% to 74% of total volume. This doesn't mean other transaction types have declined; in fact, project tokens, LSTs, stablecoins, and SOL transfers have all seen significant absolute growth during the bull market. However, meme trading volume has exploded by 667%, overshadowing other categories.
This surge explains the rise in priority fees: in meme trading, speed is critical, and users are willing to pay more for faster execution. Increased activity also creates more MEV opportunities.
Active DApps on Solana
DEXs
With meme trading dominating, decentralized exchanges are naturally among the most active DApps. Raydium, deeply integrated with meme coins, now accounts for 63.5% of Solana's DEX volume. Orca, which once held over 60% market share, has seen its portion shrink to around 15% due to the meme boom.
Pump.fun, a meme launchpad with built-in trading functionality, has also captured nearly 5% of trading volume, with a growing trend.
Aggregators and Trading Bots
Beyond direct DEX trading, aggregators and trading bots are highly active. Jupiter, the largest aggregator on Solana, holds 33% of the market share by transaction source. Other protocols, including trading bots, account for 19%.
Jupiter has recently made several moves:
- On October 2, a proposal to extend Active Stake Rewards (ASR) for one year was approved.
- A mobile app launched on October 8 supports Apple Pay and credit cards, providing new on-ramp options.
- On October 17, Jupiter introduced "Ape Pro," a meme coin terminal with MEV protection to mitigate sandwich attacks.
These developments have contributed to a strong performance for the JUP token.
Trading bots are also major players. Over 10% of transactions are facilitated by bots, with top earners including Photon, Trojan, BONKbot, and Banana Gun. Photon generated $29.85 million in revenue over the past 30 days, making it the second-highest earner after Solana itself. Three of the top five revenue-generating protocols on Solana are trading bots, highlighting their profitability.
Other Notable DApps
Despite the meme frenzy, other sectors like staking, restaking, lending, and leverage have benefited from SOL's price appreciation. Here are some standout DApps:
Jito
Jito leads Solana in TVL with over $3 billion, accounting for more than one-third of the ecosystem's total. Users can deposit SOL or LST tokens for restaking. Jito's key differentiator is its MEV toolkit, which captures MEV revenue and distributes it to stakers, enhancing yields. The restaking deposit cap has already hit $25 million, prompting plans to raise limits in the next phase.
Kamino
Kamino is a top platform for stablecoin and LST yield strategies, integrating lending, liquidity provision, and leverage. Its TVL has reached $2 billion. The protocol offers one-click automated compounding strategies for concentrated liquidity. Kamino plans to launch Lend V2 in Q4 2024, enabling permissionless creation of lending markets and automated single-asset vaults.
Marinade
Marinade is a liquid staking protocol with $1.79 billion in TVL, ranking fifth in the ecosystem. While its yields are lower than Jito's, Marinade has recently focused on institutional staking services, boosting its TVL by nearly 50% in the last six weeks.
Conclusion
The meme coin boom has undeniably fueled Solana's growth, driving on-chain revenue and user engagement to new heights. However, memes are often cyclical and tied to bull markets. If the trend fades, Solana will need to rely on a more diversified ecosystem to maintain its lead.
The NFT boom of previous cycles serves as a cautionary tale: after the hype, many projects struggled. Solana must leverage its current momentum to build a healthier, more sustainable revenue structure.
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Frequently Asked Questions
What comprises Solana's on-chain revenue?
Solana's on-chain revenue includes base transaction fees, priority fees, MEV tips, and voting fees. A portion of base fees is burned, while the rest is distributed to validators.
How does Solana's fee model compare to Ethereum's?
Both networks burn base fees and reward validators with tips. However, Solana uses a fixed percentage burn rate (initially 50%), whereas Ethereum's EIP-1559 burns all base fees.
Why are priority fees and tips growing on Solana?
Increased network congestion, driven by meme trading and DeFi activity, has users paying more for faster transactions. Validators also capture more MEV through tips.
Which DApps are most active on Solana?
DEXs like Raydium, aggregators like Jupiter, and trading bots such as Photon are highly active. Liquid staking protocols like Jito and Kamino also see significant use.
Can Solana sustain this growth without memes?
While memes currently drive volume, Solana's ecosystem includes diverse sectors like DePin, SocialFi, and DeFi. Long-term success depends on expanding these areas.
What are the risks of investing in Solana meme coins?
Meme coins are highly volatile and speculative. Their value often hinges on social sentiment rather than fundamentals, posing significant risk.