Sol Guard’s Crisis of Faith: Fundamentals Are Invincible, Why Is the Price Still “Lying Flat”?

Author: CryptoLeo, Odaily Planet Daily

Reference Link: Grayscale Report

As a loyal Sol Guard, I am now losing confidence in SOL.

Looking at the token price, this cycle may not be over yet. However, among the top market capitalization tokens, BTC, ETH, BNB, and even XRP all hit new highs in the second half of 2025. Only SOL, after reaching a high of $295 in January, has not broken its previous high (despite a long-lasting Solana Meme coin craze during that period).

Why isn’t SOL rising? It could be due to the token inflation mechanism, the Meme craze shifting to other networks, liquidity issues, or whale disinterest. One more thing to watch is that Solana seems to always lag behind others in catching up with hot trends.

Recently, Grayscale released a report titled “Solana: Crypto’s Financial Bazaar,” analyzing Solana’s technical fundamentals, network ecology, total token supply, and value metrics. It aims to boost the confidence of “SOL Guards.” Odaily Planet Daily summarized the key points of the report as follows:

Solana’s Fundamentals: Technology, On-Chain Activity, Trading Volume

According to the report, compared to other networks like Ethereum, BNB Chain, Tron, Cardano, and SUI, Solana’s on-chain activity is significantly advantageous in depth and diversity. It leads in user numbers, trading volume, and transaction fees, with more users and economic activity, which directly correlates to higher network value.

On-Chain Data and Trading Volume

As shown in the chart below, SOL ranks third in market cap, but its daily active users, daily trading volume, daily transaction fees, and transactions per second all top similar blockchains.

Ecosystem Applications and Network Revenue

The Solana network also hosts many industry-leading applications, such as:

1. Raydium DEX, a core component of Solana DeFi infrastructure. Since the beginning of the year, Solana DEX trading volume has exceeded $1.2 trillion, surpassing any other blockchain ecosystem. Additionally, the leading DEX aggregator Jupiter on Solana is the largest in the crypto industry in terms of trading volume;

2. pump.fun, a long-standing token issuance platform, with approximately 2 million monthly active users and about $1.2 million in daily revenue;

3. Helium, a DePIN project focused on mobile hotspots. Helium allows users to contribute network capacity to build a nationwide mobile access point network. These services are often cheaper than centralized alternatives. Helium currently has 1.5 million daily active users, 112,000 hotspots, and partnerships with major telecom companies like AT&T and Telefónica Spain.

These applications represent only a small fraction of Solana’s over 500 applications. Moreover, as a blockchain with nearly all functionalities of other mainstream networks, Solana ranks third in NFT trading, fifth in stablecoin trading volume, and seventh in tokenized assets. Recent use cases include Pokémon card collectibles trading and on-chain issuance of tokenized stocks.

Measuring Solana’s ecosystem should consider both the blockchain itself and the economic activity of its hosted applications. These data points fluctuate over time, but Solana’s monthly fee generation is about $425 million, with annual revenue exceeding $5 billion. Grayscale believes that fees are the most direct indicator of overall demand for the blockchain and its applications, all pointing to huge demand for Solana.

Solana’s Advantages: Second Only to Ethereum in Developer Community, Suitable for All Users

Universal Technical Advantages

Beyond fundamentals, Grayscale notes that SOL’s strong data is also due to its fast, inexpensive transactions and seamless user experience. The network generates a new block every 400 milliseconds, with final confirmation around 12-13 seconds. Besides high throughput, transaction costs have remained relatively low:

Solana uses “local fee markets,” which limit fee competition within specific applications. So far this year, the average transaction fee paid by users is only $0.02, with the median daily transaction fee at just $0.001. Compared to similar blockchains, Solana’s speed and cost-efficiency are superior. Its upcoming upgrade, Alpenglow, is expected to reduce final confirmation time to 100-150 milliseconds.

User experience benefits from Solana’s “monolithic” (single-layer blockchain) design—avoiding layered architecture (which requires bridging assets between components)—and the wallet infrastructure led by Phantom. Additionally, Solana’s network failures have been significantly fewer than industry averages in recent years, forming a foundation for user adoption.

Furthermore, Solana’s smart contracts do not rely on the Ethereum Virtual Machine (used by Ethereum and many other platforms like BNB Chain, Polygon, and Avalanche). Instead, they use the unique Solana Virtual Machine (SVM). Applications based on SVM cannot easily migrate to non-SVM blockchains, fostering strong user stickiness.

(# Second Only to Ethereum in Developer Numbers

Currently, over 1,000 full-time developers are working on Solana and SVM applications. Over the past two years, the growth rate of Solana-focused developers has outpaced any other smart contract platform (see chart), second only to Ethereum. Over time, this human capital can contribute to continuous innovation on Solana.

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( Long-Term Store of Value for SOL (Inflation, Token Performance, and Competition)

It’s well known that after the FTX collapse, SOL’s price plummeted from nearly $260 in November 2021 to just $2 in December 2022. Post-FTX bankruptcy, many retail investors felt uncertain about Solana’s future, despite a large number of SVM developers remaining active on the network.

However, starting in late 2023, SOL began to recover, outperforming the FTSE/Grayscale smart contract cryptocurrency index significantly.

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Currently, the supply of SOL increases by about 4% to 4.5% annually. All else being equal, this can dilute the value for token holders. Stakers can earn about 7% nominal returns, but after inflation, the “real” return is approximately 2.5% to 3%. About two-thirds of the outstanding SOL tokens are staked.

Grayscale states that SOL provides utility within the Solana network and may generate additional financial returns. Its value is linked to network scale, similar to other smart contract tokens. The investment thesis for SOL, like other assets, centers on the potential growth of the Solana network—more users, more transactions, and higher fees. As the network grows over time, investors can expect the price of SOL to rise.

Grayscale believes that Solana’s vision is an “open, fast, low-cost blockchain accessible to everyone.” However, its specific design leaves room for competitors to capture or retain market share in certain use cases.

For example, some other blockchains operate more centralized networks (e.g., using only a few active nodes) to offer faster and/or cheaper transactions. While centralization carries risks, users may prefer this convenience. Other blockchains might also compete by maintaining permissioned networks (only allowing approved users and activities).

On the other hand, compared to Bitcoin or Ethereum, SOL may be less suitable as a long-term “store of value” currency. This partly reflects SOL’s higher nominal supply inflation: scarcity is a key feature of any long-term store of value. More critically, the network’s resilience against third-party interference matters. For digital assets intended as long-term stores of value, users need confidence that they can transact almost anytime in the future. Supporting this, maintaining low node requirements helps keep the network highly decentralized and easy to replicate. Solana’s efficiency comes at the cost of higher hardware and bandwidth demands, leading many nodes to operate in data centers. Over time, this could become a source of centralization and a vector for third-party interference.

Of course, these are complex, unresolved issues, and investor perceptions of crypto assets as long-term stores of value may change over time.

( Conclusion

Finally, Grayscale emphasizes that the three most important metrics for on-chain activity are users, volume, and transaction fees. In these areas, Solana is currently a leading network. Despite facing many strong competitors, Solana’s ecosystem depth and diversity provide a solid foundation for SOL’s valuation, which is essential for future growth.

With robust network performance, a large user base, top trading volume and fees, a rebirth story, and dominance during Meme craze, Solana also benefits from a substantial SOL treasury. Besides inflation mechanisms, there are no major black spots threatening the token’s value. Despite having a “heroic” narrative, it has yet to reach new highs. As this article concludes, SOL’s price has fallen back to $185, and the SOL Guard is truly out of ideas.