Solana’s (SOL) blockchain has hit a major milestone, with the number of monthly active addresses surpassing 100 million, according to Artemis Terminal. This figure marks a dramatic surge from the 509,000 monthly active addresses recorded at the start of 2024, reflecting the platform’s growing prominence in the blockchain world. However, there’s more to this figure than meets the eye, as many are questioning the legitimacy of the numbers.
Active But Empty Wallets Raise Concerns
Despite the impressive headline, a deeper look at the data reveals an interesting twist. Solana data provider Hello Moon reports that over 86 million of these wallets held zero SOL during the past month. Additionally, around 15.5 million users had less than 1 SOL in their accounts, and 1.5 million users held less than 10 SOL. This has fueled speculation that a significant portion of Solana’s activity could be attributed to bots or other non-organic factors.
“Most Solana addresses have a lifetime value of less than $10, which hints at something not entirely legitimate or organic,” said Justin d’Anethan, head of APAC business development at Keyrock, a crypto market maker. This raises questions about whether these wallets represent real users or artificially inflated metrics.
The Role of Centralized Exchanges and DeFi Platforms
Dan Hughes, founder of Radix DLT, suggests that the rise in zero-balance wallets may be due to interactions with centralized exchanges (CEX) or decentralized finance (DeFi) applications. “When you send to a CEX, the exchange generates a proxy address,” he explained. These proxy addresses could account for many of the active wallets showing no SOL balance, as tokens are immediately transferred to hot wallets managed by exchanges.
This explanation provides some clarity, but it doesn’t completely dispel concerns. Critics argue that Solana’s low transaction fees and high speed make it easy for bots to flood the network with low-value transactions, artificially boosting its activity metrics.
While skeptics point to bots, Solana’s ecosystem is undeniably growing. The network has seen a resurgence in new token issuance, with over 17,000 new Solana Program Library (SPL) tokens being created daily since late September, according to Solscan. Additionally, the number of new accounts on the network doubled in just one day, with over 10 million new accounts added on October 8 alone.
Despite the questions surrounding its active address count, Solana remains a dominant player in the DeFi space. As of October 9, Solana ranked as the third-largest blockchain for DeFi, with $5.41 billion in total value locked (TVL). By comparison, Ethereum, the leader in DeFi, boasted $44.7 billion in TVL, while Tron ranked second with $7.4 billion.
The Debate Over Solana’s Metrics
The debate over Solana’s activity is not new. Critics argue that bots are driving much of the network’s interactions, pointing out that it’s easy and cheap to generate multiple small transactions on Solana. However, Austin Federa, head of strategy at the Solana Foundation, counters that bot transactions still contribute to the network’s overall value. “Bots pay fees, just to be clear,” he said.
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Solana’s fee mechanism, which burns 50% of the fees to control inflation, plays a critical role in managing the network’s long-term sustainability. As activity rises, more fees are burned, which could lead to lower inflation rates over time.
Solana’s surge in active addresses is both a sign of the network’s growth and a source of debate. While skeptics highlight the role of bots, the platform continues to attract users and developers, evidenced by the rise in new tokens and accounts. Whether this activity is driven by bots or organic growth, Solana remains a key player in the blockchain and DeFi space, with its low fees and high transaction speed fueling both innovation and controversy.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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