Solana's Crisis of Faith: Unbeatable Fundamentals, So Why is the Price 'Flatlining'?

By: blockbeats|2025/10/21 19:00:01

Original Article Title: "SOL Sentinel's Faith Crisis: Fundamental Invincible, Why the Price 'Flatlined'?"
Original Author: CryptoLeo, Odaily Planet Daily

As a loyal SOL Sentinel, I have now lost some confidence in SOL.

From the perspective of token price, this cycle may not be over yet. However, among the top-ranked tokens by market capitalization, BTC, ETH, BNB, and even XRP have all hit new all-time highs in the second half of 2025, while SOL, after reaching a high of $295 in January, has not broken its previous high (during which there was a months-long Solana Meme coin craze).

Why has SOL not risen yet? It may be due to the token's inflation mechanism, the shift of meme craze to other networks, liquidity issues, and whale bearishness. One more thing to pay attention to is that Solana always seems to be one step behind in catching up with the hype.

Solana's Crisis of Faith: Unbeatable Fundamentals, So Why is the Price 'Flatlining'?

(Group Chat Screenshot)

Recently, Grayscale released a report titled "Solana: Crypto's Financial Bazaar," analyzing Solana's technological aspects, network ecosystem, token supply, and value data indicators, providing some confidence to the "SOL Sentinel." Odaily Planet Daily summarized the key points of the report as follows:

Solana's Fundamentals: Technology, On-chain Activity, Transaction Volume

According to the report, compared to other networks such as Ethereum, BNB Chain, Tron, Cardano, and Sui, Solana has a significant advantage in the depth and diversity of on-chain activity. It is leading in terms of users, transaction volume, and transaction fees, with the Solana network having more users and economic activity, which translates to higher network value.

On-chain Data and Transaction Volume

As shown in the chart below, SOL ranks third in market capitalization, but it leads similar blockchains in daily active users, daily transaction volume, daily transaction fees, and transactions per second.

Ecosystem Applications and Network Revenue

Additionally, the Solana network hosts many industry-leading applications, such as:

1. Raydium DEX, also a core component of the Solana DeFi infrastructure. From the beginning of the year to date, the Solana DEX has processed a trading volume exceeding $1.2 trillion, surpassing any other blockchain ecosystem. Furthermore, Solana's leading DEX aggregator, Jupiter, is the cryptocurrency industry's largest aggregator in terms of trading volume;

2. pump.fun, a long-standing token launch platform, with approximately 2 million monthly active users and a daily revenue of around $1.2 million;

3. Helium, a DePIN project focused on mobile hotspots. Helium allows users to contribute to network capacity, thereby building a nationwide mobile hotspot network. These services are often cheaper than centralized alternatives, and Helium currently boasts 1.5 million daily active users, 112,000 hotspots, and has established partnerships with major telecom companies such as AT&T and Telefónica.

The above applications represent only a small fraction of Solana's 500+ applications. Additionally, as a blockchain that almost fully replicates the functionalities of other mainstream networks, Solana ranks third in NFT transactions, fifth in stablecoin transaction volume, and seventh in tokenized assets. Recent use cases that have gained traction include Pokémon card collectibles trading and on-chain issuance of tokenized stocks.

When measuring the Solana ecosystem, one should consider both the blockchain itself and the economic activities of its hosted applications. While these figures may evolve over time, the Solana ecosystem generates approximately $425 million in fees per month, with an annual income exceeding $5 billion. Grayscale believes that fees are the most direct indicator of measuring total demand for a blockchain and its applications, and all these data points indicate significant demand for Solana.

Solana's Advantages: Developer Scale Second Only to Ethereum, and Universally Accessible

Universal Technological Superiority

In addition to fundamental analysis, Grayscale also mentioned that Solana's good performance is due to its fast, low-cost transactions, and seamless user experience. The network generates a new block every 400 milliseconds, and transactions can be finalized in about 12-13 seconds. Apart from high throughput, transaction costs have also remained relatively low:

Solana uses a "local fee markets" technology, which restricts fee competition to specific applications. So far this year, the average transaction fee paid by users has been only $0.02, partly due to this feature. The median daily transaction fee this year is only $0.001. Solana's transaction speed and cost efficiency are faster and cheaper compared to similar blockchains. Its upcoming Solana upgrade, Alpenglow, is expected to reduce final confirmation time to 100-150 milliseconds.

Solana's user experience is mainly due to its "monolithic" (single-layer blockchain) design rather than a layered design (which avoids the need to bridge assets between network components), and the wallet infrastructure led by Phantom. In recent years, Solana's network failure rate has also been significantly lower than the industry average, which is also a foundational factor for user adoption.

Furthermore, Solana smart contracts do not rely on the Ethereum Virtual Machine (used by Ethereum and many other smart contract platforms like BNB Chain, Polygon, and Avalanche). Instead, they use Solana's unique Solana Virtual Machine (SVM) architecture. Applications based on the SVM cannot easily move to non-SVM blockchains, leading to stable user retention.

Second Only to Ethereum in Developer Count

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

The Long-Term Storage Value of the SOL Token (Inflation, Token Performance, and Competitor Competition)

It is well known that due to FTX's collapse, the price of the SOL token plummeted from its peak of nearly $260 in November 2021 to just $2 in December 2022. Following FTX's bankruptcy, many retail investors felt uncertain about Solana's future, despite a significant number of SVM developers still remaining on Solana at the time.

However, starting from the end of 2023, the SOL token began to recover, outperforming notably the FTSE/Grayscale Smart Contract Platform Cryptocurrency Industry Index.

Currently, the SOL token's supply is increasing at a rate of around 4% to 4.5% per year, which, under unchanged conditions, can be seen as a reason for token holder value dilution. According to the network state, SOL stakers can receive around a 7% nominal yield, but the "actual" yield adjusted for inflation is approximately 2.5% to 3%. Currently, about two-thirds of unissued SOL tokens have been staked.

Grayscale states that SOL offers utility on the Solana network and may receive additional corresponding financial returns, but their value is tied to the network's scale, similar to other smart contract platform tokens, the investment thesis of the SOL token revolves around the potential growth of the Solana network. Like other assets, the SOL token price does not always move in line with the network's fundamentals. However, if the Solana network grows over time—acquiring more users, processing more transactions, and earning more fees—investors can expect the SOL price to rise.

Grayscale believes: Solana is envisioned as an "open, fast, low-cost blockchain for everyone". But its specific design leaves room for its competitors to seize or retain market share in certain use cases.

For example, other blockchains sometimes achieve faster and/or cheaper transactions by operating a more centralized network (e.g., using a small number of active network nodes). Even though centralization may bring risks, users may prefer this convenience. Other blockchains may compete with Solana by maintaining permissioning on their network (i.e., only allowing approved users and/or approved activities).

On the other hand, compared to Bitcoin or Ethereum, the SOL token may not be as suitable as a long-term "store of value" currency asset. This to some extent reflects SOL's relatively high nominal supply inflation: scarcity is a key feature of any long-term value store. But a more important factor may be the network's ability to resist third-party interference. For a digital asset to be used as a long-term store of value, users need to have confidence that they will be able to transact under almost all circumstances in the future. One way to support this outcome is to maintain low node requirements to keep the network highly decentralized and easy to replicate. Solana's efficiency comes at the cost of relatively high hardware and bandwidth requirements, so many network nodes operate in data centers. In theory, over time, this could become a source of centralization and a conduit for third-party interference with the network.

Of course, these are complex and unresolved issues, and investors' views on cryptocurrency as a long-term store of value may change over time.

Conclusion

Finally, Grayscale believes that the three most important metrics for measuring on-chain activity are users, transaction volume, and transaction fees, and Solana is currently the leading network in these metrics of on-chain activity. While the Solana network faces many powerful competitors, the depth and diversity of the Solana on-chain economy have laid a solid foundation for SOL's valuation, which is also a necessary condition for its future growth.

A network with strong performance, a large number of users, leading transaction volume and transaction fees, having gone through a phoenix-like rebirth, leading the Meme trend. In addition, Solana also has a large SOL treasury to support it. Aside from the inflation mechanism, SOL seems to have no significant flaws that would impact the token's value, seemingly holding the script of a "cool protagonist," yet it has failed to reach new highs. At the time of the end of this article, the SOL token price has dropped back to $185, and the SOL guards seem to be at a loss.

Original Article Link

Editor's Note: Citrini7's cyberpunk-themed AI doomsday prophecy has sparked widespread discussion across the internet. However, this article presents a more pragmatic counter perspective. If Citrini envisions a digital tsunami instantly engulfing civilization, this author sees the resilient resistance of the human bureaucratic system, the profoundly flawed existing software ecosystem, and the long-overlooked cornerstone of heavy industry. This is a frontal clash between Silicon Valley fantasy and the iron law of reality, reminding us that the singularity may come, but it will never happen overnight.

The following is the original content:

Renowned market commentator Citrini7 recently published a captivating and widely circulated AI doomsday novel. While he acknowledges that the probability of some scenes occurring is extremely low, as someone who has witnessed multiple economic collapse prophecies, I want to challenge his views and present a more deterministic and optimistic future.

Never Underestimate "Institutional Inertia"

In 2007, people thought that against the backdrop of "peak oil," the United States' geopolitical status had come to an end; in 2008, they believed the dollar system was on the brink of collapse; in 2014, everyone thought AMD and NVIDIA were done for. Then ChatGPT emerged, and people thought Google was toast... Yet every time, existing institutions with deep-rooted inertia have proven to be far more resilient than onlookers imagined.

When Citrini talks about the fear of institutional turnover and rapid workforce displacement, he writes, "Even in fields we think rely on interpersonal relationships, cracks are showing. Take the real estate industry, where buyers have tolerated 5%-6% commissions for decades due to the information asymmetry between brokers and consumers..."

Seeing this, I couldn't help but chuckle. People have been proclaiming the "death of real estate agents" for 20 years now! This hardly requires any superintelligence; with Zillow, Redfin, or Opendoor, it's enough. But this example precisely proves the opposite of Citrini's view: although this workforce has long been deemed obsolete in the eyes of most, due to market inertia and regulatory capture, real estate agents' vitality is more tenacious than anyone's expectations a decade ago.

A few months ago, I just bought a house. The transaction process mandated that we hire a real estate agent, with lofty justifications. My buyer's agent made about $50,000 in this transaction, while his actual work — filling out forms and coordinating between multiple parties — amounted to no more than 10 hours, something I could have easily handled myself. The market will eventually move towards efficiency, providing fair pricing for labor, but this will be a long process.

I deeply understand the ways of inertia and change management: I once founded and sold a company whose core business was driving insurance brokerages from "manual service" to "software-driven." The iron rule I learned is: human societies in the real world are extremely complex, and things always take longer than you imagine — even when you account for this rule. This doesn't mean that the world won't undergo drastic changes, but rather that change will be more gradual, allowing us time to respond and adapt.

The Software Industry Has "Infinite Demand" for Labor

Recently, the software sector has seen a downturn as investors worry about the lack of moats in the backend systems of companies like Monday, Salesforce, Asana, making them easily replicable. Citrini and others believe that AI programming heralds the end of SaaS companies: one, products become homogenized, with zero profits, and two, jobs disappear.

But everyone overlooks one thing: the current state of these software products is simply terrible.

I'm qualified to say this because I've spent hundreds of thousands of dollars on Salesforce and Monday. Indeed, AI can enable competitors to replicate these products, but more importantly, AI can enable competitors to build better products. Stock price declines are not surprising: an industry relying on long-term lock-ins, lacking competitiveness, and filled with low-quality legacy incumbents is finally facing competition again.

From a broader perspective, almost all existing software is garbage, which is an undeniable fact. Every tool I've paid for is riddled with bugs; some software is so bad that I can't even pay for it (I've been unable to use Citibank's online transfer for the past three years); most web apps can't even get mobile and desktop responsiveness right; not a single product can fully deliver what you want. Silicon Valley darlings like Stripe and Linear only garner massive followings because they are not as disgustingly unusable as their competitors. If you ask a seasoned engineer, "Show me a truly perfect piece of software," all you'll get is prolonged silence and blank stares.

Here lies a profound truth: even as we approach a "software singularity," the human demand for software labor is nearly infinite. It's well known that the final few percentage points of perfection often require the most work. By this standard, almost every software product has at least a 100x improvement in complexity and features before reaching demand saturation.

I believe that most commentators who claim that the software industry is on the brink of extinction lack an intuitive understanding of software development. The software industry has been around for 50 years, and despite tremendous progress, it is always in a state of "not enough." As a programmer in 2020, my productivity matches that of hundreds of people in 1970, which is incredibly impressive leverage. However, there is still significant room for improvement. People underestimate the "Jevons Paradox": Efficiency improvements often lead to explosive growth in overall demand.

This does not mean that software engineering is an invincible job, but the industry's ability to absorb labor and its inertia far exceed imagination. The saturation process will be very slow, giving us enough time to adapt.

Redemption of "Reindustrialization"

Of course, labor reallocation is inevitable, such as in the driving sector. As Citrini pointed out, many white-collar jobs will experience disruptions. For positions like real estate brokers that have long lost tangible value and rely solely on momentum for income, AI may be the final straw.

But our lifesaver lies in the fact that the United States has almost infinite potential and demand for reindustrialization. You may have heard of "reshoring," but it goes far beyond that. We have essentially lost the ability to manufacture the core building blocks of modern life: batteries, motors, small-scale semiconductors—the entire electricity supply chain is almost entirely dependent on overseas sources. What if there is a military conflict? What's even worse, did you know that China produces 90% of the world's synthetic ammonia? Once the supply is cut off, we can't even produce fertilizer and will face famine.

As long as you look to the physical world, you will find endless job opportunities that will benefit the country, create employment, and build essential infrastructure, all of which can receive bipartisan political support.

We have seen the economic and political winds shifting in this direction—discussions on reshoring, deep tech, and "American vitality." My prediction is that when AI impacts the white-collar sector, the path of least political resistance will be to fund large-scale reindustrialization, absorbing labor through a "giant employment project." Fortunately, the physical world does not have a "singularity"; it is constrained by friction.

We will rebuild bridges and roads. People will find that seeing tangible labor results is more fulfilling than spinning in the digital abstract world. The Salesforce senior product manager who lost a $180,000 salary may find a new job at the "California Seawater Desalination Plant" to end the 25-year drought. These facilities not only need to be built but also pursued with excellence and require long-term maintenance. As long as we are willing, the "Jevons Paradox" also applies to the physical world.

Towards Abundance

The goal of large-scale industrial engineering is abundance. The United States will once again achieve self-sufficiency, enabling large-scale, low-cost production. Moving beyond material scarcity is crucial: in the long run, if we do indeed lose a significant portion of white-collar jobs to AI, we must be able to maintain a high quality of life for the public. And as AI drives profit margins to zero, consumer goods will become extremely affordable, automatically fulfilling this objective.

My view is that different sectors of the economy will "take off" at different speeds, and the transformation in almost all areas will be slower than Citrini anticipates. To be clear, I am extremely bullish on AI and foresee a day when my own labor will be obsolete. But this will take time, and time gives us the opportunity to devise sound strategies.

At this point, preventing the kind of market collapse Citrini imagines is actually not difficult. The U.S. government's performance during the pandemic has demonstrated its proactive and decisive crisis response. If necessary, massive stimulus policies will quickly intervene. Although I am somewhat displeased by its inefficiency, that is not the focus. The focus is on safeguarding material prosperity in people's lives—a universal well-being that gives legitimacy to a nation and upholds the social contract, rather than stubbornly adhering to past accounting metrics or economic dogma.

If we can maintain sharpness and responsiveness in this slow but sure technological transformation, we will eventually emerge unscathed.

Source: Original Post Link

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