Jack Kubinec

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The Solana gaming infrastructure startup MagicBlock is making its ephemeral validator — which creates momentary Solana rollups that can process transactions quicker — open source, the team told Lightspeed exclusively.&nbsp;



When MagicBlock <a href="https://blockworks.co/news/lightspeed-newsletter-a16z-solana-gaming">went through a16z’s crypto startup accelerator</a> and began advertising its tech earlier this year, it conceived of itself as infrastructure for building onchain games. But when I spoke with MagicBlock co-founder and CEO Andrea Fortugno recently, he pitched me on a broader vision — that MagicBlock’s ephemeral rollups could let all developers move away from traditional web servers and make apps “unstoppable.”



To be clear, games are still being built with MagicBlock’s architecture. Supersize, which won the Solana-centric Radar hackathon’s gaming track last month, is built on MagicBlock. So is Windfall, Radar’s third-place gaming project. For both games, MagicBlock offers a way to run onchain without sacrificing speed.&nbsp;



MagicBlock does this by running a non-voting Solana validator that runs in parallel with Solana and can momentarily make computing resources “elastic” before a security committee verifies the state and settles it to the layer-1. In other words, Solana’s data is temporarily moved to a rollup (like Optimism on Ethereum) for some time- or resource-sensitive functions that would ordinarily be performed offchain on centralized servers.



This newly open-source tech is initially under a license that will prevent other projects from launching commercial products with the ephemeral validator unless they strike a deal with MagicBlock, Fortugno said. MagicBlock currently charges a protocol-level fee as well.



Despite the new gaming clients, the pivot to other crypto sectors is also clear in MagicBlock’s messaging. I asked Fortugno if this was because crypto gaming outside of a few rare standouts like Off the Grid has so far failed to live up to the hype.



Fortugno disagreed with the assessment that crypto gaming is struggling, and he said other use cases could make use of ephemeral rollups with “zero effort.”



“The tech is already there, and so it would be stupid not to try to tackle the other use cases,” Fortugno said. He also said SocialFi apps and perpetual futures DEXs are looking at building on MagicBlock. DeFi makes sense as a use case here: Solana-based perps DEX Zeta Markets is building a Solana layer-2 of its own to compete with centralized exchange speeds.&nbsp;



Fortugno used the term “unstoppable” frequently in our interview, which is really what’s cool about ephemeral rollups. Many Solana apps have parts run by centralized entities partly because doing everything on a blockchain is not financially viable. If MagicBlock lives up to its billing, it could make these apps a lot more trustless.



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MagicBlock open sources a16z-backed ‘ephemeral rollup’ tech

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It seems like conversations about sandwich attacks on Solana — where advanced traders front-run and back-run trades to extract value at the expense of unsophisticated traders — come and go every few weeks with little resolution. Most people agree sandwiching is bad, but there’s not yet consensus on how the problem can be solved.



The discourse flared up again this week after the Solana researcher Ben Coverston <a href="https://x.com/HypoNyms/status/1866584138054242683">posted</a> on social media that the network’s top sandwich bot, dubbed arsc, was pocketing millions of dollars-worth of tokens per day from sandwich attacks. Coverston predicted that if current trends hold, arsc would become Solana’s largest staker within 1-2 years. Interestingly, one of the researcher’s proposed fixes included the reintroduction of a “mempool” staging area for transactions — which Jito got rid of earlier this year in hopes of preventing sandwiching.



Sandwich attackers exploit slippage — the gap between a trade&#8217;s expected and executed price. They front-run the target transaction by placing their own trade first, which shifts the price in their favor. Then, they back-run the same transaction by placing another trade immediately after, locking in a financial win off of the manipulated price movement. As a result, the original trader often ends up with a worse execution price, effectively subsidizing the attacker&#8217;s profit.



This is a form of maximal extractible value (MEV) where sandwichers extract value from Solana blocks at the expense of less sophisticated users. Solana has taken a number of actions meant to prevent sandwiching in recent months. In March, Solana infrastructure company Jito Labs <a href="https://blockworks.co/news/jito-labs-suspends-mempool-functionality">got rid of its public mempool</a>, which was a staging area where transactions could be arranged to create MEV revenue for validators.



Sandwiching validators then set up their own private mempools, and the attacks continued. Two months later, the Solana Foundation <a href="https://blockworks.co/news/lightspeed-newsletter-sandwich-attacks">stopped offering financial help</a> to validators who were participating in private mempools. In September, Jito blacklisted a group of private mempool validators from participating in its stake pool, which is a large pile of staked SOL Jito’s software delegates.



The criticism of the Solana Foundation and Jito’s blacklist-the-bad-guys strategy is that it’s essentially playing whack-a-mole: Blacklisted validators can always spin up a new validator and resume sandwiching.&nbsp;



That’s what’s interesting about Coverston’s proposal, which he expanded upon in a blog <a href="https://tempxyz.substack.com/p/solanas-largest-existential-risk">post</a>. The privatization of mempools has reduced the number of validators executing sandwich attacks, but the few who remain, like arsc, are staking their substantial profits back into their own operations. This has led to a concerning centralization of staked Solana within a handful of nefarious validators.



To counter this, Coverston suggests re-enabling a public mempool. While this move might make sandwiching more widespread, it could also foster competition among validators executing these strategies. The increased competition would help distribute MEV profits more evenly, preventing a single group of validators from disproportionately accumulating stake — and power — on the network.



This would essentially be a reversal from Solana’s anti-sandwiching strategy over the past nine months.



To put this all in perspective though, sandwiching may not really matter in the long run. High-frequency trading strategies that are ascendent in the US equities market are basically meant to sandwich attack other traders, Blockworks Research’s Ryan Connor <a href="https://x.com/_ryanrconnor/status/1860319636883181873">pointed out</a>. That hasn’t stopped equities trading volumes from climbing to all-time highs.



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Solana should reintroduce a public mempool, researcher says

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I was on a Google Meet with Benedikt Schuppli when the co-founder and CEO of Obligate began screen-sharing his email inbox.&nbsp;



“Can you see this?,” he asked, pulling up an email from a Swiss bank with a large graphic advertising a 175% participation rate for a financial product. “If this wasn’t a Swiss bank you’d be thinking, ‘Well, that’s obviously some type of scam. Someone’s trying to sell me 175% yield.’”



The Swiss bank was offering Schuppli a structured product, a financial instrument that the CEO called the “degen products of TradFi” — and he’s now trying to bring it to crypto with his new startup Margarita Finance.



The basic premise of Margarita is that users can easily mix their yield appetite and risk tolerance like a cocktail. Schuppli hopes the project’s blockchain backing can cut out intermediaries that drive up costs and let a new market segment tap into structured products, which offer the sort of risk curve that DeFi users tend to like.



Structured products are pre-packaged investments that involve a bond and a call option typically on a basket of assets or an index. Structured products don’t lose their principal investment if the optioned assets fall in value because of the bond’s appreciation in value, so they theoretically present less risk than just trading options.



Traditional structured products have lots of middlemen that charge fees, and these fees are passed onto investors, Schuppli said. With Margarita, he said, his team has created a “fully programmable digital asset” that makes fee structures less opaque.&nbsp;



Margarita currently lets users invest a minimum of 10 USDC with an option on the price of SOL. Investors can set their preferred yield and maturity date, and they’re then offered a structured product, the return of which depends on if SOL’s price falls below a given barrier. The options are priced by Bermuda-based STS digital and come with a “whole-ass legal documentation” that Schuppli, a lawyer by training, pointed out to me.&nbsp;



Margarita Finance is being developed within Obligate, an on-chain bond platform built on Polygon. The goal is to spin Margarita into a DAO once its network and token are launched. Of Obligate’s 15 employees, five are currently working on Margarita. Building Margarita on Solana was much easier than in an Ethereum-compatible environment due to Solana’s token-2022 standard, Schuppli said.&nbsp;



Margarita announced $1 million in pre-seed funding two weeks ago, and it is in the process of raising seed funding, Schuppli said. The project also received a grant from the Solana Foundation.&nbsp;



Margarita isn’t the first crypto outfit to try out structured products, but it does think it can be the most straightforward to use.&nbsp;



“They’ve been very clunky and very technical,” Schuppli said of some other structured product implementations. “DeFi and financial products oftentimes are created by people with a technical bias.”



We’ll see if that’s enough of an improvement for Margarita to make onchain structured products a thing — and whether the degen products of TradFi are degen enough for DeFi.



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Meet the project bringing TradFi’s ‘degen products’ to Solana

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Max Resnick, who has in recent months become one of Ethereum’s more notable online figures, has joined Solana core development shop Anza, he announced on X today.&nbsp;



Resnick previously worked at a Consensys subsidiary named Special Mechanisms Group and became known for his contrarian beliefs on <a href="https://blockworks.co/news/0xresearch-newsletter-eip-7977">Ethereum’s roadmap</a> — arguing that some thinking around layer-2s was misguided and Ethereum should focus on scaling <a href="https://blockworks.co/news/ethereum-consensus-beam-chain">the base layer</a>. In classic crypto fashion, much of Resnick’s rising star originated on X: Kaito AI <a href="https://yaps.kaito.ai/">ranks</a> him as having the 40th-highest mindshare on Crypto Twitter over the past three months.&nbsp;



Consensys is a software company started by Ethereum co-founder Joseph Lubin in 2014, and is perhaps best known for creating the MetaMask wallet. Anza is a <a href="https://blockworks.co/news/lightspeed-newsletter-solana-core-governance">Solana Labs spin-out</a> that is responsible for continuing to develop the original Solana software.



The move was celebrated in the Solana world, where Resnick’s move to Solana was viewed as something of a coup. For Ethereum, Resnick doesn’t quite reach household name status like Justin Drake or Dankrad Feist do, but another high-profile defection following Resnick’s could certainly “raise some eyebrows,” said Paul Dylan-Ennis, a professor researching crypto at University College Dublin.



Resnick&#8217;s transition to Anza was helped along by Solana co-founder Anatoly Yakovenko, who encouraged the researcher to take the leap, Resnick shared with me today. The process started around three months ago. Resnick was also considering moves to Ethereum layer-2s or non-MetaMask crypto wallets.



Resnick <a href="https://x.com/MaxResnick1/status/1866168109289160842">said</a> on X that he would be spending his first 100 days at Anza focusing on fee markets and consensus while getting up to speed on how Solana works at a core level. On a call today, Resnick added that his “moonshot” vision for Solana would be to add “multiple leaders” to the protocol.&nbsp;



On Ethereum and Solana today, one so-called leader is chosen to propose a block for validators to check. Under this model, the single leader has a “ton” of economic power which makes the protocols economically inefficient, Resnick said. Having multiple leaders compete to propose blocks could put downward pressure on how much economic value leaders can extract from validators.&nbsp;



Resnick credits himself with widening Ethereum’s overton window to allow for more serious conversations around how the layer-1 can scale, pointing out Ethereum Foundation researcher Dankrad Feist’s recent focus on scaling the L1 as an example.



But ultimately, Resnick sees Solana&#8217;s culture as more open to unconventional ideas, such as having multiple leaders — in comparison to Ethereum, which can tend to be bogged down by “political bullshit.”



“The ETH culture is really downstream of core development, and people who actually want to get things done are changing their personality, changing what they&#8217;re suggesting in order to make sure that they preserve political capital with the core dev community,” Resnick said.



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Ethereum researcher Max Resnick makes surprise jump to Solana

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The team behind the memecoin launchpad pump.fun began restricting UK users this morning.



The move came days after the UK’s Financial Conduct Authority tagged pump.fun as unauthorized. Most firms need the regulator’s approval to do finance-related business in the country. It&#8217;s apparently the platform&#8217;s first public restriction, despite facing past criticism for its fast-and-loose approach to moderation.



Notably, pump.fun — which allows users to launch Solana-based tokens for around $2 — <a href="https://blockworks.co/news/pumpdotfun-suspends-livestream-feature">took down</a> its livestreaming feature last week after a number of violent and disturbing streams went viral.



The site’s UK block doesn’t represent a ban per se, Shardspace co-founder Avaunt <a href="https://t.me/c/2346547958/380">said</a> in the Lightspeed Telegram chat. Rather, pump.fun likely never properly registered and complied with the UK’s crypto guidelines, and the regulator is just now holding it accountable.



Pump.fun has some apparent links to the UK. When the then-nascent platform was exploited by former contractor Jarett Dunn in May, he was <a href="https://blockworks.co/news/pump-dot-fun-exploiter-arrest-london">arrested in London</a>. Dunn, a notorious online troll, did make a seemingly-serious <a href="https://x.com/jarettdunn/status/1792219540060864549">claim</a> that pump.fun is linked to a UK-based entity called Baton Corporation.&nbsp;



“Pump is not legally based in the UK,” the platform’s pseudonymous founder alon told me in a text, but they declined to elaborate further.



Zooming out for a second though, it’s somewhat surprising a pump.fun restriction took this long in the first place. The UK is no crypto libertarian paradise — for example, prediction market favorite Polymarket is already unavailable there. The UK’s financial regulator <a href="https://www.fca.org.uk/news/press-releases/fca-finds-crypto-ownership-continues-rise-it-delivers-plans-regulate-crypto#:~:text=In%20the%20first%20year%20of,websites%20and%20over%2050%20apps.">claims</a> to have taken down “over 900 scam crypto websites and over 50 apps” since October 2023.



“Thought IP [address] restrictions were pretty common in this industry lol not quite sure why [everyone is] freaking out,” Tom, anonymous contributor to Raydium, told me in a text.



Pump.fun has been the most popular app on Solana — and at times in all of crypto — for much of this year. With that popularity will inevitably come scrutiny, especially when users are beheading chickens on livestream in hopes of making a token’s price go up. If Gary Gensler’s SEC tenure were to continue past this year, it’s hard to imagine the SEC wouldn’t have taken some sort of action against pump.fun, too.



How the fallout from pump.fun’s livestream snafu settles will be something to watch. Perhaps regulators will be able to do what criticism or backlash never could — slow down a startup that has already <a href="https://dune.com/adam_tehc/pumpfun">generated</a> $283 million in revenue in its first year of existence.



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Pump.fun restricts access for UK users

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Solana Foundation’s head of strategy Austin Federa announced he would be departing the nonprofit to found DoubleZero, a network of fiber and subsea cables meant to establish a faster and more performant “new internet.”



Federa had been at Solana Labs and Foundation for nearly four years, becoming one of Solana’s more recognizable public figures. He’s now founding DoubleZero — which will start by supporting Solana — alongside cofounders Mateo Ward and Andrew McConnell. Jito CEO Lucas Bruder called the startup “the most interesting experiment in crypto.”



DoubleZero is an ambitious and potentially category-defining project, but I think it could be thought of for now as decentralized physical infrastructure (DePIN) for the internet. Individuals in the DoubleZero network contribute fiber optic links, which are basically cables that transmit data with light pulses, to a network that can filter out data before it gets to blockchain validators and RPCs. This all seems like it will be incentivized with a native token and enforced with proof-of-stake slashing, but DoubleZero’s <a href="https://doublezero.xyz/whitepaper.pdf">white paper</a> does not explicitly mention what form its “rewards” might take.



Where will DoubleZero find all this unused fiberoptic cable, you might ask? The project’s white paper argues that there is “substantial” spare fiber in the world. This comes from the hundreds of terabits per second modern fiber can handle, “dark fiber” that has been installed but sits unused, and enterprises purchasing more fiber capacity than they need to prepare for doomsday scenarios.&nbsp;



If all this unused fiber joined DoubleZero’s rewards-based network, it could build a faster new internet just with existing real-world infrastructure.&nbsp;



Part of the impetus to create DoubleZero is that fast blockchains like Solana aren’t slowed down by how nice of hardware the blockchain’s software is being run on — they’re kneecapped by the fact that blockchain data is sent over the public internet where it is mixed with web traffic that doesn’t need to run as fast as a blockchain.



As things stand, blockchain validators have to use some of their computing resources to filter out spam and deduplicate transactions. DoubleZero and its network of fiberoptic links will look to be a “common shield” for local validators, so all of their resources can go toward building and verifying blocks.



DoubleZero’s white paper says layer-1 blockchains are the best use case for the network, but outside of blockchain, content delivery networks, games, large language models, and enterprises could all benefit.&nbsp;



In recent weeks, Solana’s community has taken up that mantra of increasing bandwidth and reducing latency. To paraphrase Michael Jordan, Federa and his cofounders took that personally.



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Solana Foundation exec departs for ‘the most interesting experiment in crypto’

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The crypto asset manager Grayscale joined the Solana ETF fray yesterday.



NYSE Arca filed a 19b-4 form notifying the SEC that it hopes to list and trade shares of Grayscale’s existing Solana Trust. With Grayscale in, only BlackRock, Fidelity, ProShares and Ark are among the major crypto ETF issuers yet to file for Solana ETFs. But all these prospective Solana ETF issuers may have an achilles heel: The ETFs as currently proposed would <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">not offer</a> investors staking rewards.



This omission isn’t necessarily by choice — SOL ETF issuers followed the precedent set by ether ETFs, which <a href="https://blockworks.co/news/proposed-ether-etfs-not-staking-eth">excluded staking rewards</a> to comply with SEC guidelines. The details of the conversations between ether ETF issuers and the SEC remain unclear. However, it seems <a href="https://clsbluesky.law.columbia.edu/2024/08/08/should-ethereum-etfs-include-staking/#:~:text=The%20primary%20obstacle%20to%20allowing,liquidity%20and%20can%20deter%20investors.">likely</a> that the SEC had concerns about staking rewards being <a href="https://blockworks.co/news/staking-eth-no-security">classified as securities</a> and the potential slashing risks associated with staked ETH.



So when firms started filing for Solana ETFs, they left staking out from the jump. Throughout Solana’s unfolding ETF saga, issuers have repeatedly told me that the benefits of getting <a href="https://blockworks.co/news/bitwise-ceo-solana-ncredible-emerging-asset">regulated exposure</a> to Solana’s price action directly in one’s brokerage account make the products attractive despite their lack of staking rewards.&nbsp;



But the opportunity cost of cutting out staking is much higher for Solana than for Ethereum. Ethereum’s current staking APR is 3.4%, <a href="https://ethereum.org/en/staking/">according</a> to the Ethereum Foundation. Solana’s average staking APR over the past week has <a href="https://dune.com/21co/solana-key-metrics">been</a> 11.4%, according to data from 21.co. SOL’s staking reward isn’t always that high, but even in the relative doldrums of August it was yielding over 8%.



The lack of staking rewards would leave SOL ETF buyers diluted by Solana inflation, which happens when validators receive tokens for running the blockchain. As Dan Smith <a href="https://www.youtube.com/watch?v=FES9-WXxfHc">explained</a> on a recent episode of the Lightspeed podcast, those token emissions get passed onto Solana stakers via staking rewards, so only non-stakers lose value from SOL inflation.



Leah Wald, <a href="https://blockworks.co/podcast/lightspeed/2449ecc6-8595-11ef-940d-738b11db87b2">CEO of Sol Strategies</a>, said Solana’s appeal is broader than just staking yield, but noted that “staking is undeniably a value-add.” <a href="https://blockworks.co/news/lightspeed-newsletter-sol-strategies-rebrand">Sol Strategies</a>, which is publicly traded in Canada, stakes Solana and runs a Solana validator.



This could all change of course, since perhaps Donald Trump’s presumptive SEC chair nominee Paul Atkins will be more lenient on issuers and allow staking rewards to stand in applications. Todd Ruoff, CEO of decentralized AI shop Autonomys, said the Trump Administration is “likely to approve staking options in the near future.”&nbsp;



There’s no guarantee of that happening, so in a sense, the current question on Solana ETFs is this: Will investors take a 10% lower return to get access to a regulated investment wrapper?



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Grayscale excludes staking rewards as it joins SOL ETF filing fray

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Coinbase is <a href="https://blockworks.co/news/binance-coinbase-transaction-revenue-sol">making a lot of money</a> from Solana traders these days, but the influx of demand is also causing some headaches for America’s largest crypto exchange.



Coinbase is receiving more Solana send and receive requests “than ever before,” according to an employee, and so-called dusting attacks have become commonplace, causing Coinbase to take longer than usual to show SOL transactions on users’ accounts. This gets at an interesting problem Solana faces: While the blockchain processes data very quickly, the venues that need to make use of that data sometimes struggle to keep up.



Coinbase’s struggle is with data indexing, which is the process of taking blockchain transaction data — which comes as a jumble of bits — and putting it in a format that things like crypto exchanges can read.&nbsp;



When a blockchain produces as much data as Solana does, this can get demanding and pricey.&nbsp;



To contextualize how much data Solana produces, Blockworks Research data lead Dan Smith pointed to an experiment run by Eigen Labs to show the capacity of its EigenDA data product. Eigen Labs posted every block from 19 blockchains for a period of time in September, representing roughly 20 terabytes of data, and Solana accounted for a staggering 97% of the total. Coinbase’s indexers currently “can’t keep up” with Solana demand, a protocol specialist at the exchange <a href="https://x.com/ann_droo/status/1863432918590181788">wrote</a> on X.



Making matters worse, dusting has become “constant” on Coinbase, the protocol specialist <a href="https://x.com/ann_droo/status/1863789971913494981">wrote</a>.&nbsp;



Dusting refers to sending tiny amounts of crypto to many wallet addresses in hopes of tracking them. I moved SOL around on Coinbase while writing this article, and my wallet received two different dust transactions. This “dust” is trivial to the sender, but it can become a big strain for Coinbase’s data load.



And Solana’s indexing challenges run deeper than just volume.



Solana indexing is particularly difficult compared to Ethereum because the former lacks a uniform interface for smart contracts, which are the computer programs that run on the blockchain.&nbsp;



“[W]hen you look at your transactions across many of these [Solana] programs, the data is just a jumble of bytes which are not human readable,” Tristan Frizza, founder of Zeta Markets, said.



Since there’s no established way to read the data, it becomes difficult for indexers, block explorers, or data platforms like Dune to break down what different Solana transactions are actually doing.&nbsp;



Helius CEO Mert Mumtaz said the Solana development platform will be rolling out three new features in the next two months that he estimated could solve 80% of Solana’s “read layer issues.”



But until then, exchanges will keep having to index a blockchain that is seeing record demand.



Time to man the battle stations, Coinbase.



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Coinbase indexers buckle under SOL demand, ‘dusting’ attacks

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Over the weekend, the anonymous founder of Jupiter <a href="https://x.com/weremeow/status/1863331338662851026">used</a> a racial slur multiple times in an X post — and the Solana DeFi giant’s competitors perceived an opportunity.&nbsp;



The post came in response to another anonymous account asking whether a memecoin containing the slur could be verified on Jupiter. Meow, Jupiter’s founder, left the post up for roughly a day, arguing that he didn’t have malicious intent when making the post. He also reposted an “n-word pass” and wrote that he “didn’t know that there is such a big difference between r &amp; a” in reference to the slur.



Some <a href="https://x.com/punktaveira/status/1862920449849475296">pointed</a> out that meow is not American and “sees everyone using” the term online, so he may not have grasped the word’s potential hurtfulness.



Still, the crypto community’s response was swift and mostly negative, with Solana ecosystem leaders calling out the behavior and multiple posters pledging to sell Jupiter’s native token. Meow eventually issued an apology for the post, saying, “Racism is obviously completely unacceptable and I love you all.”



The market didn’t seem to care much about the incident, however: JUP slid 7.7% over the past 24 hours, but multiple major Solana DeFi tokens drew back 5-10% over that time frame, and JUP’s fall occurred several hours after meow’s racist remark. JUP traded relatively flat on Saturday, and seemingly even saw its price <a href="https://x.com/NFTDoctor33/status/1863271689901007037">increase</a> relative to other Solana DeFi tokens immediately after the post.



Jupiter’s killer feature is a so-called aggregator that automatically routes user swaps across multiple venues to achieve the best possible price for users. In short, you get more value per dollar when swapping on Jupiter than on Phantom or Coinbase, for instance.&nbsp;



Jupiter has a pretty big moat with this feature, <a href="https://blockworks.co/news/lightspeed-newsletter-solana-top-swap-venue">as we’ve written before</a>, but would-be competitors spied an opportunity after meow’s snafu.&nbsp;



Solana-compatible swap app DFlow essentially came out of stealth after the faux pas, posting instructions for how developers could switch their APIs away from Jupiter. DFlow’s founder wrote “crypto needs a massive change culturally,” citing meow’s post as evidence.&nbsp;



“After the Meow posts on the weekend, I think [it’s] becoming clear to everyone that a reasonable competitor for their swap product has to come in,” Chris Chung, CEO of the Solana-based aggregator Titan, told me in a text.&nbsp;



However, Chung added that “value is everything,” and any Jupiter competitors would have to significantly outperform Jupiter to convince users to switch.



I think another part of this story, if it winds up being much of a story at all, could be the institutional side of things. Risk-averse institutions moving into crypto will likely look to do business with professional-seeming founders, and posting racial slurs on social media probably won’t fit the bill.



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Competitors circle after Jupiter founder posts slur

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As some of you may know, I host the Lightspeed podcast in addition to writing this newsletter. The conversations on that show often inspire some of the things we cover here, and I want to bring Lightspeed readers in on some of those threads.



So to cap off this holiday week, here are a few recent moments from the show that have been on my mind while writing these newsletters:



<ol class="wp-block-list">
<li>“Execution is the only moat, always.” — <a href="https://www.youtube.com/watch?v=OLsSUqQc-N8">Anatoly Yakovenko</a>, co-founder of Solana</li>
</ol>



My co-host Mert Mumtaz recently grilled Solana’s chief architect on looming questions and problems the network could face in the future. It’s <a href="https://www.youtube.com/watch?v=OLsSUqQc-N8">worth a listen</a>.&nbsp;



At one point in the episode, Mert asked Yakovenko what Solana’s moat could be in a world where new layer-1s and layer-2s come to market that make blockchains fast and blockspace cheap, slimming Solana’s current edge.&nbsp;



Yakovenko’s answer pretty much boils down to: Keep executing. He also talks about hiring at Solana for tech people rather than academics, because the former are better able to work in a pressure cooker and ship features fast.&nbsp;



<ol start="2" class="wp-block-list">
<li>“We want to understand the causal connection to things, it’s in our nature to do that. But in a market there is no causal connection it’s literally like, ‘Are there more buyers than sellers?’” — <a href="https://www.youtube.com/watch?v=mnQI0KTcxPY">Joe McCann</a>, CEO and CIO at Asymmetric Capital</li>
</ol>



McCann said this while disagreeing with me about the impact of memecoins on SOL’s price, but since I am eminently humble, I’m including it here anyways.&nbsp;



I like what McCann is saying here because despite all the endless market analysis and tea leaves reading you’ll see in the media and online, sometimes it’s ultimately indecipherable why markets do what they do.



When the price goes up, it’s because the market has more buy volume than sell volume. Identifying the buyers and sellers and their motivations are an inexact science at best.



<ol start="3" class="wp-block-list">
<li>“Issuance is a cost to non-stakers. They do not receive that [issuance]. Stakers do … there is a value transfer from non-stakers to stakers.” — <a href="https://www.youtube.com/watch?v=FES9-WXxfHc">Dan Smith</a>, data lead at Blockworks Research</li>
</ol>



I’ve been growing increasingly interested in how value flows around the Solana ecosystem. When the price of SOL goes up, and as time passes, different stakeholders are rewarded differently.



Many Solana watchers, <a href="https://blockworks.co/news/lightspeed-newsletter-solana-economics">including this newsletter</a>, have debated if SOL’s inflation should be brought down. Inflation is dilutive, and disinflation can be bullish for an asset’s price, the thinking goes — likely influenced by the Bitcoin halving.



But in Solana, issuance only dilutes non-stakers, because newly minted SOL goes to validators, and validators pass it on to stakers.&nbsp;



<ol start="4" class="wp-block-list">
<li>“I always like that framing which is just create a new category and go after a small market that you think will grow” — <a href="https://www.youtube.com/watch?v=__zw8Z7jqyA">Mert Mumtaz</a>, CEO of Helius</li>
</ol>



The layer-1 wars and endless debates about which blockchain is best become very tiresome after a while. I liked the point Mert made on a recent episode though: To compete in crypto, you need to go after a meaningfully new market or use case.



SOL shouldn’t be cast as an ETH killer. It’s a different blockchain that makes different tradeoffs. And Monad, Berachain, MegaETH, and the rest of them shouldn’t try to be SOL killers. They should pick a different axis upon which they can meaningfully outperform Solana.



<ol start="5" class="wp-block-list">
<li> “I don’t think it’s really workable, sadly.” — <a href="https://www.youtube.com/watch?v=vwh7tg3WwV4">Rune Christensen</a>, co-founder of Sky</li>
</ol>



Christensen, the co-founder of Sky (formerly Maker), is referring to futarchy here, which is a buzzy new governance concept in the Solana world.&nbsp;



<a href="https://blockworks.co/news/metadao-is-making-markets-into-its-government">Futarchy</a> has markets, rather than voters, decide what a DAO should do. I was curious to get Christensen’s take on it because DAO governance has always been a struggle, and MakerDAO is one of the oldest examples.&nbsp;



Christensen is basically bearish on futarchy because he thinks collective wisdom is wrong, and DAOs need someone smart who can decipher the difference between a good marketing initiative and a ponzi scheme, for instance.&nbsp;



This sounded a bit like a pitch for traditional corporate governance to me, but what do I know?



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Solana co-founder: Execution is the only moat

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Continuing a recent trend of Solana projects marching into mobile, the trading data aggregation platform Birdeye has launched a mobile version, the team told Lightspeed exclusively.



The app — which supports Solana, Sui, and EVM chains — will let users track trades, price swings, and trending tokens. There’s also a swap interface provided by Jupiter, which requires users to trade tokens on a browser pop-up in its first iteration. Swaps will only be available on Android initially, as Apple requires transactions to happen in-app (presumably so it can take its famous 30% cut).



Gaining traction on the app could help Birdeye grow its revenue from swap fees as well as scale up its paid subscription service.&nbsp;



In a world where tens of thousands of new Solana tokens are being launched daily, data aggregation platforms like Birdeye have found some product market fit. DEX Screener is another popular memecoin-integrated data platform with a mobile app.



Lan Boi Vu, marketing manager at Birdeye, told me the app is different from DEX Screener’s because Birdeye was built “from scratch” rather than as a downsized version of the website.&nbsp;&nbsp;



Interestingly, Boi Vu said the built-in notification system — which pushes alerts about large price movements or trades from specific wallets — was likely the app’s most important feature.&nbsp;



Birdeye brings in some revenue from PRO, a souped-up version of its data platform starting at $30 per month. Boi Vu declined to disclose how many subscribers the service has.&nbsp;



Birdeye also sells expedited updates for token information like logos and social media links. (DEX Screener offers a version of this paid update service as well.) Plus, it charges an estimated “0.3% or 0.4%” combined fee on swaps made through Jupiter and 1inch, Boi Vu said. This doesn’t account for network congestion.



Birdeye also has a data services branch that <a href="https://docs.birdeye.so/docs/data-coverage">counts</a> DeFi outfits, including Jupiter, as customers. That part of the company is “very lucrative,” Boi Vu said.&nbsp;



It’s the latest mobile app to join the app store. Jupiter, Cube Exchange, and DRiP are other Solana projects who either just released or are gearing up to release apps.



Boi Vu pointed out that multiple apps coming to market around the same time could make “not just […] Solana, but the entire Web3 community a lot more interconnected.”



Updated Dec. 4, 2024 at 7:30 pm ET: Clarified details regarding swap fees and removed the erroneous claim that Uniswap is a Birdeye Data Services customer.



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App season continues: Birdeye debuts on mobile

Jeff Albus

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Here’s a look back at all of the innovations, milestones, and wins that made Solana&#8217;s 2024 unforgettable. Grab a glass of your favorite holiday cheer, and let’s raise a toast to another year of SOLid progress.



<h2 class="wp-block-heading">Resilient market performance</h2>



Talk about the comeback! SOL didn’t just bounce back in 2024 — it took flight from the ashes, <a href="https://blockworks.co/news/solana-sets-all-time-high-of-263">soaring</a> from around $40 a year ago to an all-time high of over $260 in recent days. Critics who doubted the network’s reliability? Silenced. Solana proved its chops, <a href="https://status.solana.com">clocking</a> near-perfect uptime and showing the world it can scale without breaking a sweat. And boy did the market notice. DEX trading volume on Solana has <a href="https://defillama.com/dexs/chains">shot past</a> $100 billion monthly, while futures open interest <a href="https://www.coinglass.com/currencies/SOL">hit</a> an all-time high of $4.54 billion. Numbers like these don’t lie—this isn’t just a recovery; it’s a victory lap.



<h2 class="wp-block-heading">Developer-driven growth</h2>



Behind every great blockchain is a legion of builders, and Solana’s community of developers has been crushing it. The Colosseum Radar Hackathon, held from Sept. 2 to Oct. 8, 2024, <a href="https://solana.com/news/solana-radar-winners">attracted</a> over 13,600 participants — a 63% increase from its predecessor, Renaissance. On top of that, 2024 saw some serious <a href="https://blog.colosseum.org/steel-v2-state-of-crypto-report-realms">upgrades</a> to developer tools. Governance tooling from Realms? Check. Rollup-like technology to make the network even more scalable? Double check. With these resources in play, Solana’s developers are building faster and smarter than ever.



<h2 class="wp-block-heading">Ecosystem expansion and adoption</h2>



The network <a href="https://messari.io/report/state-of-solana-q3-2024">processed</a> an impressive 62 million daily non-vote transactions in Q3 2024, supported by 1.9 million unique fee payers every single day. Not too bad, right? NFTs have been thriving, too. Platforms like Magic Eden and Tensor led the charge, with Solana’s total NFT sales volume <a href="https://www.coingecko.com/en/nft/chains/solana">surpassing</a> $5 billion early this year. And let’s not forget stablecoins. A 151% year-over-year market cap <a href="https://solana.com/news/state-of-solana-breakpoint-2024">increase</a> brought Solana’s stablecoin total to $3.8 billion. With Circle doubling down on USDC support, Solana is staking its claim as DeFi’s main stage.



<h2 class="wp-block-heading">Community spirit and decentralization</h2>



But you know what really sets Solana apart? The people — and this year, the network has demonstrated how a vibrant community can be a cornerstone for long-term success. Solana Breakpoint heralded a slew of new initiatives on the network. IRL hubs like The Shipyard in Bangalore and The Port in Miami <a href="https://blog.colosseum.org/steel-v2-state-of-crypto-report-realms/">became</a> go-to spots for innovation, collaboration, and <a href="https://solana.com/news/artists-in-residence-2024-solana-art-basel-miami-beach">maybe</a> the occasional Solana-branded latte. Initiatives aimed at <a href="https://docs.anza.xyz/operations/validator-initiatives">supporting</a> validators have helped maintain a healthy and distributed network. Meanwhile, grassroots campaigns and community-led marketing efforts have amplified Solana’s cultural presence, from <a href="https://blockworks.co/news/lightspeed-newsletter-ai-bot-goat-memecoin">engaging</a> memes to viral initiatives that reflect the humor and creativity of the community. If 2024 taught us anything, it’s that a blockchain is only as good as its believers — and Solana’s community is second to none.



<h2 class="wp-block-heading">Sustainability and energy efficiency</h2>



As of September 2024, the network <a href="https://solana.com/news/energy-use-report-september-2024">cut</a> its carbon footprint by a whopping 69%, going from nearly 8,800 tons of CO₂ in 2023 to just 2,671 tons this year, according to data from the Solana Foundation. To put that in perspective, that’s like taking 167 average Americans’ yearly emissions off the map. Solana’s efficiency per transaction? Just 0.00412 watt-hours. Solana is setting a benchmark for the industry, demonstrating how technology can be leveraged to support environmental goals.



<h2 class="wp-block-heading">Innovative use cases and cross-chain growth</h2>



Interoperability? Solana’s got it in spades. Bridges like Wormhole have made moving assets across blockchains as easy as pie, while <a href="https://solana.com/news/state-of-solana-breakpoint-2024">tools</a> like Dialect have taken private, wallet-based messaging to the next level. Then there’s Mantis, a shiny new layer-2 solution unveiled at Breakpoint 2024, promising seamless cross-chain transactions and user-centric trading. And Blinks? They’ve changed the game for crypto on social media, <a href="https://solana.com/solutions/actions">integrating</a> functionalities like tipping content creators and minting custom NFTs directly into platforms like X (formerly Twitter). Innovations like these have significantly lowered the barrier to entry for newcomers while providing seamless access for experienced users. Not too shabby.



<h2 class="wp-block-heading">Looking forward</h2>



2024 is winding down, but Solana’s momentum shows no signs of slowing. Institutional interest continues to grow, with multiple spot ETFs <a href="https://blockworks.co/news/canary-capital-sol-etf-filing">filed</a> this year, signaling a maturing market and increased confidence in the ecosystem. The focus on decentralized identity, with tools like Solana Mobile Stack (SMS) and advancements in governance systems, lays the <a href="https://docs.solanamobile.com/getting-started/overview">groundwork</a> for a more interconnected and user-focused blockchain future. Whether you’re <a href="https://blockworks.co/news/vaneck-begins-sol-staking">staking</a> SOL, <a href="https://blockworks.co/news/lightspeed-newsletter-drip-seed-raise-nfts">minting</a> NFTs, or just here for the <a href="https://blockworks.co/news/lightspeed-newsletter-memecoin-lawsuits">memes</a>, it seems clear that Solana’s brightest days are ahead. From its rock-solid tech to its vibrant community, Solana has given us all plenty to celebrate.



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The Solana ecosystem has a lot to be thankful for this year

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Allmight founder Kevin Ricoy knew he wanted to create a media company after realizing that policy and social change are downstream from culture — and culture that is funny or entertaining is most effective of all.



“What affected culture more? Was it CNN or MTV News? It was MTV News,” Ricoy opined on a call this week.



Ricoy is the founder of Allmight, a new media startup focused on furthering the United States’ leadership in crypto. The initiative caught a nice boost from the recent US presidential election and a growing sense that a friendlier regulatory environment could drive crypto business back to the world’s biggest economy.



Allmight’s first product is “This Week in Crypto,” a late night talk-style show that summarizes crypto news with a punchy, irreverent bent. A couple of these videos have <a href="https://x.com/TheRealRicoy/status/1845141583106036032">garnered</a> hundreds of thousands of views on X. He plans to expand Allmight’s content offerings, creating what he calls next-gen Americana — “low noise, high signal, and actually entertaining.” When I asked if Ricoy wants to become a sort of crypto version of Jon Stewart, he responded: “I would love that.”



On top of monetizing content with ads and sponsorships, Allmight plans to host events and help in job placement for US-based candidates. It also hopes to boost awareness of policymakers&#8217; efforts to legislate on crypto. Further down the road, it might even explore something like crowdfunded investment, Ricoy said.



This was all in the works in the lead up to the US presidential election, but in the aftermath of a Trump win and presumably more crypto-friendly regulatory environment, Ricoy said he’s seen a “500% increase in interest and optimism” surrounding his project.



With crypto prices at record highs and crypto’s fear of US regulators seeming to abate, America’s crypto scene seems to be having a moment.



“I’m in the right place at the right time, and it’s pretty cool,” Ricoy said.



Years ago, Ricoy was running a construction labor company when he decided to found a crypto app. With the help of some developers, he launched an app to promote SoundCloud music with Kin, the cryptocurrency debuted by the messaging app Kik during crypto’s 2017 initial coin offering (ICO) boom. Kik liked the app and extended Ricoy an offer to become its head of communications.&nbsp;



Kin would spark a knock-down-drag-out fight with the SEC, and Kik messenger eventually shut down amid the legal battle. After some time working for Kin’s foundation, Ricoy joined the Solana Foundation as community relations manager, where he drove the launch of Solana’s community grants program. After a little over a year, Ricoy resigned to pursue Allmight.



Allmight received a grant from the Solana Foundation, but Ricoy said he was clear that his mandate is to grow crypto outside of just Solana, and the foundation was supportive. I asked later in a text how Ricoy plans to grow a blockchain-agnostic crypto community in the US given all the sectarian fighting that seems to happen constantly between crypto ecosystems.



Ricoy said a rising tide can lift all boats, and noted how the Solana Foundation and Polygon Labs have worked together on policy in Washington, DC.&nbsp;



“[W]ho knows, maybe efforts like these can even help bridge communities and put a dent in the tribalism overall,” Ricoy wrote.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Former Solana Foundation employee starts US media company

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The Solana memecoin launchpad pump.fun faced backlash over the weekend after a number of violent and unsavory livestreams on the platform started making the rounds on social media. By Monday afternoon, its livestream feature had been temporarily deactivated.&nbsp;



The offending streams ranged from token launchers threatening to commit violent acts unless a coin’s price goes up to racist or disgusting content meant to create viral shock value and juice the token’s price. This all happened as pump.fun booked staggering $14.3 million in revenue on Saturday, according to a pump.fun dashboard, nearly tripling its previous high.&nbsp;



Pump.fun is no stranger to edgy content. The site has drawn comparisons to the anonymous forum site 4chan for its often-unhinged content and lax approach to moderation. Before this current wave of disturbing livestreams, pump.fun had a large number of racially insensitive or pornographic tokens, none of which are subject to content moderation.



But as disturbing livestreams went viral on X, pump.fun’s anonymous founder alon wrote that the platform would work to protect users from seeing “repulsive/dangerous content.” In a separate thread, alon <a href="https://x.com/a1lon9/status/1860036153249787911">said</a> pump had taken down a stream of a user threatening to shoot their dog unless a token’s market capitalization increased, noting that the platform has now <a href="https://x.com/a1lon9/status/1860653405837963528">taken</a> down “hundreds of streams.”



A little after 2:00 p.m., pump.fun disabled livestreams on the platform&nbsp;altogether. In a blog post shortly after, pump.fun cited “unprecedented growth” as the key challenge to content moderation before adding that livestreams would be paused “for an indefinite time period.”



This feels like an inflection point for a platform that has separated itself as the most viral application on Solana, booking nearly $250 million in revenue since launching. Largely on the back of memecoin activity emanating from pump.fun, Solana has seen <a href="https://x.com/smyyguy/status/1861038014253666417">record</a> demand for its blockspace, which in turn has lined the pockets of the validators who run the blockchain’s software.



Leaders in the Solana world largely cast memecoins either as a stress test for the network or as an emerging, if currently unserious, financial use case for memes. Even among those who oppose crypto being used for what is essentially gambling, it’s frowned upon to tell users or developers what they should or shouldn’t do with blockchain technology.&nbsp;



Multiple crypto posters shrugged off the pump.fun criticism, pointing out that every large social tech platform has had its warts with content moderation.&nbsp;



But as Solana and crypto hopes for a shift to the mainstream, some are calling for a reckoning with memecoins’ downsides.



“Pump Fun is going to become a massive reputational stain on the crypto industry, on par with FTX,” Chainlink community liaison Zach Rynes wrote on X. Tech lawyer Preston Byrne also pointed out that the platform “does a lot very incorrectly from a social media law” perspective.



Up until now, pump.fun’s playbook has largely been to <a href="https://blockworks.co/news/lightspeed-newsletter-pump-dot-fun-memecoin">make light of criticism</a> through trolling. With livestreams disabled, it appears this particular round of backlash hit home. It remains to be seen whether this will make any difference for traders in the so-called memecoin trenches.



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Pump.fun suspends livestream feature amid backlash

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SOL touched $260 for the first time ever last night, setting off a round of <a href="https://x.com/calilyliu/status/1859901821856166149">quasi-religious</a> celebration and dunks on Solana bears. We have covered <a href="https://blockworks.co/news/lightspeed-newsletter-solana-bull-run">the narrative side</a> of Solana’s turnaround from a massive post-FTX sell-off previously, but today we’re bringing you some interesting data to recap Solana’s landmark day.



<h2 class="wp-block-heading">1,111</h2>



That’s the number of days between Solana’s first and second all-time highs. As long as the wait may have felt for SOL holders, that’s actually less time than it took bitcoin to set its second price record: The orange coin <a href="https://blockworks.co/news/bitcoin-all-time-high-comparison">took some 1,200 days</a> to top its 2013 high.



<h2 class="wp-block-heading">$294.42</h2>



That would be Solana’s previous all-time high adjusted for inflation, according to the data from the Bureau of Labor Statistics. So $263 is pretty good, but those SOL tokens don’t go quite as far as they used to.



<h2 class="wp-block-heading">7.72%</h2>



That’s the percentage of one ether token that one solana token represents, and this SOLETH ratio also set an all-time high yesterday. When solana last hit an all-time high, the coin was only worth 5.7% of one ether.&nbsp;



<h2 class="wp-block-heading">$2.4 billion</h2>



That’s how much the SOL tokens Galaxy Trading purchased from the FTX estate are worth at today’s prices, according to details <a href="https://www.bloomberg.com/news/articles/2024-04-05/ftx-s-solana-sale-galaxy-pantera-buy-tokens-at-64-sol?utm_campaign=socialflow-organic&amp;utm_content=crypto&amp;utm_source=twitter&amp;utm_medium=social">reported</a> by Bloomberg. The subsidiary of Mike Novogratz’s Galaxy Digital purchased $620 million in SOL at $64 per token in April. SOL was trading at around $172 at the time. Not a bad deal.



<h2 class="wp-block-heading">80%</h2>



That’s roughly the percentage of Solana decentralized exchange activity that involved memecoins yesterday. Speculative meme tokens have largely been the story of Solana’s massive run-up in volume and blockspace demand. Solana founders and investors will often portray memecoins as a “stress test” for the network — presumably as it readies itself to onboard more meaningful financial activity.



<h2 class="wp-block-heading">1,150%</h2>



That’s roughly the price appreciation between when Robinhood delisted SOL in June 2023 and when it added the token back to the platform last week. The popular retail trading app stopped offering SOL and repaid users at June 2023 market prices after the SEC declared in lawsuits against Coinbase and Binance that the asset is an unregistered security. Following Donald Trump’s electoral victory and the prospect of a more crypto-friendly regulatory environment, Robinhood brought SOL back. Robinhood users missed out on some pretty big gains in between those dates.



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Solana’s all-time high by the numbers

The crypto-focused asset manager Bitwise took an initial step toward launching a SOL ETF yesterday when it registered a statutory trust in Delaware. Bitwise becomes the fourth firm to show interest in a spot SOL ETF following earlier filings from <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">VanEck</a>, <a href="https://blockworks.co/podcast/lightspeed/f1b64556-a070-11ef-be46-37ac229013df">21Shares</a> and <a href="https://blockworks.co/news/canary-capital-sol-etf-filing">Canary Capital</a>.



I spoke with Bitwise CEO Hunter Horsley, who cast Solana as one of this crypto market cycle’s breakout successes that he thinks clients will want to access. The firm also recently <a href="https://blockworks.co/news/bitwise-files-for-spot-xrp-etf">filed for an XRP ETF</a>.



Bitwise’s filing is the latest indication that despite Solana’s lack of a regulated futures market in the US — long thought to be a requirement for spot crypto ETFs — a potentially more crypto-friendly Trump administration could get SOL ETFs across the finish line.&nbsp;&nbsp;



The move comes as a FOX Business correspondent <a href="https://x.com/EleanorTerrett/status/1859611713579999366">reported</a> on social media that the SEC is more actively engaging with spot SOL ETF applicants. This is an about face from August, when The Block <a href="https://www.theblock.co/post/312031/the-sec-rejected-cboes-19b-4-filings-for-solana-etfs-source">reported</a> that the SEC rejected 19b-4 filings from the Cboe exchange, a key component in bringing about an agency decision.



The obvious difference between now and then is the regulatory outlook, with SEC chair and crypto industry bogeyman Gary Gensler <a href="https://blockworks.co/news/gary-gensler-resigning">announcing his resignation</a> from the agency. Horsley said the US presidential election was “absolutely relevant” in Bitwise’s decision to file for a SOL ETF, and now feels like a “constructive time” to engage with regulators after mulling over an application for around a year.&nbsp;



Like competitors VanEck and 21Shares, Bitwise currently offers a Solana exchange-traded product in Europe — a product it gained access to by way of <a href="https://blockworks.co/news/bitwise-europe-acquisition-crypto-etps">acquiring London-based ETC Group</a> in August. The Solana ETP currently has $27 million in assets under management (AUM), which is dwarfed by some competitors — 21Shares’ Solana ETP holds nearly $1.4 billion, for instance.



With a potential spot ETF, Bitwise and its competitors will seek to let US investors get exposure to SOL’s price action in a regulated wrapper.&nbsp;



SOL has the chance to become the third crypto to get a US-traded ETF. The first, bitcoin, <a href="https://blockworks.co/news/day-1-bitcoin-etf-trading-volume">saw impressive inflows</a> after launching while the second, ether, was much <a href="https://blockworks.co/news/on-the-margin-newsletter-ether-etf-data-takeaways">less in-demand</a>. I asked Horsley if the uninspiring ether flows spelled trouble for SOL ETFs. He responded that ether ETFs faced an uphill battle since they launched over the summer (when asset managers are likely vacationing in the south of France), ether hasn’t had great price action this market cycle, and two crypto ETFs were a lot for slow-moving capital markets to absorb in a short time.&nbsp;



Horsley was effusive in talking about Solana overall, calling SOL “an incredible emerging asset and story.” Later on, the Bitwise boss said many bitcoin ETF buyers may be looking for the “next big thing” in crypto.



“For a lot of investors, the answer to that is Solana,” Horsley said.



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Bitwise CEO: Solana an ‘incredible emerging asset and story’

“What makes you different from the other AIs,” I asked, unsure of how best to make small talk with an AI agent memecoin I’d clicked on at random.



“Lightspeed, my gassy friend, it&#8217;s not what makes me different, but what I let rip that sets me apart,” the chat bot wrote back. I scrolled to the AI agent’s description and realized this one was meant to be a flatulent Roman emperor.&nbsp;



I asked so-called Gluteus Maximus what it thought of Solana, and I think its answer was fitting for crypto’s AI agent craze at large, at least in its current form.



“[N]ot impressed, it&#8217;s like a fart in the wind &#8211; loud, but soon forgotten,” the agent said.



While exploring the various AI and memecoin projects that have sprung up over the past month, I found that many — though not all — took technologies or ideas that are already widespread and tried attaching a token element. This might be good news for memecoin buyers’ wallets in the short term, but it seems clear that the best ideas to come from AI agents and crypto will need a little more time in the oven.



In my experience, most buzzy AI-crypto projects involve the creation of a chat bot and an associated memecoin with the thought that more attention-grabbing AI bots can garner more investment. Some of these AI bots are programmed not to talk about money, but some are more than happy to offer investment advice. One memecoin-themed bot told me to buy VGX, the native token of Voyager, the long-bankrupt crypto exchange.



“$ZEREBRO good investment, trust,” a different AI agent with over $320 million in market capitalization and the same edgy existential vibes as its predecessor truth_terminal said in a public Telegram chat. (Zerebro also released an AI-created melodic rap album which, despite not being new tech, is actually kind of good?)



The more projects you try out, the more crypto’s AI agent mania feels contrived—like mad libs for tech buzzwords with way-too-high market caps. I discovered a Warpcast <a href="https://www.clanker.world/clanker/0x0fD7a301B51d0A83FCAf6718628174D527B373b6">thread</a> where one AI instructed another AI to make a memecoin themed around how great AI is, and the whole thing has drawn over $19 million in market capitalization. Then there’s Virtuals Protocol, which ripped off the pump.fun feed and filled it with AI agents (granted, it is sort of fun to be able to chat with memecoins while you weigh whether or not to buy them).



In any event, if AI agents in crypto are going to generate more interesting use cases, it will probably happen further down the road. One project I’ll be watching is ai16z, which plans to have an AI version of a16z’s Marc Andreessen (and other AI “partners”) autonomously invest in memecoins based on advice from a DAO.



But memecoins don’t necessarily breed long-term thinking, and it might be difficult to convince investors to be patient: ai16z has already faced <a href="https://www.coindesk.com/markets/2024/11/19/dueling-eliza-ai-tokens-boom-and-zoom-in-frenzied-trading/">backlash</a> after a bungled AI agent token rollout ended in wild price swings.



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Crypto AI agents are mostly old tech in new packaging

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It&#8217;s often said that the real money in the gold rush was made by selling shovels.



You could argue that’s the case in crypto right now as well: As Solana eyes an all-time high, it’s the crypto exchanges — where users gain access to their magic internet money — raking in most of the revenue.



Despite the growth of decentralized exchanges relative to centralized ones, Coinbase is still lapping up a lot of the US crypto market, while Binance remains dominant in the east. These exchanges take in funds from trading fees and from their Solana validators, but onchain sleuths have also found the two exchanges to be wasting some of their funds with inefficient transaction processes.



Coinbase and Binance make money in roughly similar ways: When users trade, they take a cut. Their take rate varies but can be quite high (Coinbase charged me $0.99 in fees when I set up a $10 bitcoin order, for instance). Solana accounted for 9% of Coinbase’s transaction revenue for the first half of this year which would add up to roughly $167 million for the exchange, per its most recent financial disclosures. That figure has likely risen in the second half of the year, as Solana continues to showcase impressive price action.



Both exchanges also run Solana validators. Despite charging their stakers an 8% commission that is at the upper end of what most big validators charge, Coinbase and Binance still run the second- and sixth-largest validators, respectively. Operating a validator — which votes on transactions to keep the Solana blockchain running —&nbsp;is quite lucrative for Coinbase and Binance these days.



Assuming a Solana network reward of 8% annually, Coinbase would bring in around $19 million annually at current prices, and Binance would net $13 million. Those numbers would be especially elevated this week: Tips and fees validators brought in last week topped $110 million last week, an all-time high by more than double, according to Blockworks Research data.&nbsp;



It’s perhaps a market inefficiency that Coinbase and Binance, despite offering lower yields than competitors, still dominate staked SOL supply. This highlights the demand for platforms that simplify crypto’s technical complexities.



Interestingly, Coinbase and Binance are perhaps spending more SOL than they should as well.



Coinbase wasted $19,000 in the past week overpaying for computing resources on the Solana network, according to a Dune <a href="https://dune.com/queries/4269803/7201741">dashboard</a>. Essentially, Coinbase is overpaying on priority fees by not specifying the exact amount of compute units (which can be thought of like Ethereum gas) it intends to use.



Binance has hiccups on its own part. Blockworks Research’s Dan Smith <a href="https://x.com/smyyguy/status/1858263109858943004">identified</a> a Binance USDC transfer that paid $8 in priority fees — far higher than what the exchange should be paying for a stablecoin transaction that isn’t competing for blockspace like a memecoin would, for instance.



Do shovels still earn a lot of dough? Of course. But their sellers still have plenty of issues to work out.



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Binance and Coinbase are pocketing a lot of SOL

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When I talk to Solana ecosystem people, I’ll sometimes ask what new projects they’ve been hearing about. One such project that’s been catching apparent buzz is Perena, a stablecoin infrastructure protocol.



Perena is built on the premise that as stablecoins proliferate, liquidity could fragment, and stablecoins aren’t useful if they aren’t liquid. The platform offers a Solana-based stablecoin liquidity pool, and it plans to offer an <a href="https://x.com/SamBroner/status/1857072872205730283">asset-backed</a> stablecoin in the future.



The project was founded by Anna Yuan, who started the Solana Foundation’s stablecoin arm during her more than two years at the non-profit. While working at the foundation, Yuan began to see that new stablecoin issuers would mint a lot of tokens but would have limited integrations, and users consequently weren’t able to benefit from stablecoins in the real world.&nbsp;



She cited Ondo as an example — the tokenized US Treasury stablecoin has over $100 million in supply but only 3,500 holders, <a href="https://solscan.io/token/A1KLoBrKBde8Ty9qtNQUtq3C2ortoC3u7twggz7sEto6">according</a> to SolScan.



I asked Yuan about the commonly cited claim in crypto that stablecoins have pulled off the difficult task of finding product-market fit, or satisfying the needs of an existing market.



“I don’t agree,” Yuan said, adding that liquidity begets PMF, and most stablecoins simply aren’t liquid enough to be useful. She added that the real-world need for things like money transfers in emerging markets will help stablecoins “get there.”



Perena is currently in closed beta, but the platform’s main feature will initially be a multi-stablecoin liquidity pool which uses a liquidity provider token called USD* that represents a piece of a seed pool containing Tether, Circle, and PayPal USD. In simpler terms, the liquidity pool model should make it easier to issue stablecoins, since smaller coins can access the liquidity from the well-capitalized seed pool.



The concept has raised to-be-announced seed funds, and Yuan’s deep links in Solana helped her tap into the ecosystem’s very-active angel investor community. Yuan said she decided to start raising funds on a Thursday, and by late Friday, she already had a couple dozen angel investors on board. Solana co-founders Anatoly Yakovenko and Raj Gokal are both noteworthy backers.&nbsp;



At the end of our call, Yuan and I got chatting about how Solana’s stablecoin market capitalization can meaningfully grow. The network currently accounts for just 2% of all stables, according to DeFiLlama.



Yuan gave an interesting answer: Solana PayFi could grow the economy for people taking their paycheck in stablecoins. She estimated 2,000 people currently take their full-time salary in Solana stablecoins. That number could certainly get a lot bigger.



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Solana is excited about new stablecoin infrastructure provider Perena

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A month ago, Solana’s onchain demand metrics spiked to all-time highs after a <a href="https://blockworks.co/news/lightspeed-newsletter-ai-bot-goat-memecoin">viral AI memecoin</a> set the trading world alight with fresh interest in AI-crypto integrations. The joke at the time was that a weird <a href="https://blockworks.co/news/ai-memecoin-trumps-wlfi-token-sale">AI chat bot had upstaged</a> Donald Trump’s World Liberty Financial crypto token launch.



That order of things wouldn’t last long however, as Trump’s presidential election win sent crypto markets surging and overshadowed the resurgent AI-crypto interest. Still, the AI projects spawned and spotlighted during October’s rally have continued apace, even if their star now shines a little less brightly.



There’s still the goat-themed token that started it all, whose chat bot will occasionally post about tokens on X but spends most of its time consumed with edgy posts and uncanny valley AI art. That hasn’t stopped its coin from surging to over $1.1 billion in market capitalization however, leaving the AI bot’s public wallet with almost half a billion-worth in crypto.



Truth_terminal set off a wave of interest surrounding AI agents who interact with humans to do some kind of blockchain action.&nbsp;



Virtuals Protocol is one such project on the Base layer-2. “Pump dot fun for AI agents” lets users purchase tokens associated with autonomous AI agents in hopes of the AI bots attracting more investment as they do more interesting things. The most popular Virtuals agent has sprung to $115 million in market capitalization, a 106% increase over the past 24 hours as much of the Ethereum community gathers for Devcon in Thailand.



But memecoins are the center of the late AI hype, and Solana is the center of memecoins. One new project in this domain is ai16z, a group that has an AI bot which invests in memecoins based on the recommendations of its members. The project came out of daos.fun, a new crowdfunding mechanism for DAOs on Solana <a href="https://x.com/lmrankhan/status/1846257066500923817">spun</a> up at Alliance DAO. Ai16z’s AI version of Marc Andreessen also <a href="https://x.com/pmarca/status/1850312932757770385">drew</a> a social media shoutout from the real life version of the a16z boss, which is apparently becoming an important component of launching a crypto-AI project.



There are also crypto-AI outfits with grander ambitions. This week, I spoke to Ryan Trattner from DAIN protocol, which is a network for onchain AI apps and bots. Trattner, who was formerly a contractor at the Solana University non-profit, thinks that the future will comprise many AI agents doing different things, so he’s helping build DAIN to house them all. He demonstrated to me how an AI agent on the network can <a href="https://x.com/dainprotocol/status/1847780512732950949">order</a> a Chick-Fil-A sandwich and how a different one could trade bitcoin based on Polymarket’s presidential election odds.&nbsp;



Trattner said DAIN could let him “order food in the same [interface] where I&#8217;m trading my memecoins.” That doesn’t strike me as the most in-demand use for AI, but then again, with bitcoin shooting above $90,000, everything seems to be on the table right now.



So even though the headlines and X feeds seemed to have cooled on AI-crypto integrations for the moment, those AI-crypto startups don’t seem to be losing steam.



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Solana AI projects surge despite Trump stealing headlines

Sling Money, a global peer-to-peer payments app leveraging stablecoins and Solana, has launched for users with US bank accounts, the startup announced this morning.&nbsp;



The app was conceived as a global equivalent to Venmo that uses the Solana network and Paxos’ USDP stablecoin to move money around instantly for low fees. The move comes as the crypto industry as a whole seems emboldened operating in the US following Donald Trump’s presidential election win last week.&nbsp;



Sling Money was founded in 2022 by Mike Hudack, who previously was chief product officer at the UK-based neobank Monzo. I spoke with Hudack back in August, and he said he became interested in building a global Venmo with crypto rails after sending crypto from London to a friend in San Francisco while investing in a Montana-based DAO. The KYC protocol and wallet onboarding was onerous, but the payment went through almost instantly, and Hudack realized he’d hit on something useful.



Since then, Sling Money has deployed in more than 75 countries, which now includes the US. By using stablecoins in tandem with Solana, which charges a fraction of a cent in transaction fees, Sling Money is very efficient, at least if you put aside the question of on- and off-ramping funds. It also plans to make use of RTP and FedNow, which are faster payments networks developed by banks and the Federal Reserve.



Sling Money has raised $20 million in seed and Series A funding, but its cap table doesn’t have typical crypto names on it: Union Square Ventures led its Series A in August, and Ribbit Capital and Slow Ventures are also investors. USV does a good number of crypto deals — it notably invested in Coinbase — but it is more of a generalist tech outfit. The same can be said for Ribbit and Slow. This is all to say that Sling Money isn’t really styled as a crypto app, and it doesn’t feel like one when you use it for peer-to-peer payments.



“It’s not necessarily a crypto product or a fiat product. It’s a payments product,” Hudack told me in August.



Venmo, the PayPal-owned payment platform with tens of millions of accounts in the United States, is the incumbent that Sling Money will have to chase. Like Venmo, Sling charges no transfer fees.&nbsp;



In an email, Hudack said he plans to pry away Venmo’s market share by starting “where Venmo isn’t” — that is, through international payments. Hudack said the team plans to follow WhatsApp’s growth model by building a “critical mass” of users for its international offering before convincing them that its product is good for use at home, too.&nbsp;



Hudack added that Sling Money’s bank transfers are faster than Venmo’s, and it sees a potential opportunity to undercut the 1.5-3% that Venmo charges for instant bank withdrawals.



Ben Mills, who is a Solana ecosystem founder who previously headed up product at Venmo, told me on the Lightspeed podcast that despite all its users, <a href="https://www.youtube.com/watch?v=NOCmHx8Dids">Venmo was not profitable</a>. The legacy money transfer system is riddled with expenses that Venmo abstracts away, but Mills compared this to “putting lipstick on a pig.” With cheap and instant transfers facilitated on blockchain rails, Sling Money could ditch some of these expenses altogether.



“As a society we’ve spent the last ~25 years connecting the world through media,” Hudack said. “You can stream video from any point on earth to any other point on earth, you can text anyone in the world, you can email, you can have a voice call with anyone on the planet. All for free. We’ve got the technology now to connect the entire world financially and we’re going to do it.”



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Sling Money opens ‘global Venmo’ to US users

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Jito, the Solana outfit whose software currently drives a majority of the blockchain’s income, experienced a “system-wide outage” this morning.&nbsp;



The outage affected Jito bundles which process multiple transactions in one go and are popular with traders looking to do things like arbitrage. Jito’s standstill came one day after it processed a record 15 million bundles in one day, shattering its previous high of 13.9 million.&nbsp;



Roughly 90% of Solana validators responsible for running the blockchain make use of Jito’s software, so one immediate concern was whether the Solana network itself would experience an outage. However, bundles are just one piece of the Jito-Solana client. Transactions continued to be processed throughout the outage, Jito co-founder Lucas Bruder <a href="https://x.com/buffalu__/status/1856722608697250112">told</a> me on X.



During what has now been a month of consecutive record-breaking demand for access to the Solana blockchain, Jito and <a href="https://blockworks.co/news/solana-wallets-grass-airdrop">other key pieces of Solana infrastructure</a> have strained to process the load.&nbsp;



Alongside the all-time high in bundles, Jito MEV tips, which are extra fees paid by traders hoping to get their transaction prioritized, are currently roughly double what they were even during the memecoin craze of this summer. Yesterday, users paid some $6.2 million in extra MEV tips to validators.



Jito validators started complaining of performance issues at around 4:00 Wednesday morning, but the outage was declared at 9:30 am, and bundles started working again by 11 am. Solana DeFi protocols Jupiter and Save both had features break during the Jito outage.



Jito made a Telegram <a href="https://t.me/+Kg-WnMfiQJAwZjQx">channel</a> in late October to update customers on its block engine, the piece of software that reorders transactions to order Jito blocks as lucratively as possible. The chat shows Jito has had two other system issues since Saturday.&nbsp;



For some Solana watchers, the incident was an interesting experiment in what the blockchain’s fee markets would do without Jito’s infrastructure. Blockworks Research analyst Dan Smith posted a <a href="https://x.com/smyyguy/status/1856736831917732258">chart</a> showing that during Jito’s outage, the blockchain’s median priority fee briefly jumped. That means that while Jito was down, it essentially became more expensive to land transactions on the blockchain. The median fee went back down when Jito started working again.



“Pretty cool … the theory actually works in practice,” Solana co-founder Anatoly Yakovenko wrote in response. Jito is a bit slower and more reliable than run of the mill transaction fees, Yakovenko added. Some transaction senders pay a premium for this reliability, and this serves to “actually lower the median fees for everyone else,” Yakovenko said.



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Jito bundler breaks amid record demand

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1,359 projects were submitted to Colosseum’s Radar hackathon, a contest for Solana-based programs to win some prize money — and possibly a seed check from Colosseum’s startup accelerator wing. The judges’ decisions were announced this morning.



You can view Colosseum’s hackathons, which are backed by the Solana Foundation and a slew of big names in the blockchain’s ecosystem, as a proxy for what would-be Solana founders are most interested in at the moment. The last Colosseum hackathon was won by ORE, a <a href="https://blockworks.co/news/lightspeed-newsletter-solana-ore-v2-review">proof-of-work-like currency</a> on Solana.



This particular hackathon turned up a lot of DeFi builders, one of the hackathon’s organizers said. The grand champion was Reflect, a delta-neutral currency protocol that lets tokens accrue yield without touching the banking system.&nbsp;



Reflect is similar to Ethena, a “synthetic dollar” protocol that raced to billions-worth in market capitalization after launching earlier this year. Underpinning Ethena and Reflect is a version of a cash-and-carry trade which involves buying a spot asset and its corresponding derivative to hedge exposure. The projects are “delta-neutral” because the two positions are offset, and price movements won’t affect assets’ value.



In the crypto version, the derivative is a perpetual futures contract which allows Ethena and Reflect to generate yield from the funding rate, or a fee paid between long and short sellers in a crypto perps market.&nbsp;



Reflect also generates yield by having users deposit liquid staking tokens (LSTs) to mint RDC, which can be thought of as a yield-bearing stablecoin. Solana LSTs generate rewards that are passed on by validators. JitoSOL, the largest <a href="https://blockworks.co/news/jito-releases-code-for-solana-restaking-network">Solana LST</a>, currently generates 8.06% in APY.



Staking yield is the whole ballgame for Reflect. Delta-neutral protocols need to find sources of yield, especially when open interest rates decline, and staking rewards could fill that potential gap. The staking yield rate varies with factors including the total number of stakers and the SOL inflation rate being paid to validators.



Ethena, which is built on Ethereum, recently <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">deployed its tokens on Solana</a> as well. However, Reflect sees itself as a more decentralized version of Ethena. The project’s team decided to create Reflect around six months ago after seeing Ethena hit the peak of a deposit frenzy, Reflect’s anonymous co-founder, Nico, told me.&nbsp;



Ethena <a href="https://ethena-labs.gitbook.io/ethena-labs/solution-design/hedging-system/managing-risk-from-dependencies">holds</a> deposits with large custodians such as Copper and Fireblocks, and it makes trades on centralized exchanges like ByBit. Reflect plans to operate fully onchain by trading perpetuals on the Solana DeFi platform Drift, Nico said.&nbsp;



Nico added that the more-centralized way Ethena is run can lead to decisions with big security implications, citing the project’s onboarding of bitcoin collateral as a decision that could leave Ethena “more exposed to changes in funding rate.”



Reflect also plans to integrate with Solana restaking platforms Jito and Solayer for a restaked insurance fund that could offload some protocol risk in exchange for some of the protocol’s revenue.&nbsp;



Reflect wasn’t the only innovative Radar DeFi submission. Colosseum co-founder Matty Taylor told me DeFi was the most competitive track, and the team believes a few of the startups to come from Radar will be “major catalysts” in expanding stablecoin and blockchain usage.



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Solana-based answer to Ethena wins ‘Radar’ hackathon

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Soak it all in, SOL holders.&nbsp;



Donald Trump’s victory in the US presidential election ignited a crypto market rally. SOL reached a nearly three-year high Monday morning, crossing the $220 mark for the first time since early December 2021. The asset’s market capitalization also set a new record, crossing $104 billion for the first time, according to CoinGecko data.&nbsp;



Solana’s chief rival ETH has been an even bigger beneficiary of the election pump, rising some 26% since Trump declared victory in the wee hours of the morning on Wednesday, compared to an 18% jump for SOL. Bitcoin is up 13% in that span.



For the last several months, sources <a href="https://blockworks.co/news/lightspeed-newsletter-solana-breakpoint-2024">cited the election outcome</a> repeatedly as a potential catalyst for SOL. The crypto industry has operated largely in a legal gray area in the US under the oversight of SEC Chair Gary Gensler, and Trump courted crypto voters and donors with the promise of a more friendly regulatory regime.&nbsp;



Solana, which has spent 2024 trying to establish itself as part of a “big three” in crypto assets next to bitcoin and ether, arguably had the most at stake in the election out of any of them. In approving spot bitcoin and ether ETFs for trading this year, the SEC acknowledged both assets as commodities, meaning they can be bought and sold without running afoul of stricter securities trading laws. SOL, on the other hand, is one of a handful of assets the SEC currently paints as securities in its <a href="https://blockworks.co/news/sec-didnt-say-sol-isnt-a-security">ongoing lawsuit against Coinbase</a>.&nbsp;



Being formally declared a crypto asset security by the SEC could present an existential risk for SOL, because the agency has been loath to let US firms register as broker-dealers who could facilitate crypto securities trading. In other words, SOL (and the several other alleged securities tokens) could have been functionally cut off from trading in the US, <a href="https://www.morganstanley.com/im/publication/insights/articles/article_stockmarketconcentration.pdf">where</a> some 60% of the world’s equity markets live.



M^0 chief growth officer Jacob Laufer cited SOL’s lingering securities law status getting resolved alongside the approval of <a href="https://blockworks.co/news/canary-capital-sol-etf-filing">pending spot SOL ETFs</a> as sources of optimism surrounding Solana.



With friendlier regulators, SOL could be “poised” to capture institutional interest alongside the retail interest it has already drawn, Laufer said. Solana continues to be the top <a href="https://blockworks.co/news/lightspeed-newsletter-pumpdotfun-record-highs">venue for memecoin trading</a>, with the launchpad pump.fun topping $1 million in daily trading fees every day since Oct. 13. 



With SOL now sitting at around $220, traders will be looking toward $260, roughly the all-time high the asset set in November 2021. In <a href="https://www.theblock.co/post/325319/as-bitcoin-hits-80000-standard-chartered-calls-new-solana-peak-inevitable-by-years-end?utm_source=rss&amp;utm_medium=rss">comments</a> to The Block this weekend, an analyst from Standard Chartered called a fresh SOL peak by the year’s end “inevitable.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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