Solana’s explosive growth in early 2024, largely fueled by a surge in meme coin trading, has come to an abrupt halt. Weekly network revenue, which peaked at an astonishing $55.3 million in mid-January, has now fallen by 93%, with figures dropping to just $4 million in recent weeks.
This downturn follows a sharp decline in trading activity on Pump.fun, the Solana-based meme token generator responsible for a significant portion of network fees.
At its peak, Pump.fun was generating $15 million per day, but those revenues have now collapsed by 95%, leaving just $800,000 in daily fees as of March 7.
The dramatic shift in trading volume highlights the volatility of Solana’s primary revenue streams. Meme coins like TRUMP and MELANIA, which briefly drove the hype, have now plummeted in value – TRUMP has fallen 86% from its peak, while MELANIA has collapsed 95% in just seven weeks.
The consequences for Solana go beyond trading fees. The total value locked (TVL) in Solana’s DeFi ecosystem has dropped by almost 50%, falling from over $12 billion in January to around $6.4 billion today.
With fewer transactions and lower fees, Solana now faces a significant revenue shortfall, raising questions about its long-term sustainability.
Why Solana’s Network Faces Growing Challenges
While Solana is widely known for its high transaction throughput and low fees, it has struggled with congestion during peak trading periods. The January meme coin boom exposed the network’s limitations, with nearly 75% of non-vote transactions failing due to network overload.
Even after implementing multiple upgrades, Solana continues to face challenges during periods of high activity. The launch of Donald Trump’s official meme coin earlier this year once again caused widespread delays, forcing developers to reconsider the blockchain’s scalability.
This ongoing struggle has intensified the debate over whether Solana needs Layer-2 scaling solutions – an approach previously considered unnecessary due to the blockchain’s high-speed architecture.
However, with congestion issues persisting, the emergence of Solaxy ($SOLX) as Solana’s first major Layer-2 solution is gaining serious attention.
Can Solana Layer-2 Solutions Like Solaxy Offer a Long-Term Fix?
Unlike Ethereum, which relies heavily on Layer-2 networks like Arbitrum and Optimism to scale its transactions, Solana has traditionally avoided the need for secondary chains.
However, the recent congestion problems have made it clear that additional scaling layers could be essential for the network’s future growth.
Solaxy is positioning itself as the first prominent Solana Layer-2 chain, designed to optimise transaction speeds and reduce costs while ensuring zero downtime.
The project has already raised over $25.8 million in presale funding, with significant interest from whale investors making six-figure purchases.
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The Layer-2 chain will introduce zero-knowledge rollups, a key innovation that allows transactions to be processed off-chain before being settled on Solana’s mainnet. This will help alleviate congestion, ensuring that transactions execute seamlessly even during periods of high demand.
Additionally, Solaxy is integrating with Hyperlane’s multi-chain bridge, allowing for cross-chain transfers between Solana, Ethereum, Base and Solaxy. This will expand the reach of Solana’s ecosystem while providing users with more flexibility to move assets across different networks.
How Solaxy’s Technology Could Transform Solana’s Ecosystem
Solaxy’s architectural framework includes a deterministic sequencer, which helps process transactions in a structured and predictable manner, reducing network overload.
The project also incorporates state transition optimisation, ensuring that transactions are bundled efficiently before being executed on Solana’s mainnet.
This multi-layered approach aims to eliminate downtime, making Solana a more reliable platform for high-frequency trading, DeFi applications and NFT marketplaces.
Additionally, Solaxy is building an AI-powered data analytics tool to monitor network activity and adjust its transaction flow dynamically. This could help prevent congestion before it happens, offering a proactive rather than reactive approach to network scaling.
Why Investors Are Betting on $SOLX as the Next 100x Crypto
Despite the broader market downturn, Solaxy has continued to attract large-scale investors, with whale purchases exceeding $200,000 per transaction. The strong institutional demand suggests confidence in the project’s long-term potential, particularly as Solana continues to face scalability issues.
Layer-2 projects have historically outperformed during altcoin bull runs, with Ethereum-based scaling solutions like Arbitrum and Optimism reaching multi-billion dollar valuations.
Given the increasing need for Layer-2 solutions on Solana, analysts believe $SOLX is significantly undervalued compared to other L2 tokens.
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Some market experts have projected that $SOLX could see a 100x return once it launches on exchanges. Even more conservative estimates suggest a 10x price increase, driven by strong adoption and growing demand for Solana Layer-2 solutions.
Can Solaxy Revive Solana’s Growth?
Solana’s recent struggles have revealed a critical weakness in its network design – the inability to handle surging transaction volumes without experiencing congestion. While past upgrades have helped, the network’s over-reliance on meme coins has led to volatile revenue swings, making long-term sustainability uncertain.
Solaxy offers a compelling Layer-2 alternative that could provide scalability, lower fees and increased transaction reliability, solving many of Solana’s persistent issues.
With $25.8 million already raised in presale funding, investor confidence in the project is growing and the demand for scalable blockchain infrastructure is at an all-time high.
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