Data & Insights: Solana Highs, EigenLayer Lows

Solana loves launching new coins 

• As of September 30, 2024, Solana accounted for 96,010 new tokens out of a total 110,180 launched across all tracked chains. 
  • This represents over 87% of all new tokens appearing on DEXs, a testament to Solana's growing dominance in the space. The chart illustrates Solana's rise, with the number of new tokens skyrocketing from near-zero levels in early 2024 to consistently topping 100,000 per month by mid-year.
• While Solana leads the pack, Base has also seen significant activity. The two chains have gone back and forth since April 2024 to see who can launch more coins, collectively accounting for more than 80% of new token launches. This duopoly highlights the intense competition in the space and the shifting preferences of token creators and traders.
• The surge in new tokens, particularly on Solana, can be largely attributed to the explosion in the popularity of memecoins. 
  • Platforms like pump.fun have made it easier than ever for users to create and launch their own tokens, fueling a frenzy of speculative activity. While not all new tokens are memecoins, the vast majority likely fall into this category, riding the wave of hype and social media buzz.
• However, the memecoin gold rush comes with its fair share of cautionary tales. The recent launch of MOODENG on Solana serves as a stark reminder of the volatility and risks inherent in this space. 
  • Despite the initial hype, MOODENG's performance has faltered, underscoring the fact that even the most buzzworthy memecoins face long odds of sustained success.
  • As we move into the final quarter of 2024, all eyes will be on Solana to see if it can maintain its commanding lead in new token launches. Will the memecoin craze continue unabated, or are we approaching a saturation point? Only time will tell, but one thing is certain – the world of DEXs and token creation is more dynamic and unpredictable than ever before.

Guess Who’s Back

• Solana has just recorded its highest ever monthly level in terms of the number of addresses on the network, be it active addresses or newly made addresses.
  • In September, the Solana network had a record-breaking 86.36 million active addresses, representing a 228% increase compared to the previous month.
  • Meanwhile, the network also saw 99.76 million new addresses in September, which is a ~150% increase compared to August.
• The increased number of addresses active on the network is accompanied by an increase in the total fees generated by the Solana network.
  • On August 31st, Solana generated just 3,810 SOL in network fees. Fast forward just a month later as more addresses transacted, the network generated 10.16K SOL on September 30th, representing a 166% MoM increase.
  • Jito validator tips saw a similar V-shaped recovery, having generated just 2.37K SOL on August 31st, before a 217% increase just a month later, having generated 10.67K SOL on September 30th.
• These V-shaped recoveries in terms of addresses and fees on the Solana network were likely caused by the resurgence of pump.fun.
  • The platform saw a significant increase in the number of token deployments from the third week of September, with the number of deployments reaching near its Q3 all-time highs.

 The Election’s Real Winner

• To the surprise of no one, Polymarket has continued to experience record numbers across all its key metrics heading into the final weeks of the US presidential election
  • September saw over 90,000 active traders on the platform contributing to over $533 million worth of volume for the month. This represents a MoM increase of over 41% and 12%, respectively, for these metrics.
  • Meanwhile, open interest on Polymarket has continued to show no signs of slowing as it blitzed past $140 million, up over 38% compared to this time last month.
  • Beyond these 3 key metrics, the number of new markets being opened on the platform has also shown positive growth, with over 2.1K new markets for the month, a ~26% MoM increase.
• The surge in activity is largely driven by the upcoming US presidential election, which is shaping up to be one of the most significant events in prediction market history, as these platforms were not as popular during the last election in 2016.
  • As election day approaches, traders are increasingly turning to Polymarket to bet on who will become the next president of the United States.
• While Polymarket’s continuous heightened activity is likely not a surprise, the main question on everybody’s head is whether this is sustainable post-election.
  • For the skeptics, activity will likely fall off significantly immediately after the results of the election.
  • For optimists, Polymarket will continue to see significant activity irrespective of the election as more people look for ways to express their views and profit from potential outcomes on various real-world events.

I Don't Want To Play With You Anymore.

• The total value locked (TVL) in EigenLayer has fallen by nearly 12% since the launch of the EIGEN token on September 30, 2024, losing ~$1.29 billion in value in a week.
  • The day after the EIGEN token launch, the protocol saw just $5.89 million worth of net inflows. However, it gets significantly more interesting in the following days.
  • EigenLayer experienced 3 consecutive days of net outflows totalling over -$128 million worth, while averaging -$42.8 million worth of net outflows per day.
  • This should come as no surprise, as a large number of yield “farmers” and airdrop speculators likely chose to withdraw their capital into other, more promising yield opportunities with higher incentives.
  • Interestingly, on Saturday, September 5, 2024, the protocol experienced $89.47 million worth of net inflows, its highest figure since July 30, 2024.
• This continues the trend of EigenLayer consistently losing its TVL since the initial announcement of its EIGEN token and the end of its first farming campaign in May 2024.
• The EIGEN token launched at a fully diluted valuation (FDV) of ~$6.7 billion, before peaking at a ~$7.7 billion FDV later that day.
  • Since then, following sell pressure from airdrop recipients as well as controversies surrounding the “unapproved” selling of “locked” tokens, the EIGEN token currently trades at a FDV of $5.5 billion, at the time of writing.

Bitcoin's powerful appetite

• Bitcoin's cumulative energy consumption has surpassed 615 TWh in September 2024, marking a significant milestone in the cryptocurrency's ongoing energy debate.
  • This represents a 20.1% increase from the 512 TWh recorded at the beginning of the year, highlighting the network's growing energy demands.
  • To put this in perspective, 615 TWh is roughly equivalent to the annual electricity consumption of a large country like Germany or France.
• The energy-intensive nature of Bitcoin stems from its proof-of-work consensus mechanism:
  • Bitcoin mining involves solving complex mathematical problems to validate transactions and create new blocks.
  • As more miners join the network and computing power increases, the difficulty of these problems adjusts upward, requiring more energy to maintain the same block production rate.
  • This arms race of computational power ensures the network's security but comes at a significant energy cost.
• The scale of Bitcoin's energy consumption raises important questions about sustainability:
  • While 615 TWh may seem high in absolute terms, it's crucial to consider this figure in the context of global energy use and the value Bitcoin provides as a decentralized financial network.
  • The environmental impact of Bitcoin mining varies greatly depending on the energy sources used. Regions with abundant renewable energy can mitigate some of these concerns.