Layer by Layer: Solana Ecosystem Carries On Through Regulatory Pressure

The battle for survival rages on in the Layer 1 (L1) landscape, with ongoing regulatory challenges and growing competition from rollups representing existential threats to the L1 smart contract platforms that have been the dominant source of on-chain financial activity in the past few years. It remains unclear how recent actions by U.S. regulators might directly impact L1 protocols from an operations or development perspective, but the knock-on effects of these actions for the broader industry are already starting to take shape. Earlier this week, the centralized exchange (CEX) Kucoin introduced mandatory know-your-customer (KYC) screenings for the first time, following a trend of increasingly restrictive access to crypto services in 2023, particularly for U.S. customers. 

Today, we check in with the Solana ecosystem, which has endured numerous difficulties over the past year, including the FTX fallout and recurring network issues, and now faces the challenge of sustaining activity and growth at a time when optimism in the crypto industry is waning.