• Solana x 2025 - The Story So Far
• Major Technological Developments in 2025
• #1 - Firedancer: The Game-Changing Validator Client
• Performance Breakthrough
• Revolutionary Architecture
• Enhanced Network Resilience
• Security and Stability Improvements
• Current Status and Rollout
• What is Jito + Frankendancer?
• Client Distribution:
• Why Jito + Frankendancer Matters?
• Why It's Game-Changing?
• #2 - Alpenglow Consensus Algorithm: Redefining Blockchain Consensus
• Before Alpenglow (Current State)
• After Alpenglow (Proposed)
• The Dramatic Improvement
• Technical Changes
• #3 - Network Performance and Scaling Improvements
• #4 - DoubleZero
• Say Hello to the IBRL Revolution
• How IBRL Will Transform Solana's Growth
• Exciting Protocols to Watch Out For in 2025
• 1. Jupiter - The DeFi Conglomerate
• 2. Kamino Finance - The Yield Optimization Powerhouse
• 3. Drift Protocol - The Perpetuals Trading Innovation Hub
• 4. Raydium - The DEX Innovation Leader
• 5. Solayer - The Restaking Revolution
• 6. Bullet - Competitor to Hyperliquid
• Institutional Adoption and ETF Developments
• The ETF Revolution
• Corporate Treasury Adoption
• DeFi and Ecosystem Growth
• DeFi Leadership and Innovation
• Developer Ecosystem Expansion
• Memecoin Phenomenon and Cultural Impact
• The Memecoin Explosion
• Technical Infrastructure Supporting Memecoins
• Gaming and NFT Developments
• Gaming Infrastructure
• NFT Ecosystem Evolution
• Regulatory Developments and Policy Institute
• Solana Policy Institute Launch
• Leadership and Strategic Approach
• Network Health and Decentralization
• Validator Economics and Health
• Decentralization Metrics
• Major Events and Conferences
• ETH vs. Solana Battle
• Challenges and Areas for Improvement
• Network Congestion and User Experience
• Validator Consolidation Concerns
• Is Solana Making Money?
• Future Outlook and Roadmap
• Upcoming Developments
• Scaling and Performance Goals
• Encapsulate’s Solana 2025 Thesis
• More Blog Posts
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Solana x 2025 - The Story So Far

Solana has emerged as one of the most transformative blockchain platforms in 2025, experiencing unprecedented growth, technological advancement, and institutional adoption. The Solana ecosystem began 2025 on a high note, hitting all time highs at the back of the launch of President Trump's TRUMP memecoin, setting the stage for a year of remarkable developments across multiple fronts.

This comprehensive research examines Solana's evolution throughout 2025, focusing on key areas including major protocol upgrades, institutional adoption milestones, regulatory developments, ecosystem expansion, and technological innovations. The analysis reveals that Solana has successfully positioned itself as a leading blockchain platform, challenging Ethereum's dominance while carving out its unique niche in high-performance decentralized applications.

The year 2025 has been pivotal for Solana, marking a period of maturation from a high-speed experimental blockchain to a robust, enterprise-ready platform. The network has experienced 100% uptime for nearly 16 months and counting, demonstrating unprecedented reliability that has become crucial for institutional adoption and real-world applications.

One of the most significant shifts in the cryptocurrency landscape has been the increasing interest from institutional investors, with Solana positioned at the forefront of this institutional wave. The platform's evolution reflects a strategic shift from speculative investment to practical application, as institutions increasingly ask "how can we use Solana?" rather than "should we invest in it?"

Major Technological Developments in 2025

#1 - Firedancer: The Game-Changing Validator Client

Perhaps the most significant technological development for Solana in 2025 has been the advancement of Firedancer, a revolutionary validator client that promises to redefine blockchain performance standards. Firedancer is a new client written from the ground up and maintained by Jump Crypto. As of April 17, 2025, 34 validators are using firedancer (about 7%), but this number is expected to quickly grow.

The impact of Firedancer cannot be overstated. According to Austin Federa, a key figure in the Solana ecosystem: "If you go to Breakpoint from 2024, there was a demo that the Firedancer team ran showing a million transactions per second running on I think it was six nodes and four continents. And that was running on the DoubleZero network." This demonstration represents a quantum leap in blockchain performance, far exceeding the capabilities of traditional networks.

The current implementation, known as Frankendancer, represents a hybrid approach. The current version, Frankendancer, is a hybrid Firedancer/Agave release. Firedancer was engineered for massive parallelism and includes well-designed dashboard and telemetry tooling. This gradual rollout strategy ensures network stability while introducing revolutionary performance improvements.

Performance Breakthrough

Firedancer has demonstrated the potential to process over 1 million transactions per second (TPS), far exceeding Solana's current capability of around 3,000 TPS for actual user transactions. In a live demo broadcast in 2022, Firedancer demonstrated an ability to process over 1 million transactions per second. This figure is many times greater than Solana's current theoretical limit of 50,000 tps, and far exceeds the amount of transactions leading service providers like Visa typically handle.

Revolutionary Architecture

Firedancer is written from scratch in C/C++ (versus Solana's original Rust client) and designed from the ground up to be fast. The concurrency model draws from experience in the low latency trading space, and the code contains many novel high-performance reimplementations of core Solana primitives.

Key technical innovations include:

• Modular tile architecture that breaks validator functions into independent processes
• Custom QUIC networking with kernel bypass techniques for ultra-low latency
• AVX512 cryptography for accelerated signature verification
• Parallel processing pipeline that maximizes CPU utilization

Enhanced Network Resilience

Firedancer is independently developed—sharing virtually no code with the original Solana Labs validator client. This means that bugs or issues in one validator client won't affect the other, significantly reducing the chances of network-wide outages and improving Solana's uptime and reliability.

Currently, Solana has been vulnerable because it primarily relies on one main client implementation. Right now, the Solana blockchain has only three validator clients in operation, making Firedancer the fourth option and dramatically improving decentralization.

Security and Stability Improvements

The architecture of the validator allows it to run with a highly restrictive sandbox and almost no system calls, which significantly reduces attack surfaces. Solana currently finalizes blocks in about 400 milliseconds. With optimizations enabled by Firedancer, that number could fall to around 120 milliseconds—a 4x improvement that makes Solana more responsive and better suited for real-time applications.

Current Status and Rollout

A hybrid version known as Frankendancer, which integrates components from both Firedancer and existing clients, is already live on Solana mainnet. The full Firedancer implementation is currently operational on testnet. Frankendancer is live on mainnet, and Firedancer is live on testnet.

What is Jito + Frankendancer?

Jito is a specialized validator client that focuses on Maximal Extractable Value (MEV) optimization. The Jito validator client is a fork of the Solana Labs validator client and is mostly used by validators that specialize on all things Maximal Extractable Value (MEV). By optimizing for MEV, the Jito validator client helps reduce network spam and improves the overall efficiency of Solana.

Frankendancer is the hybrid implementation that combines Firedancer's high-performance networking components with existing Agave runtime code. Frankendancer is a hybrid validator using parts of Firedancer and parts of Agave.

Client Distribution:

• Agave + Jito: 857 validators with 357.8M SOL staked (89.0% of network stake)
• Frankendancer + Jito: 77 validators with 31.6M SOL staked (7.9% of network stake)
• Agave Vanilla: 83 validators with 9.8M SOL staked (2.4%)
• Frankendancer Vanilla: 18 validators with 2.7M SOL staked (0.7%)

Why Jito + Frankendancer Matters?

1. MEV Optimization: Jito's MEV capabilities help validators capture additional revenue from transaction ordering and bundling
2. Enhanced Performance: Frankendancer's networking improvements boost overall throughput
3. Network Efficiency: By optimizing for MEV, the Jito validator client helps reduce network spam and improves the overall efficiency of Solana.
4. Revenue Enhancement: Validators running Jito can earn additional fees from MEV extraction

Why It's Game-Changing?

1. Massive scalability leap: From thousands to potentially millions of TPS
2. Network resilience: Multiple independent clients prevent single points of failure
3. Performance optimization: Leverages cutting-edge hardware capabilities and low-latency trading expertise
4. Security enhancement: Sandboxed architecture with minimal system calls
5. Future-proofing: Built for sharding and elastic scaling

As one industry leader noted: "This technological feat makes the fastest, most performant blockchain currently on the market even better. Solana is designed to be a high throughput, low latency global state machine. Firedancer is a giant leap forward towards perfecting these goals."

Firedancer essentially transforms Solana from an already fast blockchain into a potential global-scale transaction processing system that could handle the demands of traditional finance while maintaining decentralization and security.

#2 - Alpenglow Consensus Algorithm: Redefining Blockchain Consensus

Another groundbreaking development in 2025 has been the introduction of the Alpenglow consensus algorithm. Solana's current blockchain consensus mechanism - a hybrid of Proof of History (PoH) and Tower BFT - delivered unprecedented throughput but introduced operational trade-offs: Slow Finality (12.8 seconds): Optimistic confirmation (500–600ms) lacked deterministic finality, limiting real-time use cases.

The Alpenglow upgrade addresses these limitations fundamentally. Votor replaces Tower BFT's on-chain votes with a two-tiered consensus mechanism blockchain: Fast-Finalization Path: Blocks finalize in 150ms if ≥80% of stake approves in the first voting round. Slow-Finalization Path: If initial approval is ≥60%, a second round begins. Finalization occurs if approval remains ≥60%, ensuring liveness even with partial outages.

Before Alpenglow (Current State)

Block Finality Time: With Tower BFT, Solana's finality is set at 12.8 seconds due to the 32-deep tower structure and 400-millisecond slot times

Block Production: Blocks are still produced every 400 milliseconds, but true finality (when transactions are irreversible) takes much longer

Optimistic Confirmations: Solana introduced an optimistic confirmation system, which allowed applications to update their UI faster, giving users the impression of quicker transaction completion. However, this still resulted in confirmation times of around one second

After Alpenglow (Proposed)

Block Finality Time: The researchers ran some tests: if adopted, Alpenglow would reduce Solana's latency — the time it takes to finalize a block of transactions — from just under 13 seconds to as little as a tenth of a second

Specific Performance: Simulations show Alpenglow would achieve finality in about 150 milliseconds, with some estimates suggesting Depending on a validator's geographic location, this will fall from 12.8 seconds to 100-150ms

Real-World Testing: To test the upgrade, Solana conducted a network-wide latency test with a lead validator based in Zurich, Switzerland. Results showed that 65% of network stake finalized blocks in under 200 milliseconds

The Dramatic Improvement

This represents approximately a 100x improvement in finality speed - from 12.8 seconds down to 100-150 milliseconds. Before this, Solana's average block finality time was over 12 seconds — now it's cut to less than a second.

Technical Changes

The improvement comes from replacing Solana's current consensus mechanism with two new components:

• Votor: Handles faster block finalization through improved voting
• Rotor: Replaces the Turbine protocol for more efficient data propagation

"A median latency of 150ms does not just mean that Solana is fast," Wattenhofer, Kniep and Sliwinski said. "It means Solana can compete with Web2 infrastructure in terms of responsiveness, potentially making blockchain technology viable for entirely new categories of applications that demand real-time performance".

The Alpenglow upgrade is still in proposal phase and could go live as early as the end of 2025 or early 2026, pending community governance approval.

#3 - Network Performance and Scaling Improvements

Solana's network performance improvements in 2025 have been remarkable. Solana is planning to double its block space by 2025, significantly increasing its already high transaction throughput. A new consensus algorithm is being implemented, which will eliminate vote transactions and increase finality and block times.

The network has proven its resilience during periods of extreme stress. During periods of high network activity in January 2025, the Solana network broke several records, including all-time highs of activity for any blockchain in history. While some network applications faced challenges during this time, overall the network handled the burst remarkably well with no downtime.

Performance metrics from this stress test were impressive:

• Several days of over 200M daily transactions
• 400k+ new wallet downloads
• Over $200M in liquidity inflows
• DEX volume of up to $39B/day

#4 - DoubleZero

Say Hello to the IBRL Revolution

DoubleZero is a groundbreaking infrastructure project that's building what they call a "new internet" specifically designed for high-performance blockchain networks, with Its motto – "Increase bandwidth, Reduce Latency" or IBRL – proliferated through the Solana community even before DoubleZero debuted its white paper in December. Founded by Austin Federa (former Solana Foundation head of strategy) and co-founders Andrew McConnell and Mateo Ward, DoubleZero Foundation, a startup building a "new internet" to improve blockchain performance, raised $28 million at a $400 million valuation from top-tier VCs including Dragonfly and Multicoin Capital.

The core concept addresses a fundamental limitation: the current internet infrastructure is ill-suited for the demands of high-performance blockchain networks. DoubleZero's vision is to amass a global network of private fiber optic cables, and then harness them so that blockchains can transmit their data more efficiently than possible on the public internet. This infrastructure leverages private line operated by Jump Crypto, RockawayX, Distributed Global, Latitude and Teraswitch, essentially creating a dedicated highway for blockchain data transmission.

How IBRL Will Transform Solana's Growth

The IBRL concept is positioned to be transformative for Solana's scalability ambitions. The project is seen as an enabling technology for Solana's grander plans to process one million transactions per second. The impact has already been demonstrated: Federa mentioned a demo from Breakpoint 2024 where Firedancer, running on the DoubleZero network, achieved one million transactions per second across six nodes on four continents.

Double Zero is on a mission to create a "new internet" specifically designed for high-performance blockchain networks, with the potential to make Solana up to 10 times faster in the next two years. The economic model is designed to be self-sustaining: while initially mentioning a 5% seed fee for validators to use the DoubleZero network, Federa clarified that the launch would start with a lower fee, gradually increasing as the network proves its value. The value proposition is compelling - "If we make Solana twice as performance and as twice as much block space, validators will make more than 5% more, right? Stakers will make more than 5% more".

Check out our for a deep-dive into DoubleZero and IBRL:

The infrastructure is already gaining real-world adoption, with DeFi Development Corp. (NASDAQ:DFDV) has integrated DoubleZero into its Solana validator operations, representing early validation of the technology's practical benefits. DoubleZero's approach mirrors the strategy of major tech companies: "People forget that like Facebook literally wired up the entire Philippines with subsea cables so they could sell ads to people there. At some point, all sufficiently large enough software companies have to start looking at hardware or else they realize their ambitions simply cannot be met".

By solving the networking bottleneck that has long constrained blockchain performance, DoubleZero's IBRL concept could be the key infrastructure that enables Solana to achieve its vision of becoming the world's most performant blockchain, potentially handling millions of transactions per second while maintaining decentralization - a breakthrough that could establish Solana as the definitive platform for global-scale applications.

Exciting Protocols to Watch Out For in 2025

1. Jupiter - The DeFi Conglomerate

After the decline of memecoins in early 2025, Jupiter rose to become the top fee generating protocol on Solana, with daily fees generated of over $2M according to DefiLlama. Jupiter has evolved far beyond being just a DEX aggregator - it's becoming Solana's DeFi super-app. Approximately 60% of total DEX volumes are facilitated by Jupiter, the leading DEX aggregator on Solana and the largest DeFi project on the platform. What makes Jupiter exciting is its expansion into perpetuals, options, and its upcoming Jupiter Mobile wallet, positioning it as the one-stop shop for all Solana DeFi needs. The platform's ability to aggregate liquidity across multiple DEXes ensures users get the best prices while its governance token JUP gives holders voting power over this increasingly influential protocol.

2. Kamino Finance - The Yield Optimization Powerhouse

Kamino (KMNO), a decentralized lending platform, with TVL or 16.03% of the total, worth $2.43 billion, has positioned itself as Solana's premier lending and liquidity management platform. Kamino launched its Lend V2 program in late 2024, introducing "The Vault Layer", which aggregates and automates liquidity across various markets to deliver risk-optimized yields. An interesting innovation of theirs is the "Scam Wick Protection", enabled by their next-generation liquidations engine that protects users from unnecessary liquidations. What's particularly exciting is Kamino's automated yield strategies that handle the complexity of DeFi farming for users, making sophisticated yield generation accessible to everyone. The platform's integration with major Solana DEXes and its upcoming KMNO token airdrop make it a protocol to watch closely.

3. Drift Protocol - The Perpetuals Trading Innovation Hub

Drift Protocol, the largest open-sourced perpetual futures exchange built on Solana, is not just an application — it's a layer for other protocols to build upon. With the recent launch of its new governance token, $DRIFT, the platform has reached a significant milestone in its evolution with a Cumulative trading Volume of over $24 Billion and Total Value Locked (TVL) of over $300 Million. Drift stands out for its sophisticated hybrid liquidity model that combines virtual AMMs with just-in-time auction systems, enabling orders of any size gets filled with near-zero slippage and at the lowest fees. The platform's cross-margined accounts allow traders to use any deposited asset as collateral across all positions, maximizing capital efficiency. With leverage up to 20x and its expansion into prediction markets, Drift is pushing the boundaries of what's possible in decentralized derivatives trading.

4. Raydium - The DEX Innovation Leader

Raydium (RAY) continues to dominate Solana DEXs with TVL of $1.77 billion and remains the go-to platform for new token launches and liquidity provision. What makes Raydium exciting is its hybrid model that combines an automated market maker with Solana's central limit order book, providing both the flexibility of liquidity pools and the precision of traditional order books. Raydium and Openbook are achieving significant volumes, particularly during periods of meme coin popularity. The platform's integration with major launches (including many memecoins that have gained massive popularity) and its role as the primary liquidity hub for new Solana projects makes it essential infrastructure. Raydium's concentrated liquidity features and its position as the largest native DEX on Solana ensure it remains at the center of the ecosystem's growth.

5. Solayer - The Restaking Revolution

Solayer began as a crypto project dedicated to enabling restaking on Solana, a process in which staked tokens are then further used to secure the networks of other crypto projects. Solayer continues to innovate, venturing into other fields of Solana DeFi, beginning with the launch of the stablecoin sUSD (Solayer USD) in October 2024. The most exciting development is Solayer InfiniSVM, a hardware accelerated Solana Virtual Machine (SVM) Layer 1 blockchain unveiled in January 2025. Solayer is essentially building Solana's version of EigenLayer, allowing SOL holders to restake their tokens to secure additional networks and earn extra yield. The introduction of sUSD, a treasury-backed stablecoin developed with OpenSea, shows Solayer's ambition to become a multi-faceted DeFi infrastructure provider. As restaking becomes a major narrative in crypto, Solayer is positioned to capture significant value by enabling this new primitive on Solana.

6. Bullet - Competitor to Hyperliquid

Bullet is emerging as a formidable challenger to Hyperliquid's dominance in the perpetuals trading space, leveraging Solana's infrastructure to build what they call a "Network Extension" that promises to deliver sub-2ms transaction execution and thousands of TPS. We built Bullet because we recognized that Solana, despite being a powerhouse in spot and memecoin trading, lagged significantly behind the competition when it came to a professional-grade derivatives trading experience. The platform, evolved from Zeta Markets, functions as a high-performance decentralized exchange (DEX) specifically built for perpetual futures trading. Bullet targets high-frequency traders by offering ultra-low latency (2ms) and real-time transaction processing capabilities. What makes Bullet particularly exciting in its competition with Hyperliquid is its unique hybrid approach - existing as a network extension (an application-specific layer) on Solana, we benefit from the throughput and continued scaling of the Solana base layer, whilst applying many of the learnings and research from zero-knowledge cryptography and modular blockchain design principles.

While Hyperliquid has captured over 80% of the on-chain perpetual futures market, Zeta Markets has rebranded as Bullet, marking a shift toward a performance-focused trading platform. Bullet is being built as a Solana-native extension optimized for trading, leveraging zero-knowledge proofs for high speed and scalability. With its current testnet phase generating significant anticipation for a potential $BULLET token airdrop and its promise to finally deliver decentralized exchanges (DEX) that can compete with centralized exchanges (CEX) without having to trade off security and transparency, Bullet represents Solana's most serious attempt to reclaim market share from Hyperliquid in the high-performance derivatives trading arena.

Institutional Adoption and ETF Developments

The ETF Revolution

One of the most significant developments for Solana in 2025 has been the progress toward Exchange-Traded Fund (ETF) approval. The U.S. Securities and Exchange Commission reportedly asked prospective issuers to amend their S-1 filings in the next week, according to the story, and will comment on the paperwork in the next 30 days after submission.

The first major breakthrough came with the approval of a Solana staking ETF. In July 2025, the U.S. made headlines by approving the first Solana staking ETF, launched by REX Shares and Osprey Funds. This Solana ETF is the first in the U.S. to combine price tracking with Solana staking reward distributions.

The impact has been substantial. The launch and growth of Solana ETF products are reshaping cryptocurrency investing in 2025. With the debut of innovative Solana staking ETF products in Canada and, now, the first U.S. Solana staking ETF approval, both institutional and retail inflows have soared—surpassing $500 million in the first weeks across North America.

Corporate Treasury Adoption

Corporate adoption of Solana has accelerated significantly in 2025. Education technology firm Classover disclosed a major strategic treasury reserve adjustment, increasing its Solana holdings by 295% to surpass 50,000 SOL tokens.

Corporate interest in Solana is growing, and DeFi Development Corp. is the latest to announce the addition of more tokens to its growing portfolio. In a July 3 press release, the company announced the purchase of 17,760 Solana (SOL) worth $2.7 million, demonstrating growing institutional confidence.

The scale of institutional involvement is impressive. DeFi Technologies is the largest institutional asset manager of Solana in North America. As the parent company of Valour, DeFi Technologies manages more Solana than any other public company or asset manager in North America, with Valour's Solana ETP holds US$274,850,850 (C$377,548,870) in AUM, exceeding the Bitcoin ETP at US$269,640,836.

DeFi and Ecosystem Growth

DeFi Leadership and Innovation

Solana has established itself as a dominant force in decentralized finance. Solana, Ethereum's largest rival, leads among cryptos with highest dApp revenue. In June 2025, Solana clocked over $146 million in revenue from decentralized applications in its ecosystem.

The DeFi ecosystem's growth is reflected in impressive metrics. App revenue for Solana has been growing consistently since Q3 2023. The past two quarters have shown a significant increase over previous quarters, with over $1B in app revenue each.

Developer Ecosystem Expansion

The developer ecosystem has shown remarkable growth. Solana was the #1 blockchain ecosystem for new developers in 2024, with over 7600 new developers joining the network, over 3200 monthly active developers, and 83% year-over-year growth.

Key projects driving this growth include Jupiter, which has evolved from a simple swap aggregator into Solana's top DeFi hub, and innovative platforms like Pump.fun, which has democratized token creation. Pump.fun drove Solana's memecoin wave and now routes all tokens to its new native DEX, PumpSwap, with creator revenue features.

Memecoin Phenomenon and Cultural Impact

The Memecoin Explosion

2025 has been the year of the Solana memecoin phenomenon. Most notably, Solana is the choice blockchain for many NFT collections including Pudgy Penguins, Azuki and more to launch their own memecoins. This trend began with President Trump's TRUMP memecoin launch, which set the stage for an explosion of memecoin activity.

The scale of this phenomenon is remarkable. PENGU is the official memecoin of the famed Pudgy Penguins NFT collection. The PENGU token launched in December 2024, in what was one of the most prolific airdrops at the time, rewarding not just their NFT holders but users of the Solana ecosystem in general, with over a million Solana wallets eligible for the airdrop.

Technical Infrastructure Supporting Memecoins

The technical characteristics of Solana make it particularly well-suited for memecoin trading. Solana's rapid network speeds lend themselves to the quick creation and trading of memecoins. What's more, platforms such as Pump.fun, Moonshot, and others that simplify the creation of SPL tokens have democratized meme coin production, leading to an explosion of new tokens.

The low transaction costs on Solana make it economically viable for users to engage in speculative trading of meme coins. Coupled with this, the cultural resonance of meme coins within the Solana community has made it a breeding ground for speculative investments.

Gaming and NFT Developments

Gaming Infrastructure

Solana has made significant strides in blockchain gaming infrastructure. Non-fungible tokens (NFTs) are rapidly gaining popularity as a means of integrating Solana into games. These unique digital assets are stored on the Solana blockchain and come with a JSON metadata attached to them.

The platform supports sophisticated gaming mechanics. You can also use dynamic metadata (using Token Extensions) to save character level and experience or items in an NFT. Here is a Video Walkthrough with source code that explains dynamic metadata NFTs.

NFT Ecosystem Evolution

The NFT ecosystem has evolved significantly, with projects like Mad Lads leading innovation. Mad Lads NFTs are xNFTs, which means they are NFTs with an embedded code script that can be executed by an application that supports them, like the Backpack wallet, which is also developed by Coral.

Regulatory Developments and Policy Institute

Solana Policy Institute Launch

A major development in 2025 has been the establishment of the Solana Policy Institute. The Solana Policy Institute (SPI), a non-partisan, non-profit organization, was established on March 31 to engage with lawmakers, educate them on the role of decentralized networks in the digital economy, and advocate for Solana (SOL) in Washington.

Solana Policy Institute is a non-partisan, not-for-profit focused on educating policymakers on how decentralized networks like Solana are the future of the digital economy—and why the people building on and using them need legal certainty to flourish.

Leadership and Strategic Approach

The institute has attracted high-profile leadership. Miller Whitehouse-Levine, former CEO of the DeFi Education Fund, yesterday announced his latest venture as founder and CEO of the Solana Policy Institute. Then, this afternoon, Blockchain Association CEO Kristin Smith said she would become the fledgling non-profit's first president in May.

The strategic approach is comprehensive. SPI's strategic approach includes convening voices from within the Solana ecosystem, such as infrastructure providers, developers, and users of decentralized applications (dApps). These stakeholders will provide policymakers with case-specific insights, demonstrating how blockchain-based tools are deployed in practice.

Network Health and Decentralization

Validator Economics and Health

Validator economics have improved significantly in 2025. Validator health is thriving. Validators now earn from a variety of sources—not just increased inflation rewards and transaction fees, but also 100% of priority fees (SIMD-0096), MEV (via Jito), and out-of-protocol deals.

As a result of these improved economics, the breakeven stake for a validator has dropped from ~50k SOL to 16k SOL. Commission rates are trending to 0% and APYs are up to 7.5%, encouraging even more staking.

Decentralization Metrics

Solana maintains strong decentralization metrics. As of April 16, 2025, Solana's Nakamoto Coefficient is 20. This means the lowest number of validators that would have to collude to censor the network is 20. While this has decreased from previous highs, it remains competitive with other major blockchains.

Solana and Ethereum are the only L1 networks with more than one client. Ethereum leads by count of distinct clients, with Nethermind (21% usage) and Geth (54%) being the most popular.

Major Events and Conferences

Solana is orchestrating an ambitious global events strategy for 2025 that reflects its growing maturity and international reach. The Solana Foundation will once again host the landmark Solana Breakpoint conference, coming to Abu Dhabi in December 2025, marking a strategic shift to engage with crypto-friendly jurisdictions in the Middle East after previous years in Europe and Singapore. Beyond the flagship Breakpoint, Solana is launching an entirely new series called APEX: focused, mega-regional events meant to initiate and incubate high-quality apps. Each mega-region will have its own conference – focussed on founders, apps and tokens – where teams can showcase their products and connect with investors and partners. Coming in 2025 to Mexico City, Cape Town, Budapest, Singapore, and Mumbai. Additionally, Accelerate, described as a "mini breakpoint" event, is scheduled for May 19-26, 2025, in the United States, providing developers and builders with more intimate, focused networking opportunities.

The Foundation's 2025 strategy represents a fundamental shift toward deeply product- and growth-focused events where attendees should walk away with actionable playbooks to solve their growth challenges, engage in deep work with peers, connect with potential hires or enterprise partners, or drive communication and marketing outcomes. This includes innovative formats like Startup Villages, hosted by Superteam with other ecosystem teams, which create opportunities for attendees to engage in deep work, attend workshops and build meaningful products and connections over two weeks, instead of a couple of days. The events will follow a "barbell format" focusing on either small, niche gatherings for specific groups like product designers or DePIN teams, or large-scale events serving the entire ecosystem. With community-driven hacker houses, founder villas, and ecosystem-native events complementing the official programming, Solana's 2025 events calendar is designed to foster genuine collaboration and product development rather than just networking, positioning the ecosystem for sustained growth as it enters what many expect to be a transformative year for crypto adoption.

ETH vs. Solana Battle

In 2025, Solana has emerged as Ethereum's most formidable challenger in the race for DeFi dominance, and the data suggests this battle is far from one-sided. While Ethereum remains the leader in DeFi with a significantly higher TVL, thanks to its established ecosystem and broad developer support and over 55% of total value locked (TVL) across major chains resides on Ethereum, Solana is rapidly closing the gap through superior performance metrics and user engagement. The network consistently processes over 100 million transactions per day, powered by an average of 500,000 daily active wallets, underscoring its position as the most performant Layer-1 blockchain by throughput. The TVL gap tells only part of the story - while Ethereum holds around $71 billion compared to Solana's $9 billion, in terms of daily active users, revenue, transaction count, Total Value Locked (TVL), and developer adoption, Solana is now leading the way, not Ethereum. Over the past three months, Solana has consistently processed five times more daily transactions than Ethereum and recorded same level of the DEX trading volume.

Solana's path to DeFi leadership is being paved through innovation, user experience, and cost efficiency rather than just raw capital accumulation. Monthly DEX volume skyrocketed from $1 billion in 2023 to a record-breaking $129 billion in November 2024, surpassing Ethereum's all-time high of $117 billion set in May 2021, demonstrating that Solana has achieved parity in actual trading activity despite the TVL disadvantage. The network's breakthrough comes from its ability to serve different market segments - while Ethereum remains the choice for "serious money" and institutional DeFi, Solana has captured the retail and high-frequency trading markets through platforms like Pump.fun, which became the biggest revenue-generating dApp across all blockchains. Notably, top developers at Ethereum are finally waking up to the realization that Solana is eating their lunch these days. They are complaining that their future roadmap for growth is "too unambitious," and some have warned about the need to adopt a new strategy to take on Solana. With Firedancer's arrival promising million-TPS capabilities and Solana's proven ability to handle real-world usage at scale, the question isn't whether Solana will challenge Ethereum for DeFi supremacy - it's whether Ethereum can adapt fast enough to maintain its lead in an increasingly performance-driven market.

Challenges and Areas for Improvement

Network Congestion and User Experience

Despite significant improvements, challenges remain. The memecoin boom has sometimes led to network congestion and user experience issues. However, this is a classic case of Solana suffering from its own success, as the blockchain of choice for retail, it naturally attracts both real users and bad actors.

Validator Consolidation Concerns

Geographic consolidation of validators remains a concern. However, nodes have started to consolidate geographically to locations with major data centers and minimal latency (for example, clustering in Germany). The Solana Foundation believes this consolidation is due to: Timely Vote Credits (TVC) which incentivize stakers to move their stake.

Is Solana Making Money?

The blockchain has experienced explosive revenue growth that demonstrates its transition from a promising but struggling network to a genuine financial powerhouse. Application revenues on the Solana network increased by 213% in the fourth quarter of 2024, primarily due to memecoin speculation, according to a report by crypto research firm Messari. Cumulative app revenues grew from $268 million in Q3 2024 to $840 million in Q4, Messari said. They peaked in November at $367 million. This represents one of the most dramatic revenue acceleration stories in the crypto space.

The money is coming from multiple sources, but memecoins have been the primary driver. According to DefiLlama data, pump.fun, Solana's viral token launcher, recorded the highest consistent revenue generation, recording an average of $29.21M in monthly revenue in 2024. Pump.fun has consistently generated millions of dollars in revenue on a daily basis in Q4, recording an all-time high of $14.3M on November 23. Beyond just the memecoin mania, Solana's DeFi ecosystem has matured significantly. Monthly DEX volume skyrocketed from $1 billion in 2023 to a record-breaking $129 billion in November 2024, surpassing Ethereum's all-time high of $117 billion set in May 2021. This isn't just speculative trading - it represents real economic activity with sustainable fee generation. In July, Solana surpassed Ethereum in weekly total fees for the first time, clocking approximately $25 million in weekly revenue versus Ethereum's $21 million, proving that Solana has achieved genuine revenue competitiveness with the world's leading smart contract platform.

Future Outlook and Roadmap

Upcoming Developments

Several major developments are planned for the remainder of 2025 and beyond. Alpenglow consensus algorithm - Announced at Scale or Die, this major consensus algorithm update is designed to reduce block times and improve network stability.

The DoubleZero network - Already in testnet, DoubleZero is a new global network for high-performance distributed systems and blockchains. Validators moving to the DoubleZero network are expected to see significantly higher bandwidth and lower latency.

Scaling and Performance Goals

The network continues to push performance boundaries. Compute Units limit increase - CU limits have recently been raised to 50m, soon to bump to 60m, with future increases planned of 100m and beyond.

Encapsulate’s Solana 2025 Thesis

Solana's evolution in 2025 represents a watershed moment in blockchain technology. The platform has successfully transitioned from a high-speed experimental network to a mature, enterprise-ready infrastructure that supports a diverse ecosystem of applications, from DeFi protocols to gaming platforms and institutional financial products.

Key achievements include the deployment of revolutionary technologies like Firedancer and Alpenglow, which promise to redefine blockchain performance standards. The platform has demonstrated exceptional resilience during periods of extreme network stress while maintaining near-perfect uptime for over 16 months.

Institutional adoption has accelerated dramatically, with the approval of the first Solana staking ETF in the United States and significant corporate treasury allocations. The establishment of the Solana Policy Institute demonstrates the ecosystem's commitment to regulatory clarity and responsible innovation.

The developer ecosystem continues to thrive, with Solana attracting the highest number of new developers among all blockchain platforms. The memecoin phenomenon, while controversial, has demonstrated the platform's ability to handle massive transaction volumes and has driven significant user adoption.

As we look towards 2025, Solana's roadmap is filled with ambitious goals and exciting developments. From major protocol upgrades like Firedancer and the new consensus algorithm to ecosystem improvements like RPS 2.0, the network is poised for significant growth and evolution.

However, challenges remain, including validator geographic consolidation, the need for continued user experience improvements, and the ongoing task of balancing rapid innovation with network stability. The platform's success has also attracted both legitimate users and bad actors, requiring ongoing vigilance from the community.

Looking forward, Solana appears well-positioned to play a leading role in the future of blockchain technology. With major technological upgrades on the horizon, growing institutional interest, and a vibrant ecosystem of developers and projects, the platform's influence and importance in the cryptocurrency space is likely to continue growing.

The combination of technical excellence, practical utility, and community-driven innovation suggests that Solana has successfully established itself as a foundational platform for the next generation of decentralized applications and financial services. As the blockchain industry matures, Solana's focus on performance, usability, and real-world adoption positions it as a key infrastructure layer for the digital economy of the future.

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