Written by Michael Nadeau, The DeFi Report
Compiled by: Glendon, Techub News
Over the past year, Solana has been the platform of choice for cryptocurrency speculation. This positioning provided its network with an invaluable "stress test." As a result, it has seen explosive growth in user activity, fees, number of developers, and investor attention.
However, this also makes the network highly susceptible to a "cooling-down" effect once risk appetite subsides. This "cooling-down" effect arrived in the first quarter. Solana is now in reset mode. This article will share a comprehensive data-driven update on the Solana network's performance in the first quarter, as well as our focus going forward.
Operational performance
Real economic value
Data source: DeFi report
REV = Base Fee, Priority Fee, MEV (Jito Tip), and voting fee for accessing L1 block space. MEV (Jito Tip) is distributed to SOL holders through staking. The remaining fees belong to validators, with 50% of the base fee being burned.
Solana's total expenses in the first quarter were $89.9 million—the lowest level since the third quarter of 2023. This represents a 1.4% decrease from the previous quarter and a 68% decrease year-over-year.
For reference, Ethereum L1's fees in the first quarter were $82 million.
The specific analysis is as follows:
Basic expenses: decreased by 8.7% in the first quarter, but increased by 9.4% year-on-year;
Jito tips (MEV): Down 19.7% in the first quarter and down 72.3% year-over-year;
Priority expenses: rose 23% in the first quarter, but fell 68.8% year-over-year;
Voting fees: down 44.5% in the first quarter and down 16.4% year-over-year.
Key points summary
Solana was a "hotbed of speculation" in the previous cycle (on par with Hyperliquid). The most powerful applications on the network (Pump, Axiom, Raydium, Jupiter) are all geared towards retail traders, resulting in highly cyclical on-chain revenues that are heavily reliant on speculative demand.
This chart also helps visualize the period in the previous cycle when speculation reached its most extreme levels: late 2024 to early 2025. Since then, Solana's social attention and on-chain activity have been on a downward trend. It's unlikely this trend will reverse in the short term.
On the positive side, Pump Fun performed relatively well during the bear market, and we are beginning to see emerging fintech companies building stablecoin applications based on Solana (more on this in the report later). Ultimately, we believe Solana needs to compete with Hyperliquid for perpetual contract traders and lead the tokenization of on-chain equity (and other real-world assets) to mitigate the extreme cyclical volatility of its on-chain user base.
Actual on-chain yield
Actual on-chain rewards = MEV paid to validators and passed to SOL stakers (excluding operator payments).
The average actual on-chain yield (annualized) in the first quarter was 0.17%, up 33% from the previous quarter but down 67% year-over-year. The growth in the second quarter can be attributed to the extreme volatility of decentralized exchanges from late January to early February.
The 67% year-over-year decline indicates that a significant portion of the speculative bubble has been released from the ecosystem since the frenzy we witnessed in the first quarter of last year (when several G20 leaders launched memecoin on Solana).
Total on-chain yield
Total on-chain revenue = MEV + Protocol issuance paid to validators and passed to SOL stakers (excluding operator payments).
The total on-chain yield (average annualized yield) in the first quarter was 6.7%, of which 89% came from newly issued SOL.
This quarter, the total on-chain yield increased by 0.25%, but decreased by 66% year-over-year.
Network fundamentals
Monthly GDP
GDP = Total fees generated by top-level on-chain applications (excluding on-chain fees). Solana top-level applications generated $451 million in network GDP in the first quarter (5 times that of L1 REV), a 7% decrease compared to the fourth quarter of 2025 and a 54% year-over-year decrease.
Top 10 Applications:
Pump Fun (social/retail trading): $103 million (3% growth in Q1, down 13% year-over-year)
Circle (stablecoin): $63 million (down 28% in Q1, up 105% year-over-year)
Axiom (trading app): $46 million (down 24% in Q1, up 1829% year-over-year)
Jupiter (DEX aggregator and trading application): $45 million (down 3% in Q1, down 45% year-over-year)
GMX (Perpetual Contract DEX): $32 million (a significant increase from $160,000 in Q4)
Phantom (wallet): $29 million (down 12% in Q1, down 46% year-over-year)
Raydium (DEX and launch platform infrastructure): $24.6 million (down 26% in Q1, down 83% year-over-year).
Tether (stablecoin): $20.5 million (24% growth in Q1, 85% year-over-year growth)
Jito (Transaction Execution): $19.9 million (down 19% in Q1, down 72% year-over-year)
Orca (public DEX): $14.3 million (down 34% in Q1, down 55% year-over-year)
For reference, applications on Ethereum L1 generated $1.9 billion in GDP in the first quarter (4.2 times that of Solana).
Key points summary
Pump Fun's first-quarter revenue surpassed Solana L1's. However, Solana L1 is currently valued at 77 times Pump Fun's earnings (43 times on a fully diluted basis). We believe there is a misalignment here. This is why Pump Fun is currently on our watch list.
Active address
A unique active address is a unique wallet address that initiates at least one transaction per day. The Solana network averaged 2.4 million daily active addresses in the first quarter, a 7.5% increase quarter-over-quarter but a 4.8% decrease year-over-year.
SOL active staking
Active staking increased by 1.2% in the first quarter and by 10.8% year-over-year. As of March 31, 2026, a total of 426.4 million SOL tokens were staked on the network, representing 74.4% of the circulating supply and 68% of the total supply.
Key points summary
Unlike Ethereum, increasing the amount of SOL staked does not increase the new supply issued to validators. Instead, the supply decreases by 15% annually on a fixed, anti-inflationary schedule, down to 1.5% per year.
Cost of generating $1 in revenue (REV)
The average cost to generate $1 of real economic value in the first quarter was $8.10, down 31% quarter-over-quarter but up 93% year-over-year.
Why is this important?
The increased cost of generating $1 of real economic value indicates that more issuance (cyber inflation) is needed to ensure cybersecurity relative to the real value generated this quarter. This suggests that network costs/operating expenses declined faster than revenue declined in the first quarter.
For reference, the cost of producing $1 REV on Ethereum in the first quarter was $13.79.
Stablecoins
Stablecoin supply
Solana currently has a total of $15.9 billion in stablecoins on the network, down 2.7% in the first quarter but up 18% year-over-year. This represents 4.5% of the total stablecoin supply in the cryptocurrency market, placing Solana behind Ethereum, Tron, and BNB.
Major stablecoin issuers on the Solana platform:
Circle/USDC: $9 billion (down 16% in Q1, down 11% year-over-year).
Tether/USDT: $3.5 billion (27% growth in Q1, 46% year-over-year growth).
PayPal/USDPY: $720 million (down 23% in Q1, but up 440% year-over-year).
Paxos/USDG: $940 million (8% growth in Q1, 1021% year-over-year).
World Liberty Finance/USD1: $884 million (670% growth in Q1).
Solstice/USX: $355 million (16% growth in Q1).
We expect Solana to see more stablecoin innovation in the following areas:
Latin American fintech companies serving remittances, payroll, and card/exchange fees. Several promising examples include Rain, Morse, and Takenos.
A licensed U.S. fintech company offering new payroll solutions using stablecoins. We believe this may emerge after the Clarity Act is passed, and we still think the winning stablecoin issuer will offer a range of services around the token.
Stablecoin circulation velocity
Effective stablecoin velocity measures the daily turnover rate of each dollar's stablecoin supply on-chain. This metric filters out noise such as wash trading and recurring transactions to arrive at the true velocity, measured as daily net dollar transfers divided by the circulating supply. An increase in this value indicates increased economic activity on the Solana network.
The average velocity of stablecoins in the first quarter was 0.07, a decrease of 69% quarter-on-quarter, but an increase of 29% year-on-year.
The Q1 reading of 0.07 indicates that 7% of the stablecoin supply was "turning over" daily during the quarter. For reference, Ethereum L1 turned over 2% of its stablecoin supply daily in Q1.
As emerging fintech companies built on Solana integrate with new regulations, we expect stablecoin circulation velocity to grow steadily over the next few years, reducing reliance on cyclical/risk-averse trading/speculation.
Token Economics
Net dilution rate
Net dilution rate = Daily issuance minus SOL burned / Circulating supply (annualized). A positive net dilution rate has a dilutive effect on (unstaking) SOL holders.
SOL's net dilution rate (annualized) for the first quarter was 4.38%, a decrease of 5.3% in the first quarter and a decrease of 7.7% year-over-year. Drivers:
SOL issuance: 6.26 million in the first quarter (down from 6.45 million in the fourth quarter).
SOL burns: 677,000 in Q1 (up from 637,000 in Q4)
Net Results: 6.19 million new SOL tokens issued in the first quarter (annualized inflation rate of 4.38%)
Please note that, unlike Ethereum, in Solana, increasing staked assets does not increase the amount of SOL earned by Solana validators. This means that the issuance of SOL on Solana is always decreasing (the network is pre-programmed to have an annual deflation rate of 15%).
What impact will this have on validators/stakers?
When more SOL is staked on the network, the staking yield will decrease if on-chain fees cannot cover the shortfall.
DeFi
DEX trading volume
This sector comprises 11 public DEXs and 9 private DEXs. The story within Solana DeFi remains one of growth for private DEXs (which now dominate).
The average daily trading volume on DEXs in the first quarter was $3.2 billion, a 32% decrease quarter-over-quarter and a 4% decrease year-over-year. For reference, the average daily trading volume on Ethereum L1 DEXs in the first quarter was $2 billion, and $3.6 billion if L2 DEXs are included.
Private DEXs accounted for 60% of total trading volume ($1.9 billion per day), but this declined by 14% in the first quarter.
The average daily trading volume of public DEXs in the first quarter was $1.3 billion, down 47% from the fourth quarter and down 37% year-over-year.
Top DEXs by trading volume on Solana:
HumidiFi Private DEX: Daily trading volume of $613 million (down 55% in Q1).
BisonFi Private DEX: Daily trading volume of $574 million (614% growth in Q1).
Meteora public DEX: Daily trading volume of $447 million (down 36% in Q1).
Raydium public DEX: $298 million/day (down 69% in Q1, down 60% year-over-year).
Orca Public DEX: Daily trading volume of $278 million (down 41% in Q1 and down 21% year-over-year).
DeFi circulation speed
DeFi velocity of flow measures the turnover rate of every dollar within a DeFi protocol. When this value is greater than 1, it means that the network's daily transaction volume exceeds the total value locked in the DeFi protocol. In the first quarter, the average DeFi velocity of flow was 0.43, with networks turning over their TVL at an average rate of 43% per day. This figure represents a 7% decrease quarter-over-quarter and a 23% decrease year-over-year.
Key points summary
Last week, we pointed out that network dilution rate is the most important metric for Ethereum. For SOL, we believe DeFi velocity of flow is the most important. Why?
Solana's core concept is "Fast DeFi." Speed and turnover rate are the main drivers of network fees. This is also why Solana's actual yield consistently outperformed Ethereum in 2024/2025. We believe that Solana's speed will ultimately make it a magnet for capital in risk-averse environments. This makes SOL an extremely responsive, high-beta asset.
New trading tokens
New transaction tokens = The number of tokens created on the Solana launch platform.
A total of 3 million tokens were created on Solana in the first quarter, a 42% increase from the previous quarter and a 21% year-over-year increase. Pump Fun continued to lead the market, adding 2.5 million tokens in the first quarter (accounting for 85% market share). Pump Fun's performance during the bear market was impressive and it remains a major bright spot within the Solana ecosystem (running alongside the growth of private DEXs). Again, it's worth noting that this application generated more revenue than Solana L1 in the first quarter.
Key performance indicators of fair value
Conclusion
In the previous cycle, Solana was a "speculator's paradise," attracting more new cryptocurrency users than any other blockchain. This enabled the network to: establish itself as a "building platform" by generating some of the fastest-growing and most profitable crypto applications (Pump, Axiom, Jupiter, etc.) and successfully stress-test the network infrastructure.
While developers may not be as "overwhelmed" as they were in 2022, the network is undoubtedly undergoing its latest reset. Looking ahead, we see five key pillars that could determine Solana's success in its next expansion:
Consumer/Retail Transaction Application Scenarios. For years, cryptocurrency-native venture capital firms have been funding on-chain "game" application scenarios. But there aren't really any real games in the cryptocurrency space. The "game" refers to retail transactions. And it's arguably the most valuable use case in the cryptocurrency space. As the report states, even in the current bear market, Pump Fun has been a bright spot for Solana. The team is now focused on improving the mobile experience to make it a mainstream social/transaction app (rather than a cryptocurrency-native desktop terminal).
The perpetual contract market. Solana needs to compete with Hyperliquid in this area. Notably, Solana's most popular perpetual contract DEX (Drift) was attacked on April 1st, with nearly half of its TVL stolen by hackers. This is a significant blow to the ecosystem, as it was already at a disadvantage in its competition with Hyperliquid. This could now open the door for competitors or new builders to launch perpetual contract projects on Solana—something to watch closely.
Introducing traditional finance (TradFi). To become the "Nasdaq of the blockchain," Solana needs Nasdaq assets. This means it needs to attract asset issuers who want to tokenize their assets (stocks, bonds, etc.). Besides regulation, finding an incentive mechanism that works for all issuers is likely the biggest hurdle. This will take time.
To become a leading public blockchain, serving businesses that use stablecoins to build fintech products, especially in emerging markets such as Latin America.
Continue winning the "developer war." Compared to its peers in the crypto space, the Solana Foundation operates more like a well-managed tech company. Therefore, Solana tends to have a stronger developer pool, which it attracts and helps developers join through a global "hacker house" program. Continued organization and investment in this area are crucial to the network's continued success. For reference, Solana's full-time developer base is currently down 32%, while Ethereum's is down 29%.
