This article is from: Forbes
Original Author: Victoria Chynoweth
Solana’s network-wide total value locked (TVL) has recently experienced a frenzy of growth. Since the first week of December 2023, Solana’s TVL has nearly doubled, from $671 million to $1.21 billion, according to DeFillama.
Solana suddenly won back the market’s attention, and Jito’s recent Airdrop can be said to be indispensable. On December 8th, Jito officially launched the Airdrop of its governance Token JTO, and the generosity of the Airdrop made it a hot topic for the entire Solana community.
Let’s take a look at what Jito is and explore the future of Solana.
What is Jito?
While Solana has long been praised for its performance, cost, and more, it has also suffered from a number of security issues throughout its history.
Lucas Bruder, CEO of Jito, once said on the Bankless podcast: "There are a lot of spam transactions on the Solana network, and arbitrage transactions always fail. ”
Since Lucas had anticipated this early on, Jito Labs has been working on a solution since 2021.
Jito Labs began developing an entirely new infrastructure to efficiently extract Maximum Extractable Value (MEV) on the Solana Blockchain. The Jito Solana client was born, and Jito Labs created a Jito Blockchain engine, which Lucas describes as a “Block block builder”.
Lucas explains: "This can be compared to beaverbuild on Ethereum. ”
However, Jito’s goal is not just to extract MEV, but also to efficiently distribute value to stakers.
Jito allows network validators to become contributors to the Jito Network by deciding how much value to allocate to stakers. Jito Network is a new liquidity staking protocol that issues the Liquidity Staking derivative Token JITOSOL with SOL.
Unlike earlier liquidity staking protocols, Jito Network is built on the client side (similar to Prism and Nimbus on Ethereum). Jito itself is a client of the Solana Blockchain and could play a vital role in Solana’s future.
Is the rise in SOL sustainable?
Jito’s Airdrop boosted Solana’s recent strong performance in the secondary market. In addition to the significant increase in TVL, SOL has also soared by more than 800% in 2023, which is far ahead of similar Layer 1 competitors.
Compared to Ethereum (ETH), which has the highest TVL, the price growth of SOL is more pronounced, and ETH, although it also maintained its rally, but only increased by 94% for the year.
It’s not always a good idea to focus solely on TVL, though.
Tushar Jain, a partner at Multicoin Capital, said on the Lightspeed podcast with Blockworks, "TVL gives you a false sense of precision about a metric that can be easily manipulated. ”
Mert, CEO of Helius, agrees with Jain: "I think TVL is a flawed metric… But as more people switch to Solana, TVL will naturally increase. ”
However, there are also some professionals who have a more positive view of the surge in TVL. When asked if Solana’s recent TVL surge was a temporary phenomenon or the beginning of long-term growth, Altcoin Daily co-founder Austin Arnold replied: "Solana has one of the most active ecosystems in the crypto space in terms of decentralization application (DApp) development. People see it as a faster or cheaper version of Ethereum, and Solana offers a better user experience. The more actual Dapp development activity on the Blockchain, the bigger TVL will become, and the bigger the Solana ecosystem will become. ”
Some signs that can be seen at the moment are that while Solana TVL is growing, meme coins built on Solana are also attracting more attention, and the number of Airdrop projects on Solana has also increased.
Is the arrival of Airdrop Hunters good for Solana?
While we can be optimistic about Solana’s growth, we shouldn’t ignore that Crypto Assets is a market full of Airdrop hunters. As Solana grows, more and more Airdrop Hunters are attracted to it, is this really good for Solana? According to Mert, this also seems possible.
"It’s not perfect, but eventually some of those users will choose to stay, and they can help Solana attract more users… In addition, this helps with network stress testing. ”
No one can deny Solana’s recent growth, and as this trend continues, more and more people are beginning to consider the question - will it surpass Ethereum?
Can Solana surpass Ethereum?
Solana is faster and cheaper than Ethereum, so as Solana’s momentum strengthens, it’s natural for someone to start thinking about Solana’s odds of overtaking Ethereum.
While there are many very optimistic assumptions on the market, in this regard, the experts we invited have a more realistic view.
Considering Solana’s advantages of low latency, low fees, etc., Mert noted: “I think Solana can replace Ethereum in some use cases for smart contracts, especially those that require low latency, low fees, etc., but I think both will continue to exist.” ”
Altcoin Daily’s Austin Arnold takes a similar view, but provides a more comprehensive analysis.
"I believe we are now in the first phase of Crypto Assets being adopted and the real winners have yet to emerge. Ethereum is now leading the way because it has better network effects, is also more decentralization, and is more resistant to censorship. However, Solana is faster, cheaper, and has a better user experience. The market will make choices based on its competitive situation, and the key is which Blockchain can improve its flaws faster. ”
What is the future of Solana?
Jito’s Airdrop has clearly had a positive impact on Solana’s ecosystem, and Solana’s rapid rise in TVL is also commendable. However, it is still important to note that there is still a lot of uncertainty in the Crypto Assets market.
In addition, it remains to be seen how JITOSOL can have a long-term positive impact on the Solana ecosystem, which means we can’t ignore the improvement in the fundamentals of the Solana ecosystem due to the arrival of Jito.
Mert believes that over the next five years, Solana can drive the advancement of decentralization computing and become the Blockchain of choice for developers to build applications.
Austin Arnold added: “I think Solana will remain the top five DApp ecosystem in the next five years, development will continue to improve, and users on the network will continue to grow.” As Crypto Assets become more mainstream, the overall network effect will become larger. ”
Solana’s rise in 2023 may be attributed to the arrival of Jito and the improved crypto market environment. However, when the market’s eyes are once again focused on Solana, what exactly will the future hold? Will Jito help Solana catch up with Ethereum? The answers to these questions will be revealed as Solana develops in 2024.
