Howdy!
Welcome back to Lightspeed, where we’re trading memecoins to keep you informed. Is Blockworks the first media company to own BODEN?
Let’s dive into the state of the blockchain.
Inside Solana’s congestion
Much was made of Solana’s dropped transaction problem in early April. The network buckled under a rash of memecoin launches and speculative projects making use of Solana’s low fees. Users encountered slow confirmation times and struggled to get their transactions included in blocks.
On April 15, Solana rolled out a network upgrade it said would “help alleviate the ongoing congestion” on the network. The announcement was met with general “we’re so back” sentiment on X.
Today, top-line numbers still show a high transaction failure rate. According to Blockworks Research, roughly 59% of non-vote transactions still fail. This is fewer than the 75% of transactions that were failing for a couple days in April, but not by much.
Jon Wong, ecosystem engineering lead at the Solana Foundation, told Blockworks that failed transactions amount to business logic in smart contracts failing to execute, as opposed to dropped transactions, which are a symptom of network congestion.
Still, data is just a piece of the story. I decided to test for myself how transactions perform for the average user by conducting real-time transactions on the Solana blockchain.
I turned some Solana into the JitoSOL liquid staking token on Jupiter, then deposited the JitoSOL into a liquidity pool on Raydium. The transactions all landed quickly with network fees under $1. I tried swapping some more SOL for the Jeo Boden memecoin on Raydium. It took a few attempts, but the transaction finally landed on my third try.
Newsletter
Subscribe to Blockworks Daily
I’d give the experience an A- at this point.
Then, I found a dog-themed memecoin on Pump dot Fun and tried buying it with the BONKbot Telegram trading bot. The transaction failed multiple times. “Solana is congested,” BONKbot told me, urging me to up my transaction fee for a better chance of landing a trade. I tried to buy the memecoin directly on Pump dot Fun, but the token crashed to zero as I was setting up the trade. A sign of the times, I suppose.
Some on-chain analysts have claimed that many failed transactions on Solana are due to arbitrage bots spamming the network with trades, and my experience seems to support this argument. For users making only a few transactions per day, the issue may be less significant.
Tom Wan, who works in business development and strategy at 21Shares’ parent company, ran a Dune Analytics query showing that for a week in March, more than 92% of failed transactions were suffered by bots (defined as traders who made more than 5,000 transactions in a day). Still, since bots make many more transactions than non-bots, this statistic isn’t proof that the average user has more success with the blockchain than the average bot.
“[F]ailed transactions are transactions where some business logic in a smart contract failed to execute, e.g., an attempt to arbitrage two markets may fail if the slippage tolerance is too low for the rates available in that particular block. The vast majority of these failed transactions are sent by bots — prototypical extension-based wallet flows would simulate transactions ahead of time before submitting to the chain, whereas a bot is more likely to send the transaction without verifying the execution,” Wong said in a message.
As to a more permanent fix for Solana congestion, Solana Labs has released a few patches since April, but Solana co-founder Anatoly Yakovenko has said a major release takes 30 patches.
Some in Solana are casting their hopes on the Firedancer upgrade, a Jump Crypto-designed validator client meant to increase the network’s throughput. At Solana’s recent Crossroads conference, Yakovenko put 50% odds on Firedancer going to mainnet before the Solana Breakpoint event in September, the Defiant reported.
— Jack Kubinec
Zero In
Solana’s price is sitting at around a monthly high, trading at roughly $180 at the time of publication. The asset climbed 18.5% in the past 7 days, according to CoinGecko. The rally began with Robinhood’s announcement that it would enable Solana staking for EU customers and continued as euphoria stemming from increased ether ETF odds spread throughout crypto markets.
Solana will still need to climb more than 40% to test an all-time high of around $260.
— Jack Kubinec
The Pulse
Back in April 2024, Drift Protocol announced an airdrop to reward its most active users. Eligibility criteria were standard fare, requiring active participation in the Drift protocol, such as trading, staking, and referrals.
However, it quickly became evident that some users were engaging in Sybil attacks. They employed various tactics to create the illusion of legitimate activity across multiple accounts, including funding wallets directly from centralized exchanges to make it difficult to spot Sybil clusters.
To address this, Drift partnered with Allium, a blockchain data platform, to identify and mitigate malicious accounts. Suspected users had their allocations redistributed to allegedly genuine participants, leading to increased rewards for some.
However, many users expressed frustration on X, claiming they were wrongly flagged. “1 wallet, only 1 account created, traded several times, got liquidated and now you call me Sybil […] why?” posted Greatkhing7.
Another user, Jymba_, added, “Can you explain me why using two wallets (Phantom + Backpack) with different addresses for a year+ makes me a sybil?” User Guney.SOL said, “LOL, I got eliminated from the @DriftProtocol airdrop. How is that possible?! I have done real trades and spent more than $200+ on fees, and do you guys think I am a Sybil? Bravo team.”
In response, Drift Protocol set up an appeal page for users to contest their Sybil status, aiming to review and potentially restore allocations for wrongly flagged accounts. The dust has yet to fully settle, but what is clear is that ensuring fairness in token distributions is no easy task.
Drift Protocol’s experience underscores the delicate balance between security and user trust. It also reminds us that innovation doesn’t just happen for the good guys; bad actors evolve their tactics in tandem, and staying ahead requires constant adaptation.
— Jeffrey Albus
One Good DM
A message from Ian Unsworth, co-founder of Kairos Research:
Updated May 23, 2024 at 2:39 pm ET: Modified headline.
Updated May 23, 2024 at 2:12 pm ET: An earlier version of this article mistakenly conflated dropped transactions with failed transactions on the Solana network. This article has also been updated with added comments from the Solana Foundation.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.
The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
- Lightspeed Newsletter
- meme coins
- SOL
- Solana
