Op-Ed: Solana survived Trump's $70B memecoin tsunami - but exposed critical weaknesses in DeFi infrastructure.
Over the weekend, Trump nearly broke the crypto market with the launch of his $TRUMP memecoin, which soared to $70bn FDV in just 24 hours. The Solana blockchain, which he chose as the home for his token, performed perfectly at first. However, the subsequent launch of the $MELANIA memecoin on Sunday – which itself now sits at an FDV of more than $3bn – really turned the pressure up to eleven.
This was, perhaps, the biggest challenge Solana has faced yet – but, contrary to all the criticism, the blockchain itself performed perfectly. It was the applications on Solana that struggled, and that’s where the focus needs to be if Solana is to become the mass-onboarding blockchain it was originally built to be.
It’s time for the dApps and trading venues to upgrade their technology to be ready for this onslaught of activity, which, I have a feeling, is just around the corner.
A Massive Weekend
So what actually happened on Solana over the weekend?
The surge in trading volumes from the memecoin frenzy resulted in arbitrage bots having difficulty landing transactions after big market orders were executed on-chain, which caused huge market mispricings and price dislocations. Things got pretty wild. Traders could manually buy SOL for $150 on DeFi platforms and then turn around and sell it for $250.
At one point, Coinbase was taking several hours to process transactions on Solana because it simply couldn't handle the increased trading activity on this blockchain.
We saw tweets like this one from Helius Co-Founder @0xMert_ going up calling out Coinbase for its sub-par performance and pointing out that the fault didn't lie with Solana.
But that in itself is nothing new. CEXs have previously done this in response to major trading events on other networks – including Ethereum and even Bitcoin. For example, the launch of Yuga Labs' Otherside NFT project in May 2022 led to temporary ERC-20 withdrawal suspensions, while a BTC surge to nearly $20,000 in 2017 led several exchanges to pause BTC withdrawals.
Getting Ready for Mass Adoption
And really, is it any surprise that the Solana ecosystem struggled? 24-hour DEX trading volume shot up to $10 billion over the weekend, making Solana the first chain ever to hit that milestone and outpacing all other chains combined. Of course, it struggled. What’s important, though, is that Solana itself never went down. The blockchain kept producing blocks throughout the weekend, handling the huge demand pretty well. It experienced no major bugs.
Of course, the congestion did lead to a certain amount of degraded performance. But it was the applications on Solana, like pricing feeds and arbitrage bots, that struggled. It is these dApps that will have to prepare for mass adoption – the blockchain itself is ready. And the upgrades expected in 2025 will only serve to prepare it even further for the mainstream demand that will surely come as soon as a Solana ETF is approved (which will likely be very soon indeed with the new, crypto-friendly US administration in office).
For one thing, we have the Firedancer upgrade going live on the mainnet this year, which promises to handle up to 1 million transactions per second and 50x faster block propagation speeds, which will improve network stability during periods of high demand. It will make Solana far more efficient, enabling it to handle even greater trading volumes in the future.
A Big Test
Last weekend was a huge test for Solana. One that it has been preparing for all of 2024, with the help of the controversial memecoin launchpad, pump.fun, which has been responsible for thousands of token launches a day. Of course, pump.fun currently has a daily trading volume of around $5 billion, while $TRUMP’s 24-hour trading volume hit nearly $40 billion on Sunday. It can be likened to the difference between revising for an exam and actually sitting one. But looking back at this weekend, Solana prepared for its exam well and has certainly passed.
That doesn’t mean there isn’t work to do, however. While $30 billion in trading volume seems sky-high for a decentralized ecosystem, this could become the norm as cryptocurrencies turn mainstream under a friendly regulatory regime. The launch of the $TRUMP and $MELANIA coins on Solana shows that it is the blockchain of choice for anyone looking to enter the crypto space, and I have no doubt both traders and investors will increasingly flock to Solana in Trump’s footsteps. When they do, we have to be ready.
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