It’s A Degen World And Solana Is King Of The Degens
I’m interested things going up and to the right. I want to understand what’s going on. If it’s sustainable. So I went to the first Solana Breakpoint in Lisbon in November 2021, at the peak of the last bubble. I wanted to get a visceral feel for the community that had grown to $70B+ in market cap far faster than anything ever before. Given the massive wealth creation, it wasn’t surprising that it was a big PARTY! I had an awesome time.
But Breakpoint was different from ETHDenver, 2020, the previous ecosystem event I attended (prior to Covid). During ETHDenver 2020, we were at the nadir of that crypto winter. ETH had plunged from $1,366 in January 2018, to $122 . But the strength of the ETH community was viscerally overpowering. The community members who had joined for the money had already left. But even though the ETH community had shrunk, the remaining members were awe inspiring, wildly brilliant people looking to change the world. And they weren’t going anywhere just because the price was down 90%+. It was a community I was proud to be a member of. I became an ETH bull.
But, while I met a lots of smart folks at Breakpoint 2021, I sensed that most of the people I met at were there for the money. And that’s fine. I truly appreciate ALL people in crypto, including those who are here for the money. Some will be hodl, and help build the ecosystem. But most will leave during the inevitable winter to come. And that’s fine, because they contributed to the community by leaving lots of money behind. In my blog post about Breakpoint 2021, I wrote that:
“… if the next crypto winter started tomorrow, I’m pretty sure 95% of the people I met in Lisbon would leave the Solana community. The ones that remained would be awesome, but it wouldn’t be a $70 billion thing. And maybe the facade of a Solana community that I saw in Lisbon can evolve in to something as special as the Ethereum community. So I’m going to continue to observe the Solana community as it evolves.
So I observed Solana from afar. I watched it fall from a peak of $260.06 the day before Breakpoint started in 2021, to a low of $8.14 on December 29, 2022. Then, over the next 10 months, leading up to Breakpoint 2023, as crypto winter faded, and Bitcoin price doubled from it’s lows, Solana was up 4X, to $32.82. Over the next two months, it was up almost 4X again, peaking on Christmas day, 2023, at $125.19.
While I was right about developers leaving the Solana ecosystem in droves during the following crypto winter:
I missed the whole 10-month 15X, because, from afar, I missed three key things:
1. Solana Continued To Innovate & Execute At An Impressive Level
Even as Solana was experiencing a 48% yr/yr decrease in developers in 2023, innovation continued:
- State Compression — A new way to store data directly on-chain that cuts down on cost by magnitudes of scale, was introduced in May. The first use of the technology was compressed NFTs, which saw the costs of minting and storing 1M NFTs on Solana fall from $253,000 to $113.
- Saga — Solana’s flagship web3-native mobile phone came to market in June to underwhelming response. A price drop from $1,000 to $599 in August did little to drive interest. However, as the value of airdrops to Saga started soaring, demand exploded. After the device sold out in December, the price of unopened Saga phones flew past $2k on eBay.
Q4 ’23 saw a slew of meaningful announcements at Breakpoint:
- Firedancer went live on testnet — built by a team at Jump Trading Group, Firedancer will increase validator diversity, which is the key to long-term resiliency and decentralization.
- Render Network migrates to Solana — The leading provider of decentralized GPU based rendering solutions successfully upgraded its core infrastructure from Ethereum to Solana. Render was the 4th best performing ERC-20 token of 2023 and followed fellow DePIN Helium’s migration from it’s own layer-1 blockchain to Solana.
The announcements have continued to flow in 2024:
- Solana Mobile announced plans for a second smartphone following the surprising success of its first smartphone. The new phone, expected in the first half of 2025, will have the same basic features as its predecessor, but at a lower cost of $450.
- Token Extensions —Previously, app devs relied on a mix of ad-hoc protocols, code bases and projects to enable true programmability of digital assets. Token extensions enable devs to now natively access those programmability features, with the ability to decide which features to enable or disable. One extension enables token gated transfers based on KYC identifiers. Another extension enables token issuers to charge transfer fees to better monetize transactions.
2. Solana Rewards The Community (Really Well!) For Engagement
In December 2022, Solana began distributing the Bonk meme coin as a reward for using Solana dApps, joining events, and being active participants in the community. The market cap was still below $10M in mid-October 2023, a few weeks before Breakpoint. A week after Breakpoint, Bonk market cap passed $100M. By December 12th, Bonk had surged to $700M. On Decemebr 13th, Coinbase announced it was listing Bonk, leading to another doubling in value, to $1.4B+. Today Bonk’s market cap is $650M, making it the 3rd most valuable meme coin after doge and shiba inu. . A massive windfall for the community. If you don’t appreciate the importance of meme coins, read “Meme Coins: Social Infrastructure For Crypto” by Meow, the pseudonymous Founder of Jupiter. Per Meow, it turns out “Memes are integral to crypto.”
On December 7th, 2023, Solana DeFi platform, Jito, airdropped 90 million tokens to early users. That airdrop is now worth $160M at it’s current price of $1.85. Jito’s liquid staking protocol uses both staking & MEV techniques to let community members earn money for locking their tokens.
On January 31, the leading liquidity aggregator for Solana, Jupiter, airdroppped one billion tokens to early users. At today’s price $0.54, that represents another $540 million in value provided to the community.
3. It’s A Degen World & Solana Is King Of The Degens
Let’s start with defining “degen”. Per Ledger Academy:
The origin of the term “degen” can be linked to sports betting, where it was used as a shortened form of “degenerate”. Typically used as a derogatory term, it refers to bettors who place large sums of money without the necessary knowledge or expertise to support their bets.
Despite its negative connotations, the term “degen” has been adopted by many in the crypto community as a badge of honor, indicating a willingness to take risks and embrace the industry. They are known to be typically committed to the projects and communities they invest in.
Despite the potential for losses, degens are often seen as passionate and committed members of the crypto community. They may contribute to projects through active participation, offering ideas, feedback, and support to help build up communities.
This tweet by crypto OG Nick Tomaino adds additional insight:
When I went down the crypto rabbit hole in 2013/2014, I looked for the smartest people I could find to teach me. I was fortunate enough to connect with Wences Caseras, “patient zero” for crypto in Silicon Valley, credited by Wikipedia with red pilling “… Reid Hoffman, Bill Gates, and other tech veterans in Silicon Valley.” After our hour long conversation, when Wences knew he had made little progress red pilling me, he gave one final pitch:
“If nothing else, appreciate this about bitcoin. Sure, you could lose 100% of your investment, but you could also make 10000X. It’s the world’s greatest assymetric bet” — Wences Caseras, when Bitcoin when ~ $500
In retrospect, I now appreciate that Wences was the first degen I met.
While there are degens across all areas of crypto, Solana is king of the degens. In retrospect, it secured that status with it’s ~200X return in the year running up to it’s 2021 peak:
It remained king during the 13 month, 97% decline, from it’s the Nov. 2021 high to it’s low the following December. The Solana degens believed in Solana’s tech. They believed in Solana’s community. And they’ve been rewarded for those beliefs.
So, I’m now a Solana bull, because I think we’re still early in this bull run in this degen world, and degens will continue to be well rewarded.
That said, there’s nothing constant but change. Bitcoin used to be the king of degens. Then Ethereum took the crown. Today, it’s Solana. Tomorrow’s king is anyone guess. My current guess of the next king, having just returned from their ecosystem summit in Palo Alto, is Aptos. I think the Move programming language used by Aptos is a thing. More to come on this at a later date.
So long live the degens! We’re the lifeblood of crypto. Embrace us! I look forward to meeting more of my degen brethren in Singapore in September at Solana Breakpoint 2024!
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This content is for educational purposes only. It does not constitute trading advice. The author of this article may hold assets mentioned in the piece.
