VanEck has come forward to defend Solana (SOL) against skepticism, asserting that the network’s structural efficiencies foster both speculative trading and revenue growth, even amid concerns about wash trading.
The firm’s latest analysis indicates that Solana’s robust user engagement and transaction volume stem from its low-cost, high-throughput architecture, despite significant revenues being derived from speculative activity involving memecoins. This response comes amid criticisms suggesting that Solana’s impressive statistics may be artificially inflated due to wash trading practices, leading to doubts about its genuine growth and future prospects.
Mathew Sigel, head of digital asset research at VanEck, emphasized that the chain’s appeal to speculative traders results from its efficient structure, which attracts users more effectively than competing networks.
According to VanEck’s findings, around 14.2% of Solana’s revenue can be attributed to wash trading—where trade volumes are artificially boosted through repetitive buying and selling of the same asset. In contrast, Ethereum’s wash trading volume this year represented only 2% of its revenue.
Sigel remarked, “The design of Solana encourages significant transaction activity, especially among speculative traders, which in turn bolsters its revenue growth.” He also highlighted that VanEck’s SOL exchange-traded product (ETP) prospectus now includes expanded risk disclosures. This addition reflects the firm’s dedication to transparency regarding potential wash trading, market manipulation by large SOL holders, and other associated risks.
Speculative Revenue and Its Implications
VanEck’s report pointed out that over one-third of Solana’s revenue is linked to trading in memecoins and NFTs, which has sparked skepticism among critics. Many believe that a significant portion of Solana’s 111 million active wallets may actually be Sybil accounts—fraudulent accounts created to inflate user metrics.
While analyzing actual user engagement can be complex due to the decentralized nature of blockchain, VanEck argues that Solana’s efficient structure is particularly conducive to high-volume trading. The network’s low transaction fees, which are about one-ten-thousandth of Ethereum’s, create an ideal setting for speculative trading. Additionally, platforms like Pump.fun have contributed to increased memecoin activity on Solana, reinforcing its status as a prominent blockchain for speculative investments.
Despite this focus on speculative trading, the report notes that Solana’s architecture has the potential to support a broader array of applications beyond memecoins, which could enhance revenue diversification and stability in the future.
Looking Ahead
VanEck anticipates that Solana’s transaction metrics will evolve similarly to those of Ethereum, expanding to encompass a wider range of applications, despite its current dependency on speculative memecoins for a substantial portion of its revenue.
The report draws parallels between Solana’s development and the early challenges faced by companies like Alibaba and DraftKings, which were initially scrutinized for their user metrics but eventually transitioned to more diversified revenue streams.
VanEck projects that, like Ethereum, Solana could move away from its reliance on speculative assets, developing sustainable applications in decentralized infrastructure and social media. As the Solana ecosystem matures, the firm believes that its high levels of user engagement may open up long-term growth opportunities that meet investor expectations for a more diversified revenue model.