In recent days, Solana, the Layer 1 blockchain network, has witnessed a decline in the number of daily active addresses, causing some concern among crypto enthusiasts. The drop, however, may not be as alarming as it seems, according to Austin Federa, the acting head of strategy for the Solana Foundation.
Federa emphasized that the decrease in daily active addresses does not necessarily equate to a decline in actual users. He pointed out that the network might have seen a reduction in the presence of bots, which could have been driven by changes in economic incentives and network upgrades implemented earlier in the year.
Additionally, traders who previously relied on multiple bots for activities like arbitrage and NFT minting may now opt to pay priority fees akin to Ethereum, potentially accounting for the drop in active addresses.
Data from The Block’s Data Dashboard reveals that the network’s daily active addresses, measured using a seven-day moving average, declined from over 300,000 in mid-August to approximately 204,000 by the end of the month.
Kevin Peng, a Research Analyst at The Block, echoed Federa’s sentiments, stressing that daily active addresses can be a misleading metric influenced by short-term events. He suggested that transaction fees provide a more meaningful indicator of user activity within a blockchain.
Solana’s Ecosystem Bolster Confidence
Despite the recent decline in daily active addresses, there are reasons for optimism within the Solana community. Visa recently expanded its USDC stablecoin settlement capabilities to Solana, enhancing the protocol’s appeal for digital payments.
MakerDAO co-founder Rune Christensen also expressed confidence in Solana’s technology, calling it “the most promising codebase” for building a new blockchain.
Solana’s integration with e-commerce giant Shopify and the development of its payment system also contributes to a positive outlook. These initiatives could potentially attract more users and merchants to the Solana network.
Looking ahead, Federa hinted at more “payment news” on the horizon, possibly in the coming month. He emphasized the growing infrastructure that enables the creation of user-friendly payment experiences on the Solana blockchain, comparable to popular platforms like Venmo.
While daily active addresses may have dipped momentarily, the network’s long-term prospects remain promising, buoyed by strategic partnerships and a commitment to enhancing user experiences on the network.