Author: Lucas Tcheyan, Vice President of Research at Galaxy Digital;
Translated by: Shaw, Golden Finance
Introduction
Solana's performance in the second quarter continues the trends discussed in our "Q4 2025 Report" and "Q1 2026 Report." Despite a weakening market and a continuous decline in overall on-chain activity, this public chain remains at the forefront of key indicators such as decentralized exchange (DEX) trading volume, application fees, and network fees. (Related Reading: Solana Q2 Report: Trading Volume of Tokenized Assets Doubles, Significant Growth in Non-Speculative Demand)
However, surface data alone is insufficient to fully showcase the transformation Solana is advancing: shifting the on-chain economy from a heavy reliance on meme coin speculation to an infrastructure platform capable of supporting financial activities for a variety of asset classes. Progress is being made across the entire technology stack: the core infrastructure and execution environment of the underlying public chain, the legal and technical frameworks needed to onboard traditional assets, novel trading venues, and decentralized finance (DeFi) integration solutions, as well as applications aimed at reducing user friction and broadening asset participation channels. Solana's differentiated advantages are no longer confined to low-cost, high-throughput transaction execution; they are gradually integrating execution capability, liquidity, distribution channels, and composability. A series of advancements further support the notion that Solana has the opportunity to break away from a single growth path reliant solely on native cryptocurrency speculation.
Yet, the technical supply capacity still outpaces the actual scale of implementation. Most of the tokenized assets on Solana remain idle; the lending market has yet to form sustainable borrowing demand reliant on the continuously growing supply of tokenized assets and stablecoins; and fee revenues remain highly concentrated in meme coin trading. In Q2, Solana continued to lag in the competition in the top independent trading arena: Hyperliquid maintains the deepest perpetual contract liquidity; the wave of predictive markets led by Polymarket and Kalshi mainly occurs outside the Solana ecosystem.
Therefore, entering the second half of 2026, the core question is no longer whether supporting infrastructure is complete, but whether Solana can transform token issuance and asset distribution into sustained demand for collateral usage, borrowing needs, trading activities, and fee income. Progress made in the second quarter strengthens the logic of diversified development; the most important measure for the remainder of 2026 will be whether this diversification transformation can generate substantial economic value.
Network Metrics
Network Performance and Operational Stability
In the second quarter of 2026, Solana's network continued to operate robustly. Throughout the quarter, the median block production time remained stable at the target value of 400 milliseconds, achieving zero downtime for the ninth consecutive quarter. The development team continues to iterate on the Agave client series, steadily improving network stability. The Agave v4.0, which became the recommended version at the end of May, and the Agave v4.1 launched at the end of June, lay the foundation for the next major performance upgrade. The Agave v4.2, scheduled for initial deployment on the mainnet from early to mid-August, includes several important optimizations: an increase in the maximum number of computational units (100 million CU), XDP network optimizations, direct mapping mechanisms, and stronger data recovery mechanisms. The most anticipated change in this upgrade is based on the Solana improvement document SIMD-0525, aimed at reducing block time from 400 milliseconds to 200 milliseconds, with expected confirmation delays halved.
Adjustments to block time will not be implemented all at once, but in phases: in consecutive epochs, the duration will be reduced by 50 milliseconds four times (400 ms → 350 ms → 300 ms → 250 ms → 200 ms); only when the block skip rate remains low will the next phase be pushed forward, with full implementation expected to span the remainder of 2026. Shorter block times will also shorten the window during which a single block producer can control block construction, thereby simultaneously enhancing the network's resistance to censorship.
Non-voting transaction throughput remains consistently within the maximum load capacity of the Solana network, with the median transactions per second (TPS) maintaining the level of thousands; high percentile data only shows sporadic peaks without forming sustained congestion pressure. For most of this quarter, under the current limit of 60 million computational units, block space was sufficient to accommodate all user transactions. On July 30, the Solana mainnet officially activated the SIMD-0286 proposal, raising the block computation limit to 100 million computational units. This marks the second expansion since the limit was raised to 60 million computational units in July 2025.
SOL nominal staking yields fell slightly by about 7% this quarter, continuing the slow decline since the previous quarter.
Inflation-generated revenue still occupies nearly 90% of staking returns, with the maximum extractable value (MEV) and transaction fees constituting only a small remainder; along with a shrinking fee income, the share of real earnings brought by fees further declined in Q2. This situation, combined with the overall weak performance of the native token SOL, forms the core background for advancing deflation proposals in the current governance process (detailed below).
Despite the stability in the client landscape in Q2, with the Agave client developed by Anza R&D labs dominating, the adoption of various clients continues to diversify. Notably, the latest version JitoBAM based on Agave has increased its market share from 28% to 33%. BAM stands for Block Assembly Marketplace, allowing applications to manage transaction ordering through a plugin mechanism (also known as Application Controlled Execution, ACE). With this feature, the general public chain Solana can achieve capabilities previously only available to application-specific chains.
Other Noteworthy Network Developments
Development work continues to advance on the Alpenglow upgrade, with most core tasks focused on meeting prerequisites; meanwhile, discussions on token economics have once again become central governance topics.
Alpenglow Upgrade: Solana's largest protocol upgrade began public testing on May 11. The Anza team deployed this version on the community test cluster and demonstrated real-time migration from the original consensus mechanism. Alpenglow will replace the Proof of History and Tower BFT consensus with a new architecture, reducing transaction confirmation time to around 150 milliseconds, improving final confirmation speed nearly 100 times; it eliminates on-chain voting transactions — a primary source of ongoing costs for validators; introduces a validator access threshold of 1.6 SOL per epoch; the new architecture possesses strong resilience, meaning that even if up to 20% of staked amounts are controlled by malicious nodes or another 20% of staking nodes go offline, the network can operate normally. Relevant prerequisite functionalities have successively integrated into the Agave 4.0 version released in May and the Agave 4.1 version released in June. Agave 4.2 includes Alpenglow code for ongoing community testing, with the goal of officially activating on the mainnet in the Agave 4.3 version scheduled for October.
SOL Token Economic Mechanism: This quarter, SOL prices were weak, prompting more vigorous discussions in the market regarding token economics, with two specific proposals emerging. The SIMD-0550 proposal put forth by Helius aims to double the annual deflation acceleration rate to 30%, bringing forward the timeline for achieving a 1.5% final inflation floor from 2032 to 2029, reducing the future issuance of approximately 18.9 million SOL, but at the cost of accelerating the decline of nominal staking yields. The SIMD-0553 proposal introduced by Temporal involves a dynamic floating resource-based fee that will be permanently burned. Based on current on-chain activity levels, the daily burn scale could reach 7,500 to 9,000 SOL, about 10 times the current burn amount, equivalent to 12%-15% of total daily issuance. SIMD-0550 aims to slow the pace of supply increase, while SIMD-0553 establishes a link between token value and network activity. Both proposals entered formal review and initiated the first round of governance voting on August 3. If implemented alongside SIMD-0123, they will form the clearest reform strategy to date: allowing network income to flow back to SOL holders instead of just block producers.
Multiple Concurrent Proposal Nodes and Quantum Resistance Solutions: At the end of March, Anza released the Constellation plan, introducing a mechanism of multiple concurrent proposal nodes to end the temporary monopoly of transaction ordering by a single block producer and to restrain the maximum extractable value (MEV) arbitrage space. Specific plans and implementation paths are still under discussion, with mainnet launch time yet to be determined. On the other hand, on April 27, Anza and the Firedancer team released post-quantum migration plans. Anza assesses that the probability of encountering a quantum computer capable of cryptographic cracking within the next five years is 3%-5%.
Network Activity
In the second quarter, Solana's decentralized exchange (DEX) trading volume declined by 45%, marking two consecutive quarters of decrease, reaching the lowest level since Q3 2024. In 2026, monthly DEX trading volumes have consistently failed to return to January's peak, continuing to fall; only in June, aided by a revival in meme coin trading ($ANSEM token issuance) and the launch of tokenized assets like SPCX, did trading volume see a month-to-month increase of 20%.
From a quarterly structural perspective, SOL and stablecoin swap transactions still comprise the vast majority of trading volume; meme coin trading accounts for 15%-20%; trading volume for tokenized stocks and cross-chain packaged foreign currency assets fluctuates around 10%.
Critics might cite these data to argue that Solana remains overly reliant on meme coin operations. However, the fact is that a trend has repeatedly shown in Q2: various teams are building the necessary projects and infrastructure for the non-meme coin economic development on-chain. In May, Securitize, Jump Trading, and Solana's super application Jupiter jointly launched what is referred to in the industry as the first full-chain regulatory stock infrastructure. This solution integrates Securitize's broker-dealer and alternative trading system (ATS) with Jump's proprietary automated market maker (PropAMM) liquidity, and Jupiter's distribution channels, enabling asset issuance and settlement to be completed atomically within a single block. In June, Backpack Securities and Sunrise officially launched tokenization services with broker-dealer qualifications. Relevant assets are held as securities according to Section 8 of the New York Uniform Commercial Code, using the same legal framework as accounts with Charles Schwab and Fidelity, supporting cash dividends and corporate action rights. Jito launched its self-custody trading platform JTX, which supports professional order types along with real-world assets (RWA), and opened for early access at the end of June, planning for a formal launch in July. In April, NASDAQ-listed stock Galaxy (GLXY) became the first publicly traded stock to be tokenized on a public blockchain, being brought into the DeFi protocol Kamino through transfer agents Superstate for use as collateral, transforming tokenized stocks from static holdings into active assets participating in DeFi activities.
Currently, Solana possesses the infrastructure foundation to achieve scale for tokenized stocks and foreign assets, breaking free from reliance on meme coins. Throughout Q2, Solana accounted for over 95% of the total market trading of tokenized stocks.
Solana has remained at the top of the decentralized exchange (DEX) trading volume leaderboard for the seventh consecutive quarter, but its market share has slipped by 6 percentage points to 30%, a new low since Q3 2025. This share decline largely aligns with the overall trend of trading volume contraction across the market; other public chains collectively absorbed most of the lost trading volume, primarily due to the smaller base in that group, leading to relatively significant trading volume fluctuations.
Solana's core competitiveness will gradually shift: it will no longer rely solely on being the lowest cost and highest performance trading public chain, but rather on supporting high-quality assets that the market is willing to trade.
Overall, the cryptocurrency industry's on-chain activity remains weak, and the changes in DEX trading volume and market share are limited quarter-on-quarter. Future focal points include: the ongoing transformation of on-chain trading structures and whether Solana can maintain its position as the leading public chain in trading volume. As entry points such as FOMO (Fear of Missing Out) continuously abstract away the underlying complexity, Solana's advantages will increasingly depend on its ability to aggregate quality trading assets, rather than merely serving as a low-cost, high-performance trading infrastructure (the recently launched Robinhood Chain is a typical example of this trend).
Network Fees
In Q2 2026, Solana network fees plummeted sharply, declining approximately 44% quarter-on-quarter. Basic fees and priority fees (tips) have been on a downward trend for several consecutive quarters. Since the peak of network fees in Q4 2024 to Q1 2025, network fees have continuously fallen; at that time, quarterly network fees reached as high as $919 million, with MEV tips constituting over 60% of total revenue. The current fee level is approximately 6% of peak levels, reflecting a significant cooling of the priority fee bidding frenzy driven by meme coins and MEV arbitrage activities since early 2025; this forms the main characteristic of Solana's fee cycle.
The decline in fees is influenced by both cyclical and structural factors. On the cyclical front, trading related to meme coins has continued to cool, with network congestion levels decreasing since early 2025, leading to reduced priority fee bidding and diminished competition for MEV. On the structural front, changes in the structure of on-chain activities also play a role. The trading volumes for tokenized stocks and other real-world asset trades, which drove the increase in June trading volumes, tend to generate less network congestion and aggressive priority fee bidding compared to pure meme coin trading. Coupled with the ongoing enhancement of network efficiency, this means that, at an equal scale of economic activity, the fee income Solana can generate is structurally likely to be lower than the peak levels from previous boom periods.
Solana's market share of network fees decreased from 26.6% in Q1 2026 to 17.3% in Q2, reversing the growth trend from the previous quarter, and falling below the 18.9% level in Q4 2025. This trend aligns with our previous quarterly report's observations: Solana's fee income is highly dependent on speculative trading cycles. In Q2 2026, the entire industry's fee market weakened, and the decline in Solana's fees surpassed the industry average, even though it maintained its leading DEX trading volume position (as noted earlier), its market share still shrank. However, the general trend of declining network fees across the entire crypto space indicates that the fee contraction is a common industry phenomenon and not unique to Solana, but the impact on Solana is more pronounced.
Application Fees
Solana's application fees have declined for the third consecutive quarter, decreasing 31% quarter-on-quarter to $552 million. This current scale is about a quarter of the peak in Q1 2025, which was driven by a speculative frenzy in January 2025 (notably represented by the Trump meme coin issuance), resulting in a 40% quarter-on-quarter increase in fees.
Fee income remains heavily concentrated in meme coin-related activities. Only the meme coin launch platform Pump generated $212 million in fees in Q2 2026, accounting for about 38% of the total application fee income excluding MEV and staking-related revenues. Major applications still consist mainly of launch platforms, decentralized exchange infrastructure, and trading terminals/aggregators. However, positive signs for supporting the diversification of fee income are beginning to emerge. The collectibles market Collector Crypt (similarly highlighted in the previous quarterly report) is a standout example, with fees growing nearly threefold, making it the fifth-largest application this quarter, confirming that the Solana ecosystem can incubate commercially viable projects.
Solana has maintained its number one position in application fee shares across public chains for ten consecutive quarters, a record that has continued since Q1 2024. However, its share has dramatically shrunk from a high of about 48% in Q1 2025 to its latest value of 23%. This trend correlates with the trajectory of network fees: Solana's application layer income is highly tied to the speculative trading cycles that spurred the 2024–2025 market peaks. Meanwhile, the non-meme coin sector has begun showing initial growth points — Collector Crypt fees have nearly tripled, tokenized stocks and RWA infrastructure are gradually taking shape, and the launch of a compliant on-chain stock system all indicate that a more diversified fee income base is being cultivated. Whether this diversified business can counterbalance the impact of the ongoing decline in meme coin activities will determine whether Solana can maintain its leading position in application fees over the next few quarters.
Perpetual Contracts
On the surface, Solana's perpetual contract trading volume surged significantly in Q2 2026, doubling to $111 billion. However, this impressive data is misleading. The increment almost entirely stems from a single trading platform GMTrade, which contributed approximately $90 billion in trading volume, but its open interest remained flat. This characteristic aligns with user behaviors seeking to inflate trading volumes for forex perpetual contract points and airdrop rewards, rather than reflecting real trading demand. Excluding GMTrade data from both quarters, the actual perpetual contract trading volume has decreased by 43%, continuing the downward trend that began in Q3 2025. The decline in trading volume is largely attributed to Drift, Solana's once second-largest perpetual contract platform, which suspended trading after a $285 million exploit on April 1 (the largest DeFi hacking incident of this year) and has yet to substantively resume operations.
However, the quarter was not devoid of positive signals. The newly established perpetual contract platform Phoenix saw trading volume rise 14-fold, approaching $700 million, and open interest expanded five-fold, surpassing $5 million. The platform continues to broaden its trading asset offerings and has introduced "Flight Codes" — a builder code mechanism developed by the platform that allows any applications, trading terminals, or bots to route order flow to Phoenix for a corresponding fee.
Excluding GMTrade, Solana's perpetual contract trading volume and open interest share are both about 1%, with the public chain continuing to be distanced by proprietary trading platforms like Hyperliquid and Lighter. Hyperliquid's recent rise heavily relies on TradeXYZ — as the leading builder in its no-access HIP-3 market, TradeXYZ was the first to list tokenized stocks, indices, commodities, and other non-crypto native assets, while on-chain trading demands continue to shift toward these types of assets. In June, HIP-3's open interest scaled approximately $3.2 billion, several times the overall size of Solana's perpetual contract market. Lighter also finalized cooperation in early July, becoming the built-in perpetual contract service provider within the Robinhood wallet. One increasingly clear point is that ample asset varieties and institutional distribution channels have become essential foundational conditions for a competitive perpetual contract platform.
The growth in Phoenix trading volume, upcoming platforms like Bulk, and the ecosystem's efforts to align with leading platforms like Hyperliquid by enhancing asset coverage, alongside continuous optimizations of front-end products like JTX and Imperial, all constitute favorable factors. However, these alone are insufficient to propel Solana into the top three of the on-chain perpetual contract arena. For example, at the beginning of Q3, Phoenix plans to launch incentive activities that distribute $15,000 in platform rewards daily. Although early-phase activities spurred platform trading volume and open interest to new highs, Phoenix's daily data indicates that active traders are fewer than 1,500, in stark contrast to the 50,000-plus traders on leading platforms like Hyperliquid.
Solana's breakthrough may lie in allowing traders to use the increasingly abundant tokenized stocks on-chain as collateral for perpetual contract positions. Tokenized stock spot, along with the perpetual contracts issued based on these assets, can settle on the same composable public chain — a unique differentiating advantage of on-chain trading platforms. This is also the most viable path for Solana's perpetual contract business to achieve substantial growth.
Prediction Markets
In Q2 2026, prediction markets within the Solana ecosystem remain a small but continually developing segment. Following initial explorations in Q1 leveraging DFlow (the tokenized Kalshi market) and the Jupiter aggregation plan, the trading volume of this segment remains relatively small compared to spot DEX and perpetual contracts. However, this quarter saw further differentiation in products dedicated to general users, event-driven trading, and professional trading scenarios, with continuous establishment of relevant infrastructure.
In June, Jupiter launched Forecast, Solana's first native prediction market. Initially, the product offered a 15-minute cycle cryptocurrency trading market, with competing market makers narrowing the buy-sell spread. Each prediction market issues a unique token for achieving composability. Concurrently, the non-custodial prediction exchange Pascal launched its private testing version, designed for professional traders rather than ordinary speculative users. Pascal employs an off-chain matching engine paired with on-chain settlement, with collateral assets stored within Solana smart contracts, and sets up over-the-counter trading desks to support large negotiated trades. The platform emphasizes transaction execution quality and settlement stability, rather than relying on token incentives to attract users.
Shortly after the close of the quarter, the non-custodial protocol World was officially released on July 1, replacing Kalshi as the built-in prediction market service within Phantom wallet. (Note: This project should not be confused with the similarly named iris scan cryptocurrency project owned by Sam Altman.)
Native prediction market trading volumes still remain low, with the Jupiter and DFlow integration plans dominating, but the overall scale is only in the tens of millions of dollars. Solana's most prominent advantage in this segment remains the public chain's composability. DFlow's mechanism can convert compliant Kalshi positions into SPL tokens (the Solana ecosystem token standard, corresponding to Ethereum's ERC-20), which can be traded, lent, or used as collateral within the Solana DeFi ecosystem—functionality that neither Polymarket's native applications nor centralized exchanges can achieve.
Similar to the perpetual contract segment, Solana is entering this rapidly growing market with a distribution and tokenization infrastructure identity. The outstanding challenge is whether Solana's native trading platform can accumulate its own significant trading volume.
TVL, RWA, and Stablecoins
Solana's total locked value (TVL) has declined for the third consecutive quarter, falling approximately 14% in Q2 to $12.5 billion (partially due to the drop in SOL prices). The public chain's proportion in the total locked value of cryptocurrency assets across the network has fluctuated little, ending Q2 at approximately 7%, remaining relatively stable. This change reflects a general phenomenon of asset shrinkage across the entire market rather than targeted withdrawals of capital from Solana. The decline in locking scale shows a widespread downturn and is not concentrated in specific protocols. On the protocol level, the liquid staking sector (Jito, Marinade, Binance Staked SOL, Sanctum) and the lending/aggregation sector (Kamino, Jupiter, Raydium) continue to form the core pillars of Solana's total locked value.
Stablecoin supplies are continuously expanding, rising approximately 1.9% quarter-on-quarter to a total of $15.6 billion. The proportion of USDC within the stablecoin supply on Solana has drastically decreased, from about 77% in Q1 2025 to less than 47% in Q2 2026, with USDT, USD1, USDG, and PYUSD capturing substantial market share. Solana's share in the global stablecoin market has slightly increased to about 5.0%, remaining roughly stable compared to 4.9% in Q1; globally, TRON and Ethereum continue to dominate.
RWA in the Solana ecosystem continued to expand this quarter, with a scale surpassing $3 billion in June, reaching this milestone for the first time since the mainnet launch. Current RWA accounts for nearly one-fourth of Solana's total locked value (TVL), with a reversal in asset structure. Combining this with the analysis of tokenized stock trading volumes mentioned earlier, publicly listed stocks grew to become the largest single category in Q2, surpassing private credit; bond asset scales remained roughly stable.
However, the majority of asset values remain idle. According to custody data analysis by 21Shares, only about 9% of the tokenized RWA on Solana are utilized in DeFi, serving as trading liquidity or lending collateral; excluding untradeable issuance reserves, this proportion rises to about 16%. Issuance reserves and individual wallets collectively hold over three-quarters of the total amount.
A key step that can allow Solana to form differentiated competitive strength in the RWA segment is to enable these assets to serve purposes beyond simple trading: acting as collateral, supporting lending activities, and achieving yield compounding within the DeFi ecosystem — this is precisely the unique advantage that general public chains have over independent trading platforms.
On the lending application front, Jupiter Lend and Kamino dominate the tokenized stock sub-market, holding about 83% of the tokenized stocks as collateral assets. Stocks are also the assets that Solana users genuinely utilize in DeFi, with well-known targets like QQQx, NVDAx, SPCX, COINx having over 15% to 30% of their circulating supply deployed in the DeFi ecosystem. Kamino also supports other tokenization strategy products. For instance, Apollo’s tokenized private credit fund supports cyclical leverage strategies, allowing holding users to stake assets for loans to amplify returns; over $17 million in assets (including Galaxy stock GLXY) under Superstate has also been stored on the platform as collateral.
Driving the continued growth of RWA adoption, alongside the pursuit of increased market share in perpetual contracts and prediction markets, is Solana ecosystem's core developmental direction for the second half of 2026. Building the infrastructure for asset issuance and initially accumulating trading volume for tokenized stocks is just the starting point. The key to Solana's breakout is to ensure that tokenized assets are not only used for trading but can also serve as collateral, support borrowing, and earn compound interest in the DeFi system; this is the core advantage of general public chains over independent trading platforms. Solana needs to strive to become such an infrastructure layer where various assets can not only be traded but can also interact with the entire DeFi stack in a composable manner.
Conclusion
As the second quarter concludes, Solana's development pathway is becoming increasingly clear, but the thresholds for success have also risen. Continuously optimizing transaction execution, consensus mechanisms, and token economic models can make the network faster, more stable, and better benefit SOL holders through improved distribution mechanisms. However, relying solely on these upgrades is insufficient to determine the next phase of development for the public chain. With block space costs continuing to decline and supply increasingly abundant, Solana's competitiveness will no longer depend solely on native base performance, but more on the assets and liquidity supported by its ecosystem, and the various applications that choose to build their business on it.
As block space costs continue to decline and supply becomes more abundant, Solana's competitiveness will no longer simply rely on underlying native performance, but increasingly depend on the assets, liquidity, and various applications that choose to build their businesses on it.
The opportunities facing the ecosystem lie in growing into a foundational settlement and cooperative layer for a broader on-chain financial system: tokenized stocks, stablecoins, prediction market targets, and various assets will no longer be limited to issuance and trading, but can also be used cyclically for collateral, borrowing, margin trading, and interest growth. Developments in Q2 suggest that the ecosystem is gathering the necessary elements to compete for this positioning. The upcoming test will be whether these segments can form powerful synergies that generate sustainable demand and economic value.
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