Coinbase: Solana on-chain trading ecosystem profitability is second only to stablecoins and L1 network fees

Meme tokens have been the core narrative of this bull run and are the best performing cryptocurrency sector this year (measured by total market capitalization growth), Coinbase analysts noted in a report released this week. Most of the activity has occurred on Solana, mainly around the growing popularity of pump.fun as the main Memecoin launch platform. To date, more than 3 million tokens have been issued on pump.fun. The dominance of transaction-related activity on Solana is reflected in its contribution to network transaction fees, which account for more than 82% of all non-voting fees paid on the network. In addition to pure network fees, Solana's token issuance and transaction process also captures high value. If the Solana on-chain transaction ecosystem is regarded as an "independent financial category", it is currently ranked third in profitability, second only to stablecoins and Layer 1 network fees. The report states: "Solana's trading-related activities typically account for 75-90% of on-chain transaction fees, which is much higher than other networks such as Ethereum, Base, and Arbitrum. Although L2 solutions have also shown growth and innovation, they generally face different scalability challenges and user fragmentation issues compared to Solana. Solana's fee dynamics and user activity patterns are still unique." In addition, the scale of revenue generated by Telegram trading robots even exceeds that of pump.fun. Photon, Bonkbot, Trojan, and SolTradingBot focus only on the Solana ecosystem, while multi-chain robots such as Maestro and Bananagun also made most of their revenue from Solana-based fees in the past week. The report believes that this shows that a large number of traders on Solana are not very sensitive to execution fees, which may be due to the higher volatility of the underlying assets (and lower liquidity). This fee insensitivity is reflected in the fee-to-volume ratio paid at the pool level of the automated market maker (AMM). In the past week, Uniswap's trading volume on all chains was $14.2 billion, and users paid a total of $11.3 million in fees at an average rate of 0.08%. Meanwhile, Raydium, the main DEX in the Solana ecosystem, had a trading volume of $8.5 billion (40% less than Uniswap), but collected $18.9 million in fees (67% more than Uniswap) with an average fee rate of 0.22%. In other words, in the past week, users paid an average of nearly 3 times more fees on the Raydium pool than on the Uniswap pool.