Solana issued nearly 500,000 tokens in May. Why is SOL so popular?

Author: Tim Copeland, The Block; Compiler: Tao Zhu, Golden Finance

• The number of new tokens on Solana has reached a monthly high not seen on any other chain to date.

• This is largely due to the success of certain memecoins and the ability for anyone to issue tokens in seconds.

Due to the low barrier to entry and the prevalence of the desire to create a popular memecoin, creators launched nearly 500,000 tokens on the Solana blockchain in May.

According to data compiled by The Block Pro, 455,000 tokens were created on Solana in May. In comparison, 177,000 tokens were created on the Ethereum Layer 2 foundation and 39,000 tokens were created on the BNB chain. The Ethereum mainnet and Layer 2 networks Arbitrum and Optimism have each created less than 20,000 tokens.

The number of new tokens launched each month by six blockchain networks. Image source: The Block Pro.

“Solana is designed to be a general purpose Layer 1 with exceptional settlement speeds and high throughput, and very low transaction fees,” said Austin Federa, head of strategy at the Solana Foundation. “The rise of mass token creation on Solana is downstream of these characteristics, making the cost of experimentation and new idea creation close to zero. Tokens on Solana should be as easy to create as content on the internet.”

The majority of Solana tokens are memecoins, as they have captured the attention of the crypto crowd. This trend follows the rapid rise of certain Solana-based memecoins, such as Dogwifhat, Bonk, and Book of Meme, in the crypto market rankings.

Part of this success is thanks to Pump.fun, a website that lets you create tokens in just a few clicks. By making it easier for anyone to issue a token, it has spurred more token creation in the past few months, with Solana issuing 1.1 million new tokens so far this year.

“The memecoin craze coupled with the success of Pump.Fun makes Solana the leading blockchain for issuing new tokens right now,” said Steven Zheng, head of research at The Block Pro. “It remains to be seen whether Solana can carve out a niche for token issuance beyond memecoin.”

Recently, celebrities such as Caitlyn Jenner and Iggy Azalea have launched Solana-based tokens, taking advantage of the fact that these tokens are prone to appreciate in value due to their large audiences.

The launch platform for politically-related memecoins, which have found success ahead of the upcoming US election. Political memecoins have surged in number following Trump’s conviction last week on 34 felony counts of falsifying business records.

From BNB Chain to Base and Solana

For Solana to take the lead in the number of newly created tokens in May, it must first surpass the Base network, which has also been very active in recent months. In April, Base had 240,000 new tokens, while Solana only had 229,000.

Both networks have taken the throne from BNB Chain, which was previously the preferred network for issuing new tokens. In 2021 and 2022, BNB Chain issued an average of 95,000 tokens per month. However, these numbers have been gradually declining since their peak in May 2021.

Overall, 7 million tokens have been issued across the six blockchain networks since 2017. BNB Chain remains in the lead with 3.7 million tokens, followed by Solana with 1.4 million tokens, and Ethereum Mainnet with just under 1 million tokens.

The number of newly created tokens is just one metric to look at in the crypto ecosystem. It is more reflective of cheaper chains with higher throughput. It does not take into account the value accumulated per token. It is also a vanity metric as most tokens lack liquidity and will soon be forgotten.

That being said, it does indicate where activity on a blockchain is occurring. As blockchain networks continue to compete to become faster and cheaper, there is no reason to think that will slow down anytime soon.