TLDR
- Solana surpasses Ethereum in transaction fees from trading (75-90% vs 55-65%)
- Network activity peaks during US Pacific Time Zone hours
- 90% of non-vote transaction fees come from 0.13% of active accounts
- Failed transactions dropped to 26% in Q3 2024, down from 55% in March
- Solana uses instruction-based transactions vs. Ethereum’s sender-recipient model
Solana has emerged as a leader in cryptocurrency trading fees, outpacing longtime blockchain frontrunner Ethereum according to a new Coinbase Institutional report.
The analysis reveals that trading activities on decentralized exchanges (DEX) generate between 75% and 90% of Solana’s transaction fees, compared to Ethereum’s 55% to 65%.
The report, authored by Coinbase Institutional Research Analyst David Han, highlights a clear pattern in user behavior, with peak activity occurring during US Pacific Time Zone hours.
Network usage reaches its highest point at 1:00 PM PT (8:00 PM UTC), suggesting a strong West Coast user base.
Data from the report shows a concentrated distribution of transaction fees across the network. A mere 0.13% of active accounts generate 90% of non-vote transaction fees on Solana, a pattern that mirrors other low-cost blockchain networks.
The growing popularity of Solana’s trading platform stems from its expanding ecosystem. New sectors within the network include an increasing number of memecoins, gaming applications, and Decentralized Physical Infrastructure Networks (DePINs), attracting diverse user groups and trading activities.
Technical differences between Solana and Ethereum emerge as key factors in their respective performance. While Ethereum uses a traditional sender-recipient model for transactions, Solana employs an instruction-based system with multiple executing accounts.
This structural variation provides enhanced security but makes direct comparisons of adoption metrics challenging.
The report indicates major improvements in Solana’s operational efficiency during the third quarter of 2024.
Failed transactions dropped to 26%, marking a substantial improvement from the 55% failure rate recorded in March. This reduction addresses previous user complaints about network reliability.
Trading volumes on Solana-based decentralized exchanges have shown steady growth throughout 2024. The platform’s ability to process transactions quickly and at lower costs has attracted both retail and institutional traders to its ecosystem.
The geographic distribution of network activity presents a striking contrast between major blockchain platforms. While Ethereum’s peak usage aligns with New York trading hours, and networks like Arbitrum and Polygon PoS see highest activity during Asian market hours, Solana’s distinct West Coast concentration sets it apart.
Solana's cohort of users skews heavily towards Pacific Time Zone hours (based on fee spend), peaking at 1pm PDT (8pm UTC).
Meanwhile, BTC, ETH, and Base fees peak with US East Coast market open. Arbitrum and Polygon PoS peak during Asia open. pic.twitter.com/2zR7nTJOmH
— David Han (@0xdavidhan) October 16, 2024
Developer activity on Solana has increased in parallel with trading volume. New projects and applications continue to launch on the platform, contributing to its expanding user base and transaction volumes.
The platform’s fee structure has remained competitive despite increased usage. Low transaction costs continue to attract traders and developers looking for cost-effective alternatives to other blockchain networks.
Recent network upgrades have contributed to Solana’s improved performance metrics. These technical enhancements have helped reduce network congestion and improve transaction processing efficiency.
Trading pairs and liquidity pools on Solana-based DEXes have multiplied over recent months. This expansion provides traders with more options and potentially contributes to higher fee generation.
The concentration of high-volume traders on Solana reflects broader trends in the cryptocurrency market. A small percentage of active traders often accounts for a disproportionate share of transaction volume across various platforms.
The temporal pattern of trading activity suggests professional traders and institutional players maintain a strong presence on Solana.
The alignment with US West Coast business hours indicates a possible concentration of crypto firms and trading desks in this region.
User interface improvements and new trading tools have made Solana’s DEX ecosystem more accessible to traders. These developments have helped maintain steady transaction volumes and fee generation.
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