Jack Kubinec

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In 2023 and 2024, a number of Solana startups <a href="https://blockworks.co/news/jito-airdrop-value">generated native tokens</a> to reward users and let investors and early contributors book returns.



Much of the attention surrounding these tokens went to how lucrative they were for recipients of so-called airdrops — and actual utility took a backseat, especially with a US regulatory regime eager to classify tokens as securities. Now with a <a href="https://blockworks.co/news/washington-dc-blockchain-summit-takeaways">friendlier regulatory outlook</a> and the airdrop flow being stemmed, some are looking to how these new native tokens can become valuable assets.&nbsp;



One such example is early Solana investor Multicoin Capital, which recently published an asset report for JTO, the native token of its portfolio company Jito. Multicoin’s forward-looking base case priced JTO at $6.80, roughly three times its current price. I had the report’s author, Multicoin investment partner Shayon Sengupta, as a guest on the Lightspeed podcast this week to discuss his valuation further.



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“If you assume Solana <a href="https://app.blockworksresearch.com/analytics/solana">REV</a> is going to increase and you assume that demand for priority blockspace is going to increase, Jito is going to be the direct beneficiary of that,” Sengupta said.



That’s likely true. 93% of the Solana network’s stake runs on the Jito-Solana client, which offers off-chain blockspace auctions that maximize economic returns for validators and makes it easier for users to land transactions. Jito tips from these auctions made up around 56% of Solana’s total REV in February. That’s not to mention Jito offering Solana’s largest LST in JitoSOL — a product it seems to be angling to have included in Solana staking ETFs.



What I’m less convinced of is the concept that Jito’s success as a company will trickle down to the JTO token. JTO’s price-to-earnings ratio swung wildly this year when Jito’s revenue greatly increased and its token price stayed roughly the same. That’s probably because there is currently no direct connection between Jito revenue and the JTO token.&nbsp;



The Jito Foundation — which oversees Jito’s stake pool as well as JTO — takes in revenue, but if the foundation were to do things like distribute its revenue to token holders, JTO might start to look uncomfortably like a security. That’s likely part of why the Uniswap Foundation is still yet to distribute fee revenue to UNI holders. Sengupta hinted to me that this may change.



“Our general framing is that as capital markets mature, you end up in a stage where revenues are going to matter,” Sengupta said, vaguely citing “changing policy dynamics” as one potential reason why.



Donald Trump’s presidency has brought previously unheard of legal possibilities to the crypto industry. Can it make native tokens great again?



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Multicoin estimates a 3x for Jito’s token

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Liam Heeger spent two years as a core engineer for Firedancer, the <a href="https://blockworks.co/news/lightspeed-newsletter-solana-firedancer-testnet">high-performance Solana client</a> being written from scratch by Jump. In January, Heeger announced he had left Jump to create his own layer-1 blockchain called Unto. The next day, news broke that <a href="https://blockworks.co/news/jump-sues-former-solana-client-engineer">Jump was suing Heeger</a> for violating his non-compete agreement by working on a new high-performance blockchain.



Jump and Heeger <a href="https://x.com/whosknave/status/1897396270639251537">settled</a> the case in late February, so I was finally able to catch up with Heeger and get more details on Unto. In short, the layer-1 will architect a new virtual machine to try and improve on Solana’s performance by an order of magnitude.



“We tend to agree with [Multicoin Capital managing partner] Kyle Samani. Incremental performance improvements don&#8217;t matter,” Unto co-founder Will Yoo said. “So we&#8217;re gonna need a 10x to be relevant.”



Heeger agreed, but added that he’s “not making any promises.”



Heeger helped push Solana’s virtual machine closer to its limits with Firedancer, but he isn’t building on the SVM partly because Solana “made a lot of design choices that they pivoted on really quickly,” he said. Unto plans to spend a lot of time designing the blockchain before beginning the coding process so that it can avoid some of these same forced pivots.



For that, Unto will likely have to raise more cash at some point. The San Francisco-based startup raised $2.5 million in seed funding from Framework Ventures. Jump’s lawsuit says the raise came at a $50 million valuation.&nbsp;



Heeger didn’t get too specific on how Unto’s new VM might look, but he said it won’t use either traditional proof-of-work or proof-of-stake for consensus. The chain will use a globally distributed validator set, so it will appear similarly to PoS — which is what Ethereum and Solana use for consensus — but Heeger aims to create something different.



“The key issue with proof-of-stake is that it incentivizes operators purely on increasing and maintaining their stake rather than the performance of the network and being an effective operator,” Heeger said.



Heeger also pointed out that in single leader based networks like Ethereum and Solana, the leader has a monopoly on blockspace for as long as they are producing a block. This is undesirable, and competition among block producers would lead to a better user experience, he added.



In any event, it doesn’t sound like Unto plans to do much media and BD in the near future. Over talking numbers or hiring KOLs, the layer-1 is looking to hire additional engineers and wants to prioritize getting some version of its virtual machine in front of people.&nbsp;



“The roadmap is we want to ship stuff,” Heeger said.



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Unto wants to 10x Solana’s performance — but no promises

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Here at Lightspeed, we’re not fans of measuring protocol success by the popular metrics of active addresses or total value locked.&nbsp;



Instead, fees can be a helpful measure for demand for different apps and services. Blockchain addresses and TVL are gameable, but fees are real funds that change hands to do something onchain, at least in theory. So, here are the top 10 Solana protocols this year by fees, based on DeFiLlama <a href="https://defillama.com/fees/chains/Solana">data</a> as of Dec. 27.&nbsp;



<h2 class="wp-block-heading">1. Raydium — $648 million</h2>



It was a banner year for the Solana decentralized exchange, which tapped into the memecoin fever that infected the crypto world for much of 2024. <a href="https://blockworks.co/news/lightspeed-newsletter-raydium-volume-growth">Some accused</a> the app of being a venue where memecoins could create fake volume to appear more legitimate, but the numbers tell a clear story. Raydium brought in quite a bit in fees.



<h2 class="wp-block-heading">2. Jito — $633 million</h2>



Jito’s <a href="https://blockworks.co/news/jito-bundler-breaks">Jito-Solana client</a> made MEV modifications and became a go-to for many validators running Solana’s software. Jito <a href="https://app.blockworksresearch.com/analytics/sol?dashboard=sol-financial">takes</a> 5% of the MEV “tips” that users pay to transact on Solana — which grew to be a huge amount this year as memecoins raised demand to pay MEV tips and land transactions on the blockchain.



<h2 class="wp-block-heading">3. Pump.fun — $308 million</h2>



In less than a year of existence, the memecoin launchpad pump.fun brought in more than $300 million in fees. Read that sentence again. If we learned anything this year, it’s that crypto users really really <a href="https://blockworks.co/news/lightspeed-newsletter-pump-dot-fun-memecoin">like to speculate on tokens</a>.&nbsp;



<h2 class="wp-block-heading">4. Photon — $248 million&nbsp;</h2>



The Solana trading platform Photon also rode the memecoin wave to the tune of a quarter billion dollars. Photon offers memecoin feeds that users can peruse, but its real calling card is speed. Photon <a href="https://x.com/tradewithPhoton/status/1749461331223499228">claims</a> its data comes in 15 times faster than DEX Screener’s, and it offers a “quick buy” function to reduce friction when trading.



<h2 class="wp-block-heading">5. bloXroute — $136 million</h2>



This one was initially a bit of a head-scratcher for me, as I hadn’t heard bloXroute mentioned much in the context of Solana. The infrastructure company offers a blockchain distribution network and trader APIs that are largely marketed as a way for traders to land Solana transactions more quickly.&nbsp;



<h2 class="wp-block-heading">6. Trojan — $121 million</h2>



Trojan offers a popular Telegram bot that lets users create a Solana wallet and buy and sell crypto all within the messaging app.



<h2 class="wp-block-heading">7. BONKbot — $118 million</h2>



The team behind the popular Solana memecoin released BONKbot as a Telegram trading bot that indicated the bear market memecoin’s creators <a href="https://blockworks.co/news/bonkbot-volumes-rise">might have some technical chops</a> too.&nbsp;



<h2 class="wp-block-heading">8. Marinade — $88 million</h2>



Marinade offers the third-largest Solana liquid staking token behind offerings from Jito and Binance. This year, it <a href="https://blockworks.co/news/lightspeed-newsletter-stake-auction-marketplace">debuted “Marinade v2”</a> which brought an auction mechanism to its stake pool in hopes of raising yields and wooing institutions. Some <a href="https://solanafloor.com/news/solana-validators-concerned-marinades-stake-auction-marketplace">accused</a> Marinade of enabling sandwich attackers in the process.&nbsp;



<h2 class="wp-block-heading">9. BullX — $85 million</h2>



BullX is another memecoin trading platform. It markets itself as offering the “fastest indexing,” which is the process of making blockchain data readable — and something <a href="https://blockworks.co/news/sol-demand-cripples-coinbase-indexers">Coinbase has struggled with</a> in recent weeks.&nbsp;



<h2 class="wp-block-heading">10. Kamino — $81 million</h2>



Kamino is a DeFi protocol that ballooned to over $2 billion in TVL in 2024. The app is popular for its borrow-lend feature, causing some to liken it to the Aave of Solana. Notably, Kamino was the home of most of the liquidity incentives <a href="https://blockworks.co/news/kamino-seeing-benefits-from-liquidity-incentives-on-pyusd">doled out</a> to try driving adoption for PayPal’s PYUSD stablecoin on Solana.



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Tracking Solana’s top protocols by fees

<em style="font-size: 16px; white-space: normal; border: 0px solid rgb(229, 231, 235); box-sizing: border-box; caret-color: rgb(55, 65, 81); color: rgb(55, 65, 81); font-family: Soehne, ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Arial, sans-serif; text-align: justify;">This is a segment from the Lightspeed newsletter. To read full editions, <a node="[object Object]" style="font-size: 16px; white-space: normal; border-width: 0px 0px 1px; border-style: none; border-color: rgb(229, 231, 235) rgb(229, 231, 235) rgb(220, 220, 220); border-image: none; box-sizing: border-box; color: rgb(86, 55, 205); font-family: Soehne, ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Arial, sans-serif; text-align: justify;" href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="nofollow noopener">subscribe</a><em style="font-size: 16px; white-space: normal; border: 0px solid rgb(229, 231, 235); box-sizing: border-box; caret-color: rgb(55, 65, 81); color: rgb(55, 65, 81); font-family: Soehne, ui-sans-serif, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Arial, sans-serif; text-align: justify;">.



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Jito, the Solana outfit whose software currently drives a majority of the blockchain’s income, experienced a “system-wide outage” this morning.&nbsp;



The outage affected Jito bundles which process multiple transactions in one go and are popular with traders looking to do things like arbitrage. Jito’s standstill came one day after it processed a record 15 million bundles in one day, shattering its previous high of 13.9 million.&nbsp;



Roughly 90% of Solana validators responsible for running the blockchain make use of Jito’s software, so one immediate concern was whether the Solana network itself would experience an outage. However, bundles are just one piece of the Jito-Solana client. Transactions continued to be processed throughout the outage, Jito co-founder Lucas Bruder <a href="https://x.com/buffalu__/status/1856722608697250112">told</a> me on X.



During what has now been a month of consecutive record-breaking demand for access to the Solana blockchain, Jito and <a href="https://blockworks.co/news/solana-wallets-grass-airdrop">other key pieces of Solana infrastructure</a> have strained to process the load.&nbsp;



Alongside the all-time high in bundles, Jito MEV tips, which are extra fees paid by traders hoping to get their transaction prioritized, are currently roughly double what they were even during the memecoin craze of this summer. Yesterday, users paid some $6.2 million in extra MEV tips to validators.



Jito validators started complaining of performance issues at around 4:00 Wednesday morning, but the outage was declared at 9:30 am, and bundles started working again by 11 am. Solana DeFi protocols Jupiter and Save both had features break during the Jito outage.



Jito made a Telegram <a href="https://t.me/+Kg-WnMfiQJAwZjQx">channel</a> in late October to update customers on its block engine, the piece of software that reorders transactions to order Jito blocks as lucratively as possible. The chat shows Jito has had two other system issues since Saturday.&nbsp;



For some Solana watchers, the incident was an interesting experiment in what the blockchain’s fee markets would do without Jito’s infrastructure. Blockworks Research analyst Dan Smith posted a <a href="https://x.com/smyyguy/status/1856736831917732258">chart</a> showing that during Jito’s outage, the blockchain’s median priority fee briefly jumped. That means that while Jito was down, it essentially became more expensive to land transactions on the blockchain. The median fee went back down when Jito started working again.



“Pretty cool … the theory actually works in practice,” Solana co-founder Anatoly Yakovenko wrote in response. Jito is a bit slower and more reliable than run of the mill transaction fees, Yakovenko added. Some transaction senders pay a premium for this reliability, and this serves to “actually lower the median fees for everyone else,” Yakovenko said.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your morning with the top news and analysis to inform your day in crypto.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
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