SOL Earnings Report Q2 2025

This episode reveals Solana's economic cooldown in Q2, showing how the network's revenue and yield are directly tied to the volatile cycles of DEX trading and memecoin speculation.

Introduction: The Purpose of a Quarterly Report

Moderator Ryan Shan Adams and analyst Mike Nato of The DeFi Report introduce the Solana Q2 Quarterly Report, framed as an "earnings call" for SOL token holders. Mike Nato emphasizes the report's core mission: to provide a clear, objective view of network fundamentals and how on-chain activity translates into value for SOL holders.

• Objective Analysis: The report aims to solve a problem for investors by compiling and interpreting public on-chain data to assess the network's health and token value accrual.
• Data Collaboration: Mike highlights that the data is sourced from numerous providers, including The DeFi Report, Dune, Glassnode, Token Terminal, Artemis, and DefiLlama, to build industry-wide standards for analysis.
• Investor Focus: "We think token holders... need a place to go where they can understand not just the network fundamentals and sort of how value is flowing through the chain but also how that accrues to them as SOL holders." - Mike Nato

Q2 Highlights: A Cooling Off Period

Mike Nato characterizes Q2 as a "cooling off period" for Solana following a record-breaking Q1. The primary theme is a general decline in on-chain economic activity and transaction volumes, which directly impacted key performance metrics for the quarter. This sets the stage for a detailed analysis of a network normalizing after a period of intense speculative fervor.

Operating Performance: Revenue and Yield Analysis

The conversation dives into Solana's core economic metrics, revealing a significant contraction in revenue and the resulting yield for token holders.

• Real Economic Value (REV): This metric combines base fees, priority fees, and MEV tips that accrue to the network. Solana generated $271 million in REV, a sharp 67% decrease from Q1.
  • MEV (Maximal Extractable Value): This refers to the profit validators can capture by reordering or inserting transactions in a block. On Solana, this is primarily captured via Jito.
  • Mike notes that MEV, captured as Jito tips, was the largest contributor to REV at 55%, highlighting the network's reliance on trading-related value extraction.
• Real On-Chain Yield: This is the yield available to stakers derived purely from user activity (MEV and fees), not token issuance. The average real yield was 1% APY, down 54% from Q1, directly reflecting the decline in Jito tips.
• Total On-Chain Yield: This metric combines real yield with rewards from network issuance. The total yield was a more stable 7.9% APY (down 14.5%), as it is heavily subsidized by Solana's issuance schedule, which accounted for 88% of the total yield.

Strategic Implication: The significant drop in REV and real yield demonstrates how sensitive Solana's fee market is to speculative trading volume. Investors should monitor DEX activity and MEV generation as primary drivers of staking returns, separate from the predictable yield from token issuance.

Network Efficiency KPIs

Mike analyzes several key performance indicators (KPIs) that measure the efficiency of Solana's on-chain economy, showing a broad-based slowdown in capital velocity.

• DeFi Velocity: This metric measures the turnover rate of capital within Solana's DeFi ecosystem (DEX Volume / TVL). DeFi velocity fell 42% in Q2.
  • Mike explains that a velocity of 0.4 means roughly 40% of Solana's TVL is turning over daily, a significant drop from Q1 when it regularly exceeded 1.0 (meaning the entire TVL turned over daily). This was driven by volume declines on major DEXs like Radium (-69%) and Orca (-41%).
• Effective Stablecoin Velocity: This shows the turnover rate of stablecoins on the network. It declined by 46%, indicating less frequent use of stablecoins for trading and payments. The total stablecoin supply on Solana also fell by 14%.
• REV per Active Address: This KPI, which measures the network's ability to monetize its users, fell 56% to $0.67 per user for the quarter. This was caused by both the 67% drop in REV and an 11% decline in active users.

Strategic Implication: The decline in velocity metrics suggests a reduction in capital efficiency and speculative interest. For researchers, this data provides a clear signal of market sentiment and the health of the DeFi ecosystem. A rebound in these velocity figures would be a strong leading indicator of renewed growth.

SOL Token Economics: Issuance, Burn, and Dilution

The discussion shifts to the core mechanics governing the SOL token's supply, highlighting the significant impact of protocol changes and vesting unlocks.

• SOL Issuance: Issuance declined by 4.9% in Q2, following a predetermined schedule that reduces the inflation rate by 8% annually. Unlike Ethereum, Solana's issuance is not affected by the amount of SOL staked.
• SOL Burn: The amount of SOL burned plummeted by 88%. Mike attributes this directly to the SIMD-96 protocol upgrade in February, which redirected 100% of priority fees to validators instead of burning 50%.
  • "Previously, before that was implemented, half of those fees were being burned... and then it just dropped off because those priority fees are no longer being burned." - Mike Nato
• Circulating Supply & Net Dilution: The circulating supply grew by 4% in Q2, influenced by unlocks from the FTX estate. The protocol's net dilution rate (issuance minus burn) averaged an annualized 5.2%.

Actionable Insight: With a 5.2% annualized dilution rate and additional pressure from vesting unlocks, holding SOL without staking is highly dilutive. Investors must stake their SOL to offset this inflation and capture network yield, making the choice of validator and liquid staking provider a critical strategic decision.

Network Fundamentals: User Growth and Asset Onboarding

Despite the economic cooldown, Solana's foundational metrics showed areas of both contraction and continued secular growth.

• Daily Active Addresses: The network averaged 4.7 million daily active addresses, an 11% decrease from Q1. This decline is linked to lower DEX volumes and a 27% drop in new token launches on platforms like Pump.fun.
• Real-World Assets (RWAs): RWA value on Solana (excluding stablecoins) grew 24% to $390 million, primarily driven by tokenized U.S. Treasury debt. This indicates growing institutional and user interest in bringing traditional assets on-chain.
• SOL Staked: The amount of staked SOL increased by 1.5% to 390 million, representing nearly two-thirds of the total supply. Critically, 96.6% of this is staked with validators running Jito, a client that enables MEV rewards for stakers.
• Total Value Locked (TVL): TVL grew 30% to $8.6 billion, boosted by growth in protocols like Sanctum and Kamino, as well as a 24% increase in the price of SOL.
• New Trading Tokens: Over 3 million new tokens were launched in Q2, an 18% decrease from Q1. Pump.fun remains the dominant platform, accounting for 87% of this activity.

Strategic Implication: The growth in RWAs and the high staking rate suggest a maturing user base with a long-term conviction, contrasting with the more transient, speculative activity seen in Q1. The dominance of Jito in the staking ecosystem makes it a central and critical piece of infrastructure for any SOL holder looking to maximize yield.

Conclusion: Normalization and Future Catalysts

Solana's Q2 performance reflects a network normalizing after a speculative peak. The key takeaway is the direct link between on-chain economic activity—especially DEX volumes and new token launches—and the value accrued to SOL holders. Investors and researchers should monitor DeFi velocity and memecoin launchpad activity as primary indicators of future revenue growth.