The Future of Solana’s TVL Is On The Rise With The Release Of Jito

Solana has experienced an insane surge in its total value locked (TVL). The increase was modest at first. However, from the first week of December 2023, DeFillama shows that Solana’sSOL TVL had almost doubled, going from $671 million to $1.21 billion.

This sudden attention to protocols on the Solana blockchain has been attributed to the Jito Airdrop. Jito’s airdrop was atypical, transforming into a symbol for the whole Solana community.

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Let’s take a look at what Jito is and what lies ahead for the Solana blockchain.

What is Jito?

While Solana has been lauded as a good blockchain, it has historically been plagued with a lot of security-related issues.

“There are a lot of spam and arbitrage transactions that are failing on Solana,” said Lucas Bruder, Jito CEO, in a podcast with Bankless.

Because Lucas predicted this would happen, Jito Labs actually started to work on a solution in 2021.

They initiated developing a new infrastructure to efficiently extract the Maximum Extractable Value (MEV) on the Solana blockchain. Thus, the Jito Solana client was born. Jito Labs also created a Jito blockchain engine, which Bruder described as a block builder.

“It’s like a beaverbuild on EthereumETH,” Lucas explained.

However, the purpose of Jito is not only to extract MEV but also to distribute it efficiently among the stakers.

It aims to empower validators to choose how much they want to distribute to the stakers and become contributors to the Jeto network, a novel liquid staking protocol. This network operates the JITOSOL, a liquid staking token.

What makes Jito unique, however, is that it’s stacked upon a client. Similar to Prism and Nimbus on Ethereum, Jito is a client on the Solana blockchain and may play a crucial role in Solana’s future.

Will the Sudden Rise in Solana be Permanent?

The Jito airdrop has allowed Solana to outperform all of its Layer One (L1) rivals by a mile. A massive boost to the TVL aside, Solana has also surged by 800% in its price on the year-to-date chart.

Charts show that SOL has outpaced Ethereum in terms of price growth; Ethereum only has a YTD growth of 94%.

Similar movements can be found on Ethereum’s TVL chart. Solana’s uptick as compared to ETH is huge, even though the TVL of the world’s first altcoin far surpasses that of SOL.

That said, focusing on the TVL alone is not always a good idea.

Speaking to Blockworks on the Lightspeed podcast, Tushar Jain, partner at Multicoin Capital Management, said, “It gives you a false sense of precision on a metric that can be trivially gamed.”

CEO of Helius, one of Solana’s leading RPC nodes, Mert, echoed Jain’s sentiment. “I think TVL is a flawed metric,” he said.

“But I would expect as more usage comes to Solana, the TVL will naturally increase,” the Helius’s CEO added.

However, Altcoin Daily has a more positive outlook toward the TVL surge. When asked whether the surge in the Total Value Locked is momentary or the start of something bigger, Austin Arnold, co-founder of Altcoin Daily replied, “Solana has one of the most vibrant ecosystems in crypto in terms of development on the blockchain and dApps being created. People see it as a faster or cheaper version of Ethereum that also boasts better UI/UX. The more actual building on the blockchain takes place, the larger the TVL will become, and the bigger Solana will be.”

However, even though Solana’s TVL has increased, and even meme coins built on the Solana blockchain, like BONKBONK, have gotten traction, there is one thing that cannot be understated — airdrop farmers have increased on Solana.

Is the Increase of Airdrop Farmers and Sybil on the Solana Blockchain Good for Solana?

While we can have an optimistic view about the growth of Solana, we must remember why it has happened. Jito came as an airdrop. Cryptocurrency is a market full of pseudo-enthusiasts looking for free stuff. Furthermore, Solana is no stranger to Sybil attacks. In August 2022, A DeFi Sybil attack created a $7.5 billion fake TVL from “anon” developers.

So, is the increased number of farmers and sybils a blessing in disguise for the Solana blockchain? According to Mert, it can be.

“Yes, because even though it’s not perfect, some percentage of those users end up being retained, and they also attract other users, plus this helps stress test the network,” he said.

Nevertheless, no one can deny the recent growth in the Solana blockchain. With the pace at which it is surging, it begs the question: Will it surpass Ethereum?

Will Solana Ever Surpass Ethereum?

Solana is faster than Ethereum, and it is cheaper. So, with the recent increase in Solana’s ubiquity, it’s natural to ask if it’s possible for SOL to overtake ETH.

While there are many overly bullish assumptions in the market in this regard, our two experts have a more realistic take on it.

Considering the low-latency and low fee factors that Solana brings, Mert notes, “I think Solana can replace some use cases of Ethereum in the context of smart contracts requiring low latency, low fees, etc., but I think they both will still be around.”

Altcoin Daily’s Austin Arnold is of a similar view, but with a little more comprehensive detail to share.

“I believe we are in the first inning of crypto adoption, and the true winners have yet to be chosen. Ethereum is winning right now because it has a better network effect,” he said. “Ethereum is also more decentralized and more censorship resistant. Yet, Solana is faster, cheaper, and has better UI/UX. The race is on to see which one the market chooses, and which blockchain can improve its faults faster.”

What Lies Ahead for Solana?

The Jito airdrop definitely had a positive impact on Solana’s ecosystem. The rapid rise of TVL is also admirable. However, it is important to note that the crypto market is still in flux.

Also, we have yet to see the long-term positives JITOSOL brings to the Solana ecosystem.

That said, we can’t deny the newfound appreciation the crypto market has for the Solana blockchain due to Jito’s arrival.

In the next five years, Solana could be, “pushing the frontier of decentralized computing and becoming the #1 most-used chain by developers to build fast, delightful apps,” Mert said.

Austin Arnold added, “I see Solana remaining as a top five dApp ecosystem in cryptocurrency in five years. The development will continue to improve. The users on the network will continue to grow. And the overall network effect will get bigger as cryptocurrency becomes more mainstream.”

Solana’s rise in 2023 can be attributed to both the arrival of Jito and the bettering conditions of the crypto market. Nevertheless, the market’s eyes are once again on this L1 blockchain. What does the future hold for Solana? Will the arrival of Jito put it in the same league as Ethereum? Answers to these will likely be revealed as Solana develops in 2024.

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