Summary Solana's price surged nearly 200% and subsequently dropped 55%; this article analyzes if the moves were speculative or fundamentally driven by intrinsic blockchain value. Introduces a macroeconomic framework, calculating Solana’s GDP by combining protocol-generated fees and app-generated revenues, revealing critical insights on network activity. Key findings suggest strong correlations between transactional volume, blockchain revenue metrics, and SOL's price movements—guiding investors on potential future trends. The Economic Pulse of Solana: Price Bubble? Or Deep Value? At the beginning of 2024, Solana USD (SOL-USD) was at a price of $101. Over the past year and part of this year, the asset has appreciated by an incredible 191% since that date, reaching a value of $295 on 20 January 2025. From that peak until today, the asset has depreciated by 55% in just 66 days. As can be seen in the graph below, the fall has been impressive. In this article, we will analyse whether both the appreciation and the fall were due to a purely speculative bubble or whether there was a chink of value in its network. We will dive into the Solana blockchain to shed some light on the latter. We will also try to give our view on the asset for the short/medium term. Price Evolution (TradingView) Framework: Solana's GDP Explained in Depth Solana GDP is calculated in a similar way to a country's GDP, consisting of two main components: Protocol GDP: Composed of base, priority and voting fees, as well as native currency issuance as a reward for staking and Jito Tips, which are additional fees to prevent MEV (Maximum Extractable Value) attacks. This data is obtained through specific platforms such as Solana Explorer, which provides accurate and up-to-date details on each metric. Application GDP: Includes revenue generated by decentralised applications in sectors such as DeFi, wallet-to-wallet payments and sector-specific applications. Tools such as Token Terminal and DeFiLlama provide detailed tracking, allowing you to quickly identify changes in usage and monetisation trends for specific applications. This detailed breakdown enables an accurate and timely reading of the economic health of the network, facilitating informed investment decisions. GDP Guide (Node Analytica) Once we are clear on the calculation methodology, we will begin to analyse the results by four-month period. 2024 Analysis: Correlation Between GDP Metrics and SOL Price Movements A quarterly statistical analysis performed on data taken from Token Terminal shows a clear correlation (spearman correlation coefficient 0.76, statistically significant at p The following image shows the results for the first four-month period of 2024, broken down between the GDP of the protocol and the GDP of applications. We can see that the predominant value is the issuance of native currency, which is normal in networks with the Proof of Stake concept. In the applications subgraph, the 'Wallet to Wallet' sector generates $40 million for the network. GDP - Q1 2024 (Node Analytica) In the second quarter data, we see a remarkable growth in the two GDP metrics. On the one hand, Protocol GDP increases to $2.59bn, mainly due to a clear increase in the amount of native currency blocked. On the Applications GDP side, we see a remarkable increase in the DeFi sector (Raydium, Meteora, Pumpfun.com) of more than 100%. It goes from $33 million to almost $78 million in a single quarter. GDP - Q2 2024 (Node Analytica) Price Evolution (TradingView) Let's look at the third quarter now. At the price level, the asset has been in a fairly wide range, but has ended up moving upwards by about 5%. On the GDP metrics, there is a very significant decrease in the total value of Solana issued, probably produced by a decrease in the amount locked in to secure the network. On the application side, we see clear declines in sectors such as DeFi and Wallet to Wallet. GDP - Q3 2024 (Node Analytica) Price Evolution (TradingView) Looking at the last quarter, we see very interesting facts. The GDP of the protocol increases from $1.11 bn to $2.38 bn with the doubling of all its main components. Jito Tips grew by 400% compared to the previous quarter. Fees double for base and voting fees. Priority fees also grew by 400%. In terms of protocol metrics, DeFi and Untagged Applications grew by almost 470%. On a price level, the asset appreciates by 50% over the quarter, but peaks at 80% in just 3 months. This is for me a first indication that when transaction fees, Jito Tips and especially application transaction fees increase massively, the value of the asset appreciates accordingly by an increase in its transactional velocity. Value moves! By closely monitoring these metrics, we can anticipate sharp market movements both upwards and downwards. If the data reflects these kinds of increases, it is because users are demanding more of the native asset, which is necessary to interact within the network, with any application that is based or runs on top of it. It could be seen as economies of scale when such increases in smart contract interactions are deployed on the network. GDP - Q4 2024 (Node Analytica) Price Evolution (TradingView) Current Outlook - What to expect in 2025? We will now analyse the performance of the asset in terms of price and metrics for the year 2025. As mentioned at the beginning of this article, the price has fallen 55% from its all-time high. In terms of metrics, we see that all but the Solana issue value have fallen considerably. This leads us to a clear reflexive conclusion, when fees and application metrics increase very significantly, the issuance value of the coin is reduced because the different agents prefer to sell their assets or move them to other applications because the opportunity cost of leaving them blocked to validate the network is greater than the profitability they could achieve with their asset in another type of application. For me, a big component of price evolution (not counting exogenous variables such as Bitcoin, macroeconomics, or global economic cycles) is the formation of behavioural cycles. If the locked-in monetary value, reflected by the issuance of native currency, rises sharply, it means that hard times are coming for the asset. If, on the other hand, that value decreases (note that it will never decrease that much because the price itself influences that value) and application activity increases considerably, the asset will certainly appreciate. Using historical trends and current GDP trajectories, we propose these scenarios for 2025: Bullish Scenario: If DeFi revenues roughly double to $150 million in Q2 2025 and issuance remains stable, a realistic target price would be between $350-$400 per SOL. Bearish Scenario: If application revenues stagnate or fall below $50 million quarterly, and issuance increases significantly, downward pressure towards $120-$150 levels could be expected. Solana's price movements reflect real economic value, closely tied to network GDP metrics. Investors should use this framework to overcome speculative noise by strategically positioning themselves based on clear data-driven signals. GDP - Q1 2025 (Node Analytica)
