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News/Solana's Memecoin Woes: 75% Transaction Failures Plague the Network

Solana's Memecoin Woes: 75% Transaction Failures Plague the Network

Van Thanh Le

Apr 5 2024

3 months ago3 minutes read
A cubic-styled robot contemplates the [liquid staking] challenges amidst a swirling digital vortex

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Solana Grapples with Memecoin Mayhem: High Failure Rates, User Frustration, and Community Resilience

Solana, the high-performance blockchain, has found itself at the epicenter of a memecoin-fueled storm, grappling with a surge in transaction failures that has tested the limits of its network. According to data from Dune Analytics, a staggering 75% of transactions on the Solana network were unsuccessful on April 4th, marking a historic peak in network instability.

Dune.png
75.7% of non-vote transactions on Solana have failed. Source: Dune Analytics

The network's woes have been amplified by a flood of user complaints on social media, with Solana users venting their frustration over failed transactions and overall degraded performance. Altcoin Sherpa, a prominent trader, has been vocal about the detrimental impact on Solana's reputation as a user-friendly blockchain.

Mert Mumtaz, the CEO of Helius and a staunch Solana supporter, has offered a different perspective, suggesting that the high failure rate is primarily driven by bot spam, particularly from bots engaged in failed arbitrage attempts. Mumtaz argues that most users would not encounter these issues directly, as wallets typically simulate transactions in advance, warning users of likely failure.

Despite the technical challenges, Solana's market position remains strong, buoyed by its potential for rapid recovery and the unwavering support of its community. However, the network's woes have contributed to a slight dip in the value of SOL, Solana's native cryptocurrency, even as the broader crypto market has experienced growth in recent months.

Fueling the fire, the first quarter of 2024 has witnessed a remarkable surge in the number of new memecoin traders. IntoTheBlock's data reveals a record-high in wallet addresses holding meme-related tokens for less than 30 days, coinciding with significant gains across the memecoin sector. Projects like Book of Meme (BOME) and Dogwifhat (WIF) have delivered average returns of 1,312.6%, captivating the attention of traders seeking life-changing gains.

Anatoly Yakovenko, Solana's co-founder, has acknowledged the network's struggle with large transaction processing failures, noting that while some bugs have been relatively straightforward to fix, addressing the underlying congestion issues poses a greater challenge due to the comprehensive testing and release processes required for network updates.

Solana's development team remains committed to enhancing the network's performance and stability, with upcoming updates and network patches aimed at bolstering its resilience against surges in demand, particularly from the memecoin sector. The Solana community and its developers have demonstrated a steadfast determination to overcome the current limitations, driven by a shared vision of maintaining the network's competitive edge as a high-performance blockchain platform.

Lido Overcomes $24 Million SOL Staking Hurdle: Unlocking Funds and Restoring User Access

Lido Finance, once a prominent player in the Solana staking ecosystem, recently faced a severe technical glitch that barred users from unstaking approximately $24 million worth of Solana (SOL). This predicament stemmed from a faulty smart contract associated with the withdrawal process, a consequence of the platform's decision to cease its SOL staking services in October of the previous year due to unsustainability driven by financial strain and low fees.

As Lido discontinued the webpage facilitating the exchange of the liquid derivative stSOL for SOL in February, a significant volume of tokenized staked Solana (stSOL), specifically $24 million, found itself unintentionally locked on Lido's liquid-staking platform. This issue affected a wide user base, spanning 31,588 holders.

Initially, users were able to unstake their SOL via a user-friendly interface, but after this feature's termination, the only remaining option was the Solana command line interface (CLI), which proved too complex for many, leading to widespread frustration among the community. Complaints surfaced on platforms like Discord, where users described the CLI process as overly complicated for the average individual, with some encountering inscrutable errors despite adhering to Lido's instructions.

The Solscan data reveals the current amount of staked Lido tokens in circulation.webp
 The Solscan data reveals the current amount of staked Lido tokens in circulation.

The underlying cause of the stalled withdrawals was identified by Pavel Pavlov, a product manager at P2P Validator—the team previously managing Lido on Solana. He pointed to issues related to alterations in the Rent-Exempt Split logic within the smart contract's withdrawal process. 

Despite identifying the problem, P2P Validator admitted to having limited ability to rectify the issue unilaterally and sought to engage the Lido DAO for a potential solution, highlighting the complexity and time required to amend the smart contract.

Ultimately, P2P Validator managed to resolve the issue, launching an updated maintainer bot that allowed for the resumption of stSOL withdrawals via CLI, alongside an official guide to aid users through the process. 

This resolution arrives as a relief to affected users, especially in the broader context of Solana's staking landscape, where more than 64% of SOL's total supply, valued at $68 billion, has been staked, with liquid staking protocols accounting for about $3.7 billion of this figure. Leading the pack in liquid staking are Jito and Marinade, with total value locked (TVL) figures of $1.75 billion and $1.20 billion, respectively.

Conclusion

Solana's network is battling transaction failures due to a surge in memecoin activity. Despite addressing the technical challenges, Solana remains optimistic about its future, with its community and developers committed to improving network stability. Lido, a former Solana staking provider, resolved a technical glitch that locked $24 million worth of SOL for its users.

FAQs

1. What caused the recent surge in transaction failures on the Solana network?

A spike in memecoin trading overloaded the Solana network, leading to a historic 75% failure rate of transactions on April 4th. This highlights Solana's challenges in handling high transaction volumes.

2. How did the Lido staking issue affect users?

Lido's decision to halt Solana staking in October 2023 led to a technical glitch that locked $24 million worth of SOL tokens for over 31,000 users. Initially, users could unstake via a user-friendly interface, but its termination forced them to a complex command-line method.

3. How was the Lido staking issue resolved?

P2P Validator, the team previously managing Lido on Solana, identified a problem with the smart contract's withdrawal process. After collaborating with Lido DAO, they launched an updated bot to resume withdrawals and released an official guide to assist users.

4. What is the current state of Solana staking?

Over 64% of Solana's total supply is currently staked, with Lido no longer a participant. Jito and Marinade are the leading liquid staking protocols for Solana, holding a combined value of nearly $3 billion.

This article has been refined and enhanced by ChatGPT.

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