This week, Solana has surpassed Ethereum in various performance metrics, yet a new research article raises concerns about the authenticity of this activity. According to a study by the pseudonymous researcher Flip Research, published on July 30, a significant portion of Solana’s activity might be attributed to bots rather than genuine user engagement.
Investigative Findings on Transaction Patterns
Flip Research’s detailed analysis revealed an unusually high number of daily transactions per user on the Solana network. On July 26, Solana boasted an average of 217 transactions per user across 1.3 million active addresses. In stark contrast, Ethereum recorded less than three transactions per user among its 376,300 active participants.
| Metric | Solana | Ethereum |
|---|---|---|
| Daily Transactions/User | 217 | <3 |
| Active Addresses | 1.3 million | 376,300 |
| Total Weekly Fees | $25 million | $21 million |
The findings suggest a massive discrepancy that includes a high amount of Maximal Extractable Value (MEV) and wash trading, which are tactics often used to manipulate trading volumes and extract value from regular users.
In the week ending July 30, Solana’s decentralized exchanges (DEXs) saw impressive volumes, with Raydium leading at $6.078 billion. Orca and Phoenix followed with $3.428 billion and $1.144 billion, respectively. Despite these figures, there is a growing suspicion that much of the transaction volume on Solana DEXs, particularly through Raydium, is driven by bots rather than organic trading activity.
Solana’s DEX Trading Volumes (Past Week)
- Raydium: $6.078 billion
- Orca: $3.428 billion
- Phoenix: $1.144 billion
Suspicious Activity in Liquidity Pools
Flip Research pointed out numerous liquidity pools on Raydium with minimal actual liquidity yet reporting disproportionately high trading volumes. For instance, the FLOG-SOL pool had merely $3 in liquidity but a 24-hour trading volume exceeding $5 million, a clear indicator of potential wash trading and bot manipulation.
Further analysis uncovered over 50 liquidity pools involved in what appeared to be “rug-pull” projects—scams where developers quickly cash out their funds at the expense of other investors—generating around $200 million in trading volume and $500,000 in fees in just a day.
Examples of Discrepancies in Liquidity Pools
- FLOG-SOL Pool: $3 liquidity, $5 million volume
- Project Example: $48 liquidity, $10.8 million volume, 2,845 unique wallets
Flip Research described Solana as the “established ‘memecoin casino,'” attracting users with less sensitivity to price and higher tolerance for risk. This environment, coupled with the prevalent bot activity, makes the platform particularly vulnerable to exploitation by various malicious actors, including MEV bots, serial scammers, and insiders.
In February, the sheer volume of transactions driven by bots pushed Solana’s monthly stablecoin volume to an astonishing $643 billion, primarily through USDC transactions on Phoenix. Although this presented impressive metrics, the underlying health of the network suffered, leading to congestion issues that were only partially addressed by a mainnet update in April 2024.
While automated trading bots have boosted Solana’s apparent success, they simultaneously pose significant risks to the network’s integrity and the security of its users. As the blockchain community continues to evolve, the findings from Flip Research highlight an urgent need for transparency and regulation to mitigate the impact of such automated activities.
Featured image credit: Freepik
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