The Bull Case for Solana in 2025: Insights from Ryan Watkins

In a recent episode of the Lightspeed podcast, host Jack Cubanak sat down with Ryan Watkins, co-founder of Syncracy Capital, to discuss the evolving landscape of the cryptocurrency market, with a particular focus on Solana's impressive growth and potential. This in-depth conversation covered a wide range of topics, from the rise of AI agents to the competitive dynamics between different blockchain ecosystems.

Solana's Meteoric Rise

Solana has been making waves in the cryptocurrency world, and for good reason. Ryan Watkins, who had previously written a thesis on Solana's potential, expressed his amazement at how quickly the blockchain has progressed. "I was so impressed by how fast the data has progressed," Watkins noted, highlighting that Solana has surpassed expectations in terms of adoption and usage.

One of the key factors driving Solana's success is its ability to generate meaningful fees while keeping transaction costs low. This has been a point of contention in the past, with critics arguing that Solana's low fees would prevent it from accruing value. However, Watkins pointed out that even with the current level of activity - which he describes as "a rounding error in the global scheme of finance" - Solana is already generating significant fees.

The Data-Driven Approach

Watkins emphasized the importance of looking at the data when evaluating Solana's position in the market. He noted that Solana is dominating across nearly every metric relevant to smart contract platforms. These metrics include:

1. Total fees generated by the system (a combination of transaction fees and MEV)
2. Total revenue of applications built on the platform
3. Stablecoin volumes
4. Decentralized exchange (DEX) volumes

This data-driven approach is particularly compelling because it doesn't require a deep understanding of distributed systems or complex valuation theories. Instead, it presents a clear picture of Solana's growing dominance in the blockchain space.

The Power of Network Effects

One of the most intriguing aspects of Solana's growth is the compounding effect of its ecosystem. Watkins described Solana as a "compounding digital superstructure," likening it to Lego blocks that build upon each other over time. As more assets, applications, businesses, and users join the Solana ecosystem, it becomes increasingly difficult for new competitors to enter the market and gain traction.

This network effect is crucial for Solana's long-term success. Even if a new blockchain were to emerge with marginally better technology, it would struggle to compete with the established ecosystem that Solana has built. Watkins explained, "If someone were to fork Solana today, and this fork Solana has a hundred validators and no assets on it and no users, why would anyone build there? No one would want to do that. It'd be ridiculous to do it."

The Rise of AI Agents

One of the most exciting developments in the Solana ecosystem is the emergence of AI agents. Watkins expressed enthusiasm for this trend, noting that it represents a shift from "financial nihilism" to "financial optimism." He explained that while meme coins might be seen as a form of financial nihilism, AI agents represent a more optimistic and potentially transformative use of blockchain technology.

The AI agent sector on Solana is still in its early stages, having only emerged in the past few months. However, Watkins sees tremendous potential in this space. He explained that these AI agents are essentially a way of "financializing" artificial intelligence, allowing for distributed ownership and on-chain coordination between agents.

Watkins cautioned that the sector is still very young and that investors should focus on the developer ecosystems forming around different agent frameworks and platforms. He noted, "At this point, I mean, look at this stuff every day. I mean, there's so many platforms and frameworks that are coming out, all these different gimmicks of, oh, we have the framework in this language. Oh, well, with our platform, we can do X, Y, Z."

The Future of Smart Contract Platforms

When discussing the competitive landscape of smart contract platforms, Watkins expressed his belief that the sector is unlikely to remain fragmented. While he doesn't necessarily see it as a winner-take-all scenario, he does anticipate that there will only be a small handful of successful platforms in the long term.

Watkins explained that there might be certain trade-offs in the smart contract platform landscape that prevent a single system from encompassing all possible use cases. Additionally, the path dependency of development in parallel ecosystems could lead to a world where multiple platforms, such as Solana and Ethereum, coexist and succeed.

The Bitcoin Question

An interesting portion of the conversation focused on Bitcoin and its role in the evolving cryptocurrency landscape. Watkins expressed skepticism about recent experiments to build more complex applications on top of Bitcoin, citing limitations in expressiveness and scalability.

However, he acknowledged that Bitcoin has found product-market fit as "digital gold" and that this positioning might be sufficient for its continued success. Watkins explained, "It's just found product market fit as this digital gold. And that is what people are eating up, including a trad file like that. If there's buying to these set of digital gold, then digital gold doesn't really do anything. And it does not change and just be safe to use, right?"

Yet, Watkins also raised an intriguing question about Bitcoin's long-term prospects. He wondered if Bitcoin's inability to capture the growing digital economic activity facilitated by more versatile blockchains like Solana and Ethereum might be a "critical misstep" in the long run.

The Importance of Decentralization

The conversation also touched on the concept of progressive decentralization, particularly in the context of emerging platforms like Hyperliquid. Watkins argued that while centralization might be acceptable in the early stages of a project to achieve product-market fit, true decentralization becomes crucial as these platforms begin to handle more serious financial activity.

He explained, "If we really start thinking about this long term, when we're not just, you know, flipping these shitcoins back and forth, but we're actually using these blockchains to settle like serious financial activity, like you have, you know, I don't know, Apple issuing a bond on a blockchain for a hundred billion dollars. And you have governments participating in on-chain finance as well, then, you know, what level of decentralization is necessary?"

Solana's Competitive Advantage

Throughout the conversation, Watkins repeatedly emphasized Solana's strong position in the market. He noted that Solana has achieved product-market fit and is rapidly building a robust ecosystem that will be difficult for competitors to challenge.

Watkins explained, "We're getting to point where we have these established leaders that are really starting to compound growth. And they have this intricate web of assets and users and businesses that are all contributing to this compounding superstructure. And if you have a new blockchain that just doesn't have any usage and doesn't really offer, you know, a 10X improvement in scalability or functionality, then how does this ever go and compete?"

The Role of Speculation in Crypto Adoption

An interesting point raised during the discussion was the role of speculation in driving crypto adoption. Watkins argued that speculation often precedes utility in the crypto space, drawing parallels to earlier cycles in Bitcoin and Ethereum's history.

He explained, "I think that the history of this entire thing we're doing in crypto is speculation preceding utility. I mean, even Bitcoin, what was Bitcoin back in 2011? 2014, all these previous cycles before we had Black Rocks turning into their clients. In a way, it was just a way to get rich."

Watkins suggested that the current speculative activity on Solana, including meme coins and AI agents, serves an important purpose in stress-testing the infrastructure and ensuring its robustness before more critical applications are built on top of it.

The Potential of Decentralized Physical Infrastructure

While much of the conversation focused on financial applications and AI agents, Watkins also touched on the potential of decentralized physical infrastructure (DePIN) projects like Helium. He explained that these projects essentially create markets for physical and digital resources, leveraging blockchain technology to move assets and enforce contractual relationships.

Watkins sees DePIN projects as an example of how blockchain technology can extend beyond purely financial applications, creating new ways to build and manage infrastructure networks.

The Investment Thesis of Syncracy Capital

Watkins provided insights into the investment strategy of Syncracy Capital, the hedge fund he co-founded. He explained that they saw an opportunity in the public markets of cryptocurrencies, particularly in identifying long-term winners that could be purchased at attractive valuations during bear markets.

He noted, "We were starting to see the early signs of long-term winners emerging in select sectors. And you could potentially have the opportunity to buy these in the bear market down 80, 90%. And in fact, get more attractive risk reward on these generational winners, the next fangs of the crypto economy, then you would attempting to buy or invest in another L1 or whatever that is early stage and venture."

The Global Potential of Crypto Protocols

One of the most compelling aspects of cryptocurrency protocols, according to Watkins, is their potential to capture global markets. Unlike traditional companies that might be limited to regional markets, crypto protocols are borderless by nature.

Watkins explained, "Because these protocols are border agnostic, right? And they're not limited to any region. There's no such thing as a regional DeFi protocol or a regional DePIN, you have the opportunity to get like to capture that global TAMs, not just a regional TAMs. So you can get these really big outcomes."

The Evolution of the AI Agent Sector

Watkins provided valuable insights into the rapidly evolving AI agent sector on Solana. He noted that while the sector is still in its infancy, it's progressing at an incredibly rapid pace. "We went from someone connecting a fine-tuned LLM to Twitter and claiming some meme coin that someone greater for it to now agents running in TE and autonomously transacting from private keys and connecting to all social media platforms," he explained.

He also highlighted the potential for this sector to benefit from advancements made by larger AI companies like OpenAI, suggesting that as more advanced models become available, the capabilities of on-chain AI agents could expand significantly.

The Importance of Developer Ecosystems

Throughout the conversation, Watkins repeatedly emphasized the importance of developer ecosystems in determining the success of blockchain platforms and new sectors like AI agents. He argued that at such early stages, the most critical factor to consider is where developers are choosing to build.

This focus on developer activity aligns with Solana's strategy of creating a developer-friendly environment and providing robust tools and support for builders in the ecosystem.

The Potential for Blockchain in Global Finance

Watkins painted an ambitious picture of the future of blockchain technology in global finance. He suggested that in the long term, we could see major corporations and even governments using blockchain for significant financial transactions.

He gave the example of "Apple issuing a bond on a blockchain for a hundred billion dollars" and governments participating in on-chain finance. This vision underscores the potential for platforms like Solana to disrupt and reshape the global financial system.

The Challenges of Scaling and Decentralization

While much of the conversation focused on Solana's strengths, Watkins also acknowledged the challenges that all blockchain platforms face in terms of scaling and achieving true decentralization. He noted that as these platforms begin to handle more serious financial activity, the need for robust decentralization becomes increasingly important.

This discussion highlighted the ongoing balancing act that blockchain platforms must perform, striving to increase scalability and user-friendliness while also maintaining the decentralization that is core to their value proposition.

The Future of Crypto Asset Valuation

Watkins provided interesting insights into how crypto assets might be valued in the future. He suggested that as the crypto economy matures, we might see a shift towards valuing blockchains based on the economic activity they facilitate.

He argued, "Whatever blockchain has the most economic activity denominated in its own base asset should probably be the most valuable blockchain in the world." This perspective could have significant implications for how investors and analysts approach crypto asset valuation in the coming years.

The Role of Meme Coins and Speculation

While some might dismiss meme coins and speculative trading as unserious or detrimental to the crypto ecosystem, Watkins offered a more nuanced perspective. He argued that these activities serve an important function in stress-testing blockchain infrastructure and driving adoption.

He explained, "The meme coins are just a very easy first use case for a chain that enables you to create and trade assets very cheaply and very fast. But it's not the only use case." This view suggests that even seemingly frivolous activity can play a role in the broader development and adoption of blockchain technology.

The Potential of Hyperliquid

Watkins also discussed Hyperliquid, another project that Syncracy Capital has invested in. He explained that Hyperliquid is following a "progressive decentralization" approach, starting with achieving product-market fit before gradually increasing community involvement and decentralization.

He noted that Hyperliquid is currently positioned to compete with centralized exchanges, which is a compelling opportunity in itself. However, he also sees potential for Hyperliquid to evolve and potentially compete with platforms like Solana and Ethereum in the future, depending on how it progresses in terms of decentralization and ecosystem development.

The Importance of Long-Term Thinking

Throughout the conversation, Watkins emphasized the importance of taking a long-term view when considering the potential of blockchain technology and specific platforms like Solana. He argued that while current usage might be dominated by speculative trading and meme coins, the real potential lies in the future when these platforms begin to handle more serious financial activity.

This long-term perspective is reflected in Syncracy Capital's investment strategy, which focuses on identifying potential long-term winners in the crypto space rather than chasing short-term trends.

The Evolving Narrative of Crypto

Watkins provided interesting insights into how the narrative around cryptocurrencies and blockchain technology is evolving. He noted that while Bitcoin has successfully positioned itself as "digital gold," there's an opportunity for smart contract platforms like Solana to position themselves as the foundation for a new digital economy.

This shift in narrative could have significant implications for how these assets are perceived and valued by both retail and institutional investors in the coming years.

The Potential for Disruption in Traditional Finance

While much of the conversation focused on dynamics within the crypto ecosystem, Watkins also touched on the potential for blockchain technology to disrupt traditional finance. He suggested that as these platforms mature and begin to handle more serious financial activity, they could start to challenge established financial institutions.

This potential for disruption underscores the importance of the developments happening in the crypto space, even for those who are not directly involved in the industry.

The Role of Regulation

Although not a major focus of the conversation, the topic of regulation was touched upon. Watkins acknowledged that as crypto platforms begin to handle more significant financial activity, regulatory considerations will become increasingly important.

This highlights the need for platforms like Solana to not only focus on technical development and ecosystem growth but also to navigate the evolving regulatory landscape as they seek to become major players in the global financial system.

The Importance of User Experience

While much of the discussion focused on technical aspects and market dynamics, Watkins also emphasized the importance of user experience in driving adoption. He noted that one of Solana's strengths is its ability to provide fast, low-cost transactions, which contributes to a positive user experience.

This focus on user experience aligns with Solana's goal of becoming a platform that can support mainstream adoption of blockchain technology and decentralized applications.

The Potential for Cross-Chain Interoperability

Although not a major focus of the conversation, the potential for cross-chain interoperability was touched upon. Watkins suggested that while individual platforms like Solana might dominate in certain areas, there could be a future where multiple blockchain ecosystems coexist and interact.

This perspective highlights the potential for a more interconnected blockchain ecosystem in the future, rather than a winner-take-all scenario.

The Role of Institutional Investors

Watkins touched on the increasing interest from institutional investors in the crypto space. He noted that as platforms like Solana mature and begin to handle more serious financial activity, they are likely to attract more attention from traditional financial institutions.

This trend could have significant implications for the growth and legitimacy of the crypto ecosystem as a whole.

The Potential for New Financial Primitives

Throughout the conversation, Watkins hinted at the potential for blockchain technology to enable entirely new financial primitives. From AI agents that can autonomously engage in financial transactions to new ways of structuring and trading assets, platforms like Solana are opening up possibilities that were previously unimaginable.

This potential for innovation underscores the excitement surrounding the development of blockchain technology and its potential to reshape the financial landscape.

In conclusion, the conversation between Jack Cubanak and Ryan Watkins provided a comprehensive overview of Solana's current position in the market and its potential for future growth. From its impressive performance across key metrics to the exciting developments in areas like AI agents and DePIN, Solana appears well-positioned to play a major role in the future of blockchain technology and decentralized finance.

As the crypto ecosystem continues to evolve, it will be fascinating to see how Solana and other platforms navigate the challenges and opportunities that lie ahead. With its robust ecosystem, strong developer community, and focus on scalability and user experience, Solana seems poised to remain at the forefront of innovation in the blockchain space.

Facts + Figures

• Solana is dominating across nearly every metric relevant to smart contract platforms, including total fees generated, total revenue of applications, stablecoin volumes, and DEX volumes.
• Solana's low fees have not prevented it from accruing value, contrary to earlier criticisms.
• The AI agent sector on Solana has emerged rapidly over the past few months, representing a shift from "financial nihilism" to "financial optimism."
• Syncracy Capital, co-founded by Ryan Watkins, focuses on identifying long-term winners in the crypto space that can be purchased at attractive valuations during bear markets.
• Watkins argues that whatever blockchain has the most economic activity denominated in its own base asset should probably be the most valuable blockchain in the world.
• Bitcoin has found product-market fit as "digital gold," but Watkins questions whether this will be sufficient in the long term as more economic activity moves to smart contract platforms.
• Hyperliquid, another project Syncracy has invested in, is following a "progressive decentralization" approach and is currently positioned to compete with centralized exchanges.
• Watkins suggests that in the future, we could see major corporations like Apple issuing bonds on blockchain platforms and governments participating in on-chain finance.
• The current speculative activity on Solana, including meme coins and AI agents, serves an important purpose in stress-testing the infrastructure.
• Solana's ecosystem is described as a "compounding digital superstructure," with network effects making it increasingly difficult for new competitors to gain traction.
• Watkins argues that the crypto industry's history shows a pattern of speculation preceding utility.
• Decentralized Physical Infrastructure (DePIN) projects like Helium are cited as examples of how blockchain technology can extend beyond purely financial applications.
• Crypto protocols have the potential to capture global markets due to their border-agnostic nature.
• The AI agent sector on Solana has progressed from simple Twitter bots to agents autonomously transacting and connecting to multiple social media platforms in just a few months.
• Watkins emphasizes the importance of developer ecosystems in determining the success of blockchain platforms and new sectors like AI agents.

Questions Answered

What is Solana's current position in the smart contract platform market?

Solana is currently dominating across nearly every metric relevant to smart contract platforms. This includes total fees generated, total revenue of applications built on the platform, stablecoin volumes, and decentralized exchange (DEX) volumes. Watkins emphasized that Solana's performance is particularly impressive given that the current level of activity is still "a rounding error in the global scheme of finance."

How does the AI agent sector on Solana differ from meme coins?

The AI agent sector represents a shift from "financial nihilism" to "financial optimism." While meme coins are often seen as purely speculative, AI agents have the potential to perform useful functions and create real value. Watkins explained that these AI agents are essentially a way of "financializing" artificial intelligence, allowing for distributed ownership and on-chain coordination between agents. This sector has evolved rapidly, progressing from simple Twitter bots to autonomous agents capable of complex interactions in just a few months.

Why does Ryan Watkins believe in the long-term potential of Solana?

Watkins sees Solana as a "compounding digital superstructure" that becomes stronger and more difficult to compete with over time. He emphasizes Solana's strong performance across key metrics, its growing ecosystem of applications and users, and its potential to capture a significant share of global financial activity. Watkins also notes Solana's ability to generate meaningful fees while keeping transaction costs low, which he sees as a key advantage over other platforms.

What role do meme coins and speculative trading play in the development of blockchain ecosystems?

While some might dismiss meme coins and speculative trading as unserious, Watkins argues that they serve important functions. These activities help stress-test blockchain infrastructure, drive adoption, and often precede more utilitarian use cases. Watkins explained, "The meme coins are just a very easy first use case for a chain that enables you to create and trade assets very cheaply and very fast. But it's not the only use case." He draws parallels to earlier cycles in Bitcoin and Ethereum's history, where speculation drove initial adoption before more serious use cases emerged.

How does Watkins view the future of Bitcoin in relation to smart contract platforms like Solana?

Watkins acknowledges that Bitcoin has found product-market fit as "digital gold," but he questions whether this will be sufficient in the long term. He suggests that as more economic activity moves to smart contract platforms, Bitcoin's inability to capture this activity might be a "critical misstep." However, he also notes that Bitcoin's positioning as a stable, unchanging store of value continues to attract investors, including traditional financial institutions.

What is the "progressive decentralization" approach, and why is it important?

Progressive decentralization is an approach where projects start more centralized to achieve product-market fit, then gradually increase community involvement and decentralization. Watkins explains this concept in the context of Hyperliquid, another project Syncracy has invested in. He argues that while centralization might be acceptable in the early stages, true decentralization becomes crucial as these platforms begin to handle more serious financial activity. This approach allows projects to balance the need for rapid development and iteration with the long-term goal of creating truly decentralized systems.

How does Watkins see the potential for blockchain technology in global finance?

Watkins paints an ambitious picture of blockchain's future in global finance. He suggests that in the long term, we could see major corporations and even governments using blockchain for significant financial transactions. He gives examples such as "Apple issuing a bond on a blockchain for a hundred billion dollars" and governments participating in on-chain finance. This vision underscores the potential for platforms like Solana to disrupt and reshape the global financial system.

What is the importance of developer ecosystems in the success of blockchain platforms?

Throughout the conversation, Watkins repeatedly emphasized the importance of developer ecosystems. He argued that at early stages, the most critical factor to consider is where developers are choosing to build. This focus on developer activity aligns with Solana's strategy of creating a developer-friendly environment and providing robust tools and support for builders in the ecosystem. The strength of a platform's developer ecosystem can be a key indicator of its potential for long-term success and innovation.