Summary

At Breakpoint 2023, George Harrap, co-founder of Step Finance, took a critical look at the blockchain industry's current state, focusing on the need to align with reality and understand the foundational data that points to the health and direction of blockchain ecosystems. Harrap provided a comprehensive breakdown of various metrics such as daily active addresses, decentralized finance (DeFi), stablecoin supply, and liquid staking to illustrate the growth and efficiency of blockchains, specifically Solana. Throughout his talk, Harrap highlighted the importance of ecosystem development, community-driven events, and developer engagement, asserting that even in a bear market, the figures tell a story of resilience and expansion.

Key Points:

Understanding the Metrics

George Harrap stressed the importance of developers using accurate terminology and metrics to evaluate blockchain projects' true activity and growth. He pointed out that terms like "daily active addresses" might not always reflect user engagement accurately and should be scrutinized more closely. Harrap further explained the nuances behind Total Value Locked (TVL) as a metric, warning that it should be considered with skepticism since it can be influenced by volatile asset prices instead of actual increases in user deposits or protocol utilization.

DeFi and Stablecoins

Harrap provided insights into the growth of decentralized finance and how tokenization of projects can lead to increases in usage and value. He emphasized the sustained supply of stablecoins, especially on the Solana network, suggesting this signifies a healthy ecosystem resistant to the bear market pressures. Stablecoin retention during downtrends could point to an enduring base for transactional stability and confidence in the blockchain in question.

Decentralization and Validator Networks

Decentralization was a focal point, with Harrap explaining how increasing the number of validators improves network security and resilience. He shared that the Solana blockchain has over 2,000 validators, an indication of a robust and diverse network. Furthermore, Harrap discussed the geographical spread of nodes, stating the importance of strategic geographic placement to maintain network performance.

Developer Engagement and Community Initiatives

Finally, Harrap highlighted the vital role of community initiatives and hackathons in fostering growth within the Solana ecosystem. He cited the impressive number of developer participants and community-led events as an indicator of a booming blockchain community. Additionally, he stressed that broader community involvement and more independent events would benefit the ecosystem, akin to Ethereum's community gatherings.

Facts + Figures

• There are 300,000 daily active addresses on the blockchain; however, the definition of an active address could vary.
• DEX volume and the number of transactions per address are significant metrics to watch.
• TVL has grown, but this might be affected by cryptocurrency price fluctuations rather than true liquidity.
• DeFi has been showing considerable growth, with 11x improvements noted in some projects.
• The supply of stablecoins on Solana has reduced less compared to other blockchains, signifying resilience.
• Liquid staking on Solana is much higher in comparison to Ethereum, though in total value it is lower.
• Money velocity in DeFi and liquidity pool efficiency are higher on Solana, suggesting a more active use of funds.
• Developer activity on Solana is nearing 1,000 contributors, indicating an active and growing ecosystem.
• Georgographically, Solana’s presence is expanding, with a strategic spread of nodes for maintaining performance.
• Over 900 projects emerged from recent Solana hackathons, suggesting substantial community and developer interest.

Top quotes

• "We've got to look at the actual data and what's behind it."
• "TVL can be influenced, of course, by number going up... Does that mean that more people are depositing into your protocol? Maybe, maybe not."
• "We're looking to see how we can continue to decentralize that stake."
• "The more the merrier and the more adversarial the better and the more geographically distributed the better."
• "I think one of my takeaways is the DeFi tokenization versus the NFT landing kind of stuff."
• "Hackathon Ball Market... 907 projects, probably some people in the audience."
• "I dare say the next hackathon is going to crack a thousand."

Questions Answered

What does daily active address mean in the blockchain context?

A daily active address typically refers to a unique wallet address that has engaged in a transaction within a 24-hour period. George Harrap suggests this might not fully capture the essence of user activity as one might consider only fee-paying addresses to be genuinely active. The clarity on this definition is crucial for understanding the true scope of engagement within a blockchain network.

How significant is the Total Value Locked (TVL) metric in assessing a blockchain project?

TVL is a common metric used to gauge the amount of capital committed to the financial products on a blockchain, such as DeFi protocols. While TVL growth can indicate increased interest and investment in a project, Harrap warns it's not a definitive measure of success. This is because TVL can be artificially inflated by rising crypto asset prices, rather than by more users or investments.

Why is the solid supply of stablecoins on Solana significant?

Stablecoins' solid supply on Solana, especially in a bear market, indicates a robust foundation and continued trust in the blockchain's stability and utility. It suggests that users prefer to hold stablecoins despite market downturns, which can help provide a base for recovery and future growth.

What do the number of validators tell us about a blockchain?

The number of validators is a strong indicator of a blockchain's decentralization. The more validators there are, the less likely the network can be controlled or manipulated by a single entity. George Harrap mentioned that Solana has over 2,000 validators, which demonstrates the network's commitment to maintaining a decentralized and secure ecosystem.

What role do hackathons play in a blockchain's development?

Hackathons are crucial in a blockchain's development as they encourage innovation, collaboration, and the birth of new projects. They provide a platform for developers to create new applications, and Solana's history of hackathon participation has shown to offer a progressive development space for the community, with nearly a thousand projects being involved in recent events.