The State Of Solana With Carlos Gonzalez Campo
🎯 Summary
Podcast Episode Summary: The State Of Solana With Carlos Gonzalez Campo
This 48-minute episode of Light Speed features host Jack Cubanek and Blockworks Research analyst Carlos Gonzalez Campo, the resident Solana expert, providing a deep dive into the recent technical upgrades, market performance, and ecosystem health of the Solana blockchain.
1. Focus Area
The discussion centers on the Solana Blockchain Ecosystem, covering recent network health and technical upgrades, DeFi maturity relative to Ethereum, token valuation metrics (like REV), and the strategic implications of major developments like Jito’s Block-building Architecture for MEV (B.A.M.).
2. Key Technical Insights
- Network Capacity Upgrades: Solana has implemented significant upgrades, including Jito’s B.A.M. and an increase in the block compute unit limit to 60 million, with signaling for 100 million CUs soon, aiming to enhance throughput and efficiency.
- Jito’s B.A.M. (Block-building Architecture for MEV): This is described as a consequential upgrade utilizing an encrypted mempool within a Trusted Execution Environment (TEE) to enable private and viable block building. It introduces plugins for custom transaction sequencing, potentially unlocking previously impossible applications like on-chain order books and dark pools.
- Addressing Sandwich Attacks: B.A.M. offers a structural solution to sandwich attacks (front-running/back-running trades) by controlling transaction ordering privately, moving beyond the previous, less effective method of blacklisting malicious validators.
3. Market/Investment Angle
- Price Action & ETH Underperformance: While SOL recently hit highs near $190, the SOL/ETH ratio is at a yearly low (below 0.05), indicating Ethereum has significantly outperformed Solana in the short term, partly driven by the stablecoin narrative and institutional commentary (e.g., Tom Lee).
- REV vs. Price Disconnect: Solana’s Transaction Revenue (REV) dropped in June ($62M), lower than most of 2024, suggesting a decrease in high-urgency trading activity (like meme coin pumps). This raises questions about justifying the current SOL price based solely on this metric.
- DeFi Maturity Gap: Despite technical improvements, Solana’s DeFi ecosystem (e.g., Kamino at $4B TVL) still significantly lags Ethereum’s (e.g., Aave at $50B+ in assets), particularly in stablecoin liquidity and yield-bearing stablecoin issuance.
4. Notable Companies/People
- Jito Labs (Lucas): Central to the discussion regarding the B.A.M. upgrade, which is poised to redefine MEV capture and application design space on Solana.
- Pump: The meme coin project was noted for its recent price action; its low backward-looking Price-to-Sales ratio (3x) was contrasted with declining revenue and market share, suggesting investors are discounting future meme coin activity.
- SVM Chains (Ellipsis Labs/Las, Say/Bullet, Fogo): The proliferation of these application-specific chains built on the SVM architecture is noted, but B.A.M.’s L1 capabilities may erode their primary competitive edge (“we can do this on our chain, but not on Solana L1”).
- Katana (Sponsor): Highlighted as a DeFi-first chain focused on deep liquidity and real yield by redirecting chain revenue to active users.
5. Regulatory/Policy Discussion
The discussion touched on the stablecoin narrative being heavily leveraged by Ethereum, partly due to institutional visibility (like Tom Lee’s appearances). While Solana is technically capable of handling stablecoins, the perception and current on-chain activity (like the Trump meme coin driving USDC bridging) suggest Ethereum still captures the narrative advantage in this area.
6. Future Implications
The future of Solana hinges on its ability to leverage technical upgrades like B.A.M. to unlock new, sophisticated DeFi primitives (like advanced order books) that can compete with centralized exchanges and attract deeper, more “productive” liquidity beyond speculative trading. The success of B.A.M. plugins will determine if Solana can retain native teams currently launching separate SVM L2s.
7. Target Audience
Crypto Professionals, Solana Investors, DeFi Developers, and Blockchain Infrastructure Analysts who need a nuanced, technical, and market-aware update on Solana’s competitive positioning against Ethereum.
Comprehensive Summary Narrative
The podcast provided a comprehensive “state of the union” for Solana, balancing recent price strength with underlying technical shifts and ecosystem maturity challenges. The conversation began by noting SOL’s recent price surge, which paradoxically occurred alongside significant underperformance relative to Ethereum (low SOL/ETH ratio), suggesting the market was pricing in Ethereum’s stablecoin narrative strength.
Carlos Campo highlighted that the recent SOL price strength seemed decoupled from the REV metric, which showed a notable dip in June, likely due to reduced meme coin-driven trading urgency. This prompted a discussion on valuation—whether SOL’s price is justified when core revenue indicators soften.
The core of the episode focused on Jito’s B.A.M. upgrade. Campo explained that B.A.M. is a fundamental architectural shift using TEEs and an encrypted mempool to enable private block building and custom transaction sequencing via plugins. This innovation is critical because it unlocks advanced DeFi use cases directly on the L1, such as private order books and potentially challenging centralized perpetuals exchanges like Hyperliquid. A major implication is that B.A.
🏢 Companies Mentioned
đź’¬ Key Insights
"If they go live later this year, I think that has a lot more potential to attract institutional flows and actually create meaningful buying pressure."
"If the point of Solana is to create these internet capital markets... where anyone can get access to and verify financial services that are happening on blockchain rails instead of traditional financial rails... But that's only unlocked through a world where there are a couple hundred Solana validators, and they're all run by the Coinbases and the Galaxies and the Temporal of the world... Maybe that trade-off is worth it to you if that's what it's going to take."
"Alpen Glow reduces the time to finality a lot, so the time—because you have the optimistic confirmations basically on Solana currently—but with Alpen Glow, stuff is actually finally confirmed on the network 100x quicker is the number that gets thrown around."
"People talk about doubling block space, but I'm more excited actually about reducing latency and eventually decreasing block times below 400 milliseconds. And without B.A.M., I think that's something you can realistically target in the next months after all the B.A.M. goes live."
"These B.A.M. nodes sign an attestation when they schedule a transaction and send it to the validator. They also sign an attestation, and that attestation goes to the entire Solana network for everyone to see with the ordering of transactions. So if the validator that includes that block did not follow that ordering of transactions, then everyone is going to know that they committed potentially a sandwiching attack. So it's kind of this social pressure for validators to actually sequence transactions in the way that B.A.M. nodes transmit those messages or bundles..."
"I think B.A.M. takes a more interesting approach... you have these TEEs, which is sort of an off-chain secure computing environment that allows the B.A.M. nodes to not leak transactions, and so you don't see what's going to be in the Jito bundle... until they've already made it to the blockchain. And so this just allows less time for sandwiching validators to see transactions, which is kind of the whole ballgame."