Bots Suspected in Solana’s Surge Over Ethereum, Claims Researcher Flip Research

NEW YORK, New York – Solana has recently outperformed Ethereum in key metrics such as daily transactions and decentralized exchange (DEX) volumes. However, a new report by pseudonymous researcher Flip Research, published on July 30, suggests that bot activity, rather than genuine user engagement, might be driving much of Solana’s impressive performance.

Investigating Bot Activity on Solana

On July 26, Solana recorded an average of 217 transactions per user across 1.3 million active addresses, a stark contrast to Ethereum’s fewer than three transactions per user across 376,300 active addresses. Flip Research attributes this discrepancy to high levels of miner extractable value (MEV) and wash trading on Solana, indicating that the network’s bullish narrative might be misleading.

Financial Performance and User Activity

According to Blockworks Research, Solana’s total fees for the week of July 22 reached $25 million, surpassing Ethereum’s $21 million. Solana also led the industry in 30-day DEX volume, with Raydium topping the list at $6.078 billion in trading volume, followed by Orca and Phoenix.

Despite these high figures, the report highlights an unusually high transaction-to-user ratio, likely inflated by non-organic activities such as wash trading and rug pulls. Solana reported 282.2 million transactions versus 1.3 million daily active users, translating to an improbable 217 daily transactions per user. In comparison, Ethereum had 1.1 million transactions versus 376,300 users, or approximately 2.92 transactions per user daily. This significant discrepancy suggests potential manipulation within Solana’s ecosystem.

Artificial Inflation and Network Congestion

Solana’s DEX volumes appear artificially inflated by bots and fraudulent projects. In the past 24 hours on Raydium, there were over 50 rug pulls with a combined volume of more than $200 million and $500,000 in fees. These activities demonstrate a pattern where bots conduct thousands of transactions to create fake volumes before rug-pulling investors.

The pervasive bot activity has also impacted Solana’s network functionality. In February, Solana’s monthly stablecoin volume surpassed $643 billion, driven predominantly by bot transactions on the Phoenix DEX. Although developers addressed network congestion with a mainnet update in April, bot activity remains rampant, leading to many failed transactions. According to Dune Analytics, Solana experienced a peak in failed transactions on April 4, with 75% of non-vote transactions failing.

Community Response and Market Impact

Helis CEO Mert Mumtaz explained that these failed transactions are primarily due to bots spamming the network, resulting in legitimate user transactions being dropped. He noted that simply raising transaction priority fees would not resolve the issue, as spam occurs before the scheduling process.

This recent report quantitatively sheds more light on the allegations of bot activity, which had been speculative before now. Amid these developments, Solana’s native token price has dropped by 4% in the past 24 hours to $178, amidst a broader 3% market decline. The drop followed the SEC’s decision to amend its legal complaint against Binance, which means the court will not rule whether Solana and nine other tokens are securities.

Additionally, the Celebrity Solana meme coin market’s recent dramatic price drops have contributed to the decline. Analysts report that out of 30 celebrity meme coins launched in June, half have plummeted by 99%, seven others are down at least 90%, and even the best performers have seen drops of at least 70%.