Solana aims to create an "on-chain Nasdaq". Where does AI narrative go from here?

Author: Biteye Core Contributor Anci

Editor: Biteye Core Contributor Denise

"The biggest advantage of Solana is its versatility, which allows it to support multiple different types of applications and tracks simultaneously."

——Lily Liu, Chair of the Solana Foundation

Many relationships in the world are like a seesaw. On one side, the price of ETH's tenth anniversary coin is recovering, while on the other side, SOL is feeling a bit anxious – not only is the path of the "Ethereum killer" becoming more difficult, but it has also encountered its own batch of "killers" – which somewhat reflects the idea of the wheel of fortune turning.

However, moderate anxiety is not a bad thing for individuals or projects. For the battle-tested Solana, it is even more familiar to cope with such situations. In this article, we intend to take you through some recent significant moves by Solana and delve into the current landscape of Solana AI, as well as our subsequent views on the AI sector.

01. Official major actions frequently emerge.

1. Alpenglow Upgrade: Replaces SoH, Racing with Faster Speeds and Competitors like SUI

Alpenglow is considered the most significant upgrade to the Solana core protocol to date, comparable in importance to Ethereum's transition from PoW to PoS consensus, as Alpenglow's mission is to replace the existing PoH (Proof of History) and Tower BFT (Tower Byzantine Fault Tolerance) consensus mechanisms.

Why replace the existing formula mechanism?

In the past, PoH did not require timestamp synchronization like other blockchains, and with Tower BFT adopting a "one person packages, others vote" approach, it significantly simplified block synchronization time, allowing Solana to lead all public chains in high performance during its early stages. However, this structure, under high load, causes huge computational overhead due to PoH, combined with the single leader overload issue of Tower BFT, which has led to frequent criticisms of Solana's downtime issues.

In addition, Solana is often criticized for the high operating costs of its nodes, which leads to a lack of decentralization.

How has Alpenglow improved?

In simple terms, Alpenglow removes PoH, a potential power killer, and combines Votor (stake-weighted voting) with node clock processing time order and confirmation, reducing the computational burden on the leader nodes; and addressing the drawbacks of a single leader, it paves the way for future designs, where multiple leaders will propose blocks simultaneously.

Another core component, Rotor, is used to optimize block propagation and synchronization, reducing the block confirmation time from 12.8s to 150ms. At the same time, by reducing the communication overhead and computational burden between nodes, Rotor allows weaker nodes to participate efficiently, achieving "performance upgrades without hardware upgrades."

According to the validator yield calculator from Cogent Crypto, after the implementation of Alpenglow, the minimum staking amount required for validators to be profitable will decrease from 4850 SOL (approximately $800,000) to 450 SOL (approximately $75,000).

Final Expectation

The Alpenglow white paper states: "Alpenglow will be a turning point for Solana; it is not just a new consensus protocol, but a key step for Solana towards competitive strength at the level of internet infrastructure."

In simple terms: faster, more stable, cheaper, more scalable, more decentralized, reclaiming the throne of performance and escaping the nightmare of downtime.

2. ICM Roadmap: Re-optimizing Trading, Continuing the Journey Towards the 'On-Chain Nasdaq'

After announcing the Alpenglow upgrade, Solana Labs, in collaboration with several core development teams within the ecosystem such as Anza and Jito, has released a more detailed "Internet Capital Markets" (ICM) roadmap.

In the past few years, Solana has attracted a large number of users and DeFi market share with its low costs and fast transactions. However, the trading-specific chain Hyperliquid has quickly risen, capturing over 70% of the on-chain contract market. The founder of Hyperliquid has even publicly criticized Solana's speed as "not fast enough." This undoubtedly creates a sense of crisis for Solana.

Is Solana not fast enough?

Currently, the final confirmation time for transactions on Solana takes 12-13 seconds, while the average confirmation time on Hyperliquid is about 0.2 seconds, and the average confirmation time on SUI is 0.5 seconds.

It is expected that after the Alpenglow upgrade, Solana's confirmation time will reach 150 milliseconds, regaining its speed advantage and achieving Visa-level transaction confirmation capabilities, but there is still a gap compared to Nasdaq's "microsecond" high-frequency trading system.

What else besides being faster?

Give more power to dApps on the platform - known as ACE (Application-Controlled Execution) - allowing dApps (smart contracts) to determine the priority of transactions themselves, enabling dApps to be more flexible and powerful when dealing with complex issues.

Protecting market makers and addressing the issue of MEV (such as sandwich bots and other high-frequency arbitrage attacks): Hyperliquid's order matching engine provides higher priority for market maker orders, protecting them from MEV attacks, thus offering better prices to attract retail investors. The roadmap for Solana ICM is similar; through the introduction of BAM and the completion of the Alpenglow upgrade, DEXs within the ecosystem will be capable of addressing the high-frequency arbitrage plague, improving market health and providing better prices for retail investors.

A more grand goal

In addition to aligning Hyperliquid in DeFi, Solana has a grander goal - a true "on-chain Nasdaq" - to help more businesses bypass the complex IPO process and conduct on-chain financing.

Anatoly Yakovenko, co-founder of Solana, recently stated in an interview that he hopes to complete the on-chain integration of traditional financial assets (RWA) within a year, provide compliant and open-source on-chain IPOs for entrepreneurs within five years, and ultimately create an open, low-cost, decentralized internet capital market.

It is grand enough, but it also seems to be the goal of almost all major public chains. Currently, we see Solana continuously striving for reform in various aspects such as underlying architecture, ultimate performance, and application scenarios. However, this strategy will need time and market validation to break through in this highly competitive era.

02, In a tumultuous autumn, how will AI narratives develop?

Public chains usually do not easily change their consensus strategies, just as no one would casually change their nationality or relocate their household registration. Once a change occurs, it is often driven by significant threats.

In terms of trading business on the core chain, whether it is Hyperliquid as a trading-specific chain rapidly eroding Solana's advantages in the DEX perpetual contract market, or the rising star Sui as a general-purpose chain comprehensively catching up in multiple fields such as DeFi and DeAI, combined with hot topics like stablecoins, RWA, and micro-strategies pushing ETH back onto the throne, Solana is feeling considerable pressure, forcing it to accelerate upgrades in an attempt to reverse the situation.

The AI field that Solana prides itself on is also not optimistic. After the previous DePIN and AI Agent MEME craze faded, the Virtuals ecosystem rapidly rose, allowing Base to occupy an absolute advantage in the AI Agent field; the BNB Chain leveraged celebrity effects and exchange resources to divert a large amount of attention away from AI MEME. In terms of decentralized AI infrastructure, the rapid expansion of the Bittensor subnet and the rise of numerous AI Layer 1s are gradually forming a new force in the DeAI field.

For a moment, anxiety seems to have spread to all levels of the Solana chain, but the battle-hardened Solana is clearly not going to give up easily. Currently, the Alpenglow upgrade is expected to bring strong confidence to the ecosystem. At the very least, Solana's officials have shown enough humility and pragmatism, clearly identifying their competitors and gradually addressing their shortcomings, even aiming to become stronger.

Next, let's sort out the AI ecosystem of Solana together and see if Solana's AI narrative can still help it usher in a new round of prosperity.

03, Solana's AI landscape

The development of AI projects on Solana has been so long and the breadth of the track is so wide that it is hard not to be amazed when reviewing them. Here, we can roughly divide the AI projects on Solana into three stages.

Phase One: Early DePIN Ecosystem Explosion, DeAI Budding Growth

The explosive concept of DePIN has made Solana one of the first public chains to explore on-chain decentralized AI. These projects rely on the powerful performance and low cost of the Solana blockchain to build their own decentralized computing power, bandwidth, data, and other networks, laying an early foundation for the Solana AI ecosystem.

In terms of AI computing power networks, early projects like Render, io.net, and Aethir were the first to attempt on-chain decentralized computing power, although their focuses differ.

• Render focuses on rendering tasks for 3D animation and the metaverse, recording the allocation and payment of rendering tasks on Solana, and matching GPU providers with demand through smart contracts.
• io.net primarily provides low-cost decentralized GPU computing power for AI and machine learning, automatically allocating computing power through its own network, with Solana used for settlement of $IO tokens and recording node contributions.
• Aethir primarily optimizes real-time applications such as gaming through edge computing, with its own network allocating computing power to edge nodes, while Solana is used to record transactions and incentivize with the $ATH token.

These projects are among the early explorers of the already saturated decentralized computing network, and as early entrants, they have raised large amounts of financing and are highly regarded by the market. However, these projects typically require high-performance GPUs to participate in the network, which presents a high barrier to entry for ordinary people.

In contrast, the grassroots support for Grass, Helium, Roam, and Gradient Network is relatively better.

• Grass is a decentralized data collection network where users can automatically contribute bandwidth by simply downloading a browser plugin or application, and collect network data through activities like web crawling. Users' contributions are recorded on the Solana blockchain and rewarded with $GRASS.
• The network built by Roam aims to provide seamless and secure global internet coverage through WiFi nodes provided by the community. Users can earn $ROAM tokens simply by providing WiFi coverage or verifying the network in the APP. The project uses Solana for node management and payments.
• Gradient Network is a decentralized edge computing platform where users can simply install a plugin to contribute idle computing resources (such as mobile phones, laptops, etc.) to support scenarios like AI inference, content distribution, and serverless functions. It processes coordination and payments between devices through Solana's on-chain mechanism, ensuring efficient and secure decentralized computing.
• Helium provides Internet of Things and mobile network coverage in a decentralized manner, utilizing Solana to record hotspot data and transactions. Users purchase and deploy Helium Hotspots (hotspot devices, priced around $200-500) to provide network coverage and earn $HNT or $MOBILE token rewards. A more accessible way to participate is by using the phone cards launched by Helium and T-Mobile in the United States, enabling the "network mapping" feature to share anonymous location data to help optimize network coverage, earning Cloud Points or $MOBILE tokens, and trying the phone card for free.

These projects have actively explored the infrastructure field where blockchain integrates with AI (such as bandwidth, data, computing power, etc.), bringing not only immense imaginative space and confidence to the market but also further opening a new chapter for DeAI. Although the token prices of these projects have retreated from their peaks, the network effects are still evident, and many projects have established partnerships with traditional large companies, gaining recognition in the mainstream market.

Phase Two: AI Agent in Full Bloom

With the significant enhancement of LLM capabilities represented by Chatgpt, applications like AI Agents have rapidly developed in the past year. Solana, with its outstanding performance and rich ecosystem, has become one of the first public chains to benefit from the prosperity of on-chain AI Agent tokens and related applications.

• Wayfinder is developed by Parallel Studios (backed by Solana Ventures, whose previous work includes the blockchain game Colony on Solana), simplifying cross-chain operations through AI Agent, enabling easy cross-chain asset transfer across multiple blockchains including Solana, Ethereum, Polygon, and Base.
• ElizaOS is an open-source AI Agent framework that helps developers quickly create, deploy, and manage AI Agents on Solana. These AI Agents can quickly process information, execute trades, and interact with smart contracts, governed by DAO AI16Z. The DAO token $AI16Z reached a market cap of over $2.5 billion, becoming the leading AI token on Solana at one point. However, due to its strong MEME attributes, its value later returned to rational levels.
• Holoworld is a multimodal AI Agent launch platform that allows ordinary people to create, customize, and trade AI Agents, supporting the customization of 3D characters and videos, with all digital asset interactions managed through Solana's smart contracts.
• Moby AI was originally an AI Agent focused on Alpha research and providing real-time cryptocurrency information. It has now launched its own terminal, concentrating on Alpha mining and trading on the Solana chain.
• Hey Anon is a DeFAI protocol deployed on Solana, aiming to simplify DeFi interactions through natural language processing and real-time data aggregation, helping users manage DeFi operations, obtain project updates, and analyze market trends.

In addition, the Solana blockchain saw the emergence of many well-known agents and application projects during the AI boom at the beginning of the year, such as the Agent framework $ARC, $SWARMS, the DeFAI platform $GRIFFAIN, $BUZZ, the AI Agent launcher $HAT, and well-known AI agents $PIPPIN, $ZEREBRO, among others. However, after the tide receded, the prices and popularity of these projects quickly declined, and the development of some projects is in a stalled state.

Stage Three: The Post-Chain AI Era, Taking a More Solid Step Towards On-Chain DeAI

As the market gradually returns to rationality, we notice that a new batch of projects has emerged on the Solana chain, which have washed away the noise of the AI MEME era and are more solidly and feasibly building decentralized AI infrastructure on Solana.

• Nous Research is dedicated to training open-source AI models that can compete with mainstream large models like OpenAI through a decentralized approach. Its core Psyche network significantly reduces the communication frequency between nodes through compression technology, effectively addressing the communication bandwidth bottleneck in decentralized AI training, enabling the network to support AI training scenarios with high computational demands such as LLM pre-training; and records node contributions and completes incentive distribution through the Solana network. Currently, the Hermes series of open-source models based on fine-tuning the Llama model has been launched.
• Arcium was originally a privacy protocol on Solana called Elusiv, which later transformed into a broader privacy computing platform. By using MPC and ZKP technologies, it allows computations on encrypted data without exposing the content of the data, providing protection for user privacy not only in fields such as DeFi and DeSci, but also offering a privacy infrastructure for AI model training and inference, which requires attention to training data privacy, as well as for AI Agent applications.
• Neutral Trade is a hedge fund platform based on Solana that offers various AI-driven quantitative and automated trading strategies. Currently, in addition to the more common quantitative neutral strategies and arbitrage strategies, there is also a well-performing CTA Momentum strategy. This strategy is a multi-asset, high liquidity strategy operated in collaboration with the renowned quantitative company R* Research, with an annualized return of up to 95.11%. The subscription limit of ten million dollars has already been filled.

Although the popularity of Solana AI has declined at this stage, it also has a sense of sifting through the sand. The quality of projects has significantly improved—there is a stronger ability to implement and solve more practical problems—evolving from "dream speakers" to "doers."

04. How do you view the current AI ecosystem of Solana?

From the above rough inventory, we can see that the AI ecosystem on Solana developed early, has a very comprehensive coverage, and its overall strength is still very competitive among existing public chains.

At the same time, many excellent projects have emerged in the Solana ecosystem. For example, Nous Research is dedicated to addressing the challenges of decentralized large-scale training of AI models, Grass collects massive training data through a decentralized network, and Arcium focuses on building privacy infrastructure. These projects often require proprietary chains to support their competitors, yet they thrive on Solana, fully demonstrating Solana's outstanding capacity.

Although the current heat of on-chain AI has been diverted by Base, BNB Chain, and others, the possibility of one chain dominating the AI field in the long term is almost zero. There will be more cooperation than competition between chains. At the same time, with the Alpenglow upgrade, Solana's advantages in the AI field will be further strengthened.

1. Fast and Cost-effective: Speed, throughput, and cost are the most critical factors for on-chain AI projects. Multiple AI Agents need to work closely together and transact under protocols like MCP, and decentralized training and data collection also rely on high-frequency and rapid interactions between nodes. Currently, Solana is very efficient, with confirmation times reduced to 150 milliseconds after the Alpenglow upgrade, further lowering latency and costs, which can better support real-time AI applications.

2. Good liquidity: As the currency of the project, the stability and smooth circulation of AI tokens have a significant impact on the project. Solana's current average daily DEX volume reaches $1.4B, ranking second on the network only after Ethereum, and boasts mature and active DeFi ecosystems like Raydium and Jito, allowing AI projects to easily access stable liquidity pools. After the upgrade, it is expected to attract more market makers, providing deep liquidity to help AI tokens circulate and finance quickly.

3. Smart Contract Support: Solana supports parallel processing and more flexible development languages. Its virtual machine SVM can handle complex logic more efficiently, making it suitable for the more complex on-chain execution required for AI tasks (such as Agent decision-making or data validation). After the Alpenglow upgrade, the contract functionality will be even more powerful and run more stably, making it easier for AI developers to build applications such as prediction markets or automated training.

4. Decentralization: Although Solana has long been criticized for "not being decentralized enough", this is only because it is compared to Ethereum. Its current 2,000+ nodes have already surpassed many popular performance chains and proprietary chains. The Alpenglow upgrade will reduce operational costs, and it is expected that more nodes will join, further enhancing the level of decentralization and strengthening the censorship resistance and global distribution of the AI ecosystem.

5. Ecosystem Collaboration: As a universal chain, the ecosystem on Solana is more complete, diverse, and mature, making it easier for AI projects to collaborate across fields. For example, AI agents can use the DePIN computing power network for seamless interaction with on-chain RWA assets. A comprehensive ecosystem can easily empower AI projects.

05. Written at the end

Being in the crypto space, we are always particularly excited about the birth of narratives and anxious about their demise. Solana, full of memes, is undoubtedly a master in terms of narratives. "On-chain Nasdaq" and AI are undoubtedly his two most important narratives.

The arrival of the Alpenglow upgrade is highly anticipated. At that time, Solana, which once fought Ethereum and the entire Layer 2 ecosystem on its own, will become even stronger. But will it be strong enough to carry these two narratives and compete with more general-purpose and proprietary chains? Perhaps only time will tell.