Uncovering the truth behind Solana data misconceptions

Author: Riyue Xiaochu Source: X, @riyuexiaochu

Clarification of Misunderstandings in Data Analysis

When analyzing data, especially when it comes to data in the financial and cryptocurrency fields, it is crucial to understand the dimensions and context of the data. This article is mainly to clarify some of the panic caused by data misunderstandings, especially about the inflation and financial status of Solana (SOL).

1. Clarification on inflation

The original text mentioned that Solana issued 60 million SOLs worth $8.4 billion last year and dumped them into the market. However, this explanation is somewhat misleading because it ignores the real source of the new circulation. In fact, the "new circulation" in Messari's data includes not only the issuance of the network, but also some of the tokens that have been unlocked. Most of these unlocked tokens have not actually entered the market circulation, but belong to foundations or ecological funds. These tokens are usually held for a long time and do not cause direct selling pressure on the market.

In addition, regarding the issue of inflation, Solana's official documentation clearly states that the current annual inflation rate of the Solana network is 3.5%, and it will decrease by 15% each year. In comparison, the inflation rate of Ethereum (ETH) in 2020 was 4.5%, and the market value at that time was between 20 billion and 70 billion US dollars. Therefore, Solana's inflation level is not serious enough to cause concern.

2. Interpretation of financial statements

Another author mentioned that Solana showed huge losses in its financial statements and the losses were expanding rapidly. For example, from $160 million in the second quarter of 2023, to $300 million in the fourth quarter, and to $950 million in the second quarter of this year. However, this statement of "expanding losses" is actually an illusion.

The key lies in the way expenses are priced. These expenses include daily operating expenses and SOL tokens paid to nodes. Since the price of SOL fluctuates greatly in different quarters, the amount of expenditure appears to be increasing rapidly when denominated in US dollars. However, the actual situation is only a superficial data change caused by the increase in the price of SOL, and no actual financial loss has actually occurred.

For example, the average price of SOL in the second quarter of 2023 was about $25, while the average price in the fourth quarter rose to $50 due to the pull. In the second quarter of this year, the average price of SOL further rose to around $160. Therefore, although the issuance of SOL remains stable, the increase in expenditure denominated in US dollars due to the increase in the price of the currency does not represent the expansion of actual losses.

Summary

Misunderstanding of data can easily lead to incorrect market interpretation and emotional fluctuations. By correctly interpreting Solana's inflation and financial statements, it can be found that the so-called "problem" is actually just a superficial phenomenon, not a substantive crisis. Therefore, investors should remain calm when facing these data and should not be confused by superficial data.

Finally, only by understanding the truth behind the data can we look at market dynamics more rationally. Continue to maintain confidence and patience and enjoy the opportunities brought by the market.