Solana's network has become significantly busier and cheaper to use over the past year, even as the SOL token price has fallen more than 50% compared to 2025. This divergence between on-chain fundamentals and market performance highlights a growing disconnect in how investors value blockchain networks, according to new research from Bitwise, a major cryptocurrency asset manager.

Why Are Solana Transaction Costs Falling While Activity Rises?

Solana, along with Ethereum (ETH) and Avalanche (AVAX), has deliberately made blockspace cheaper and more abundant over the past year. This design choice has driven increased on-chain activity while simultaneously reducing the revenue these networks generate from transaction fees. Bitwise's first-ever quarterly staking report found that despite rising transaction volume, revenues declined sharply across all three networks.

"We've seen a big divergence between network fundamentals and market sentiment because, obviously, prices are down compared to 2025. But what we're seeing onchain is, first, that blockchains are becoming cheaper, and second, onchain activity is actually increasing," said Kam Benbrik, Head of Onchain Research at Bitwise.

Kam Benbrik, Head of Onchain Research at Bitwise

The decline in network revenue was driven mainly by deliberate protocol design choices rather than weak demand. By making transactions cheaper, Solana and similar networks have prioritized accessibility and user growth over maximizing fee income. This strategy reflects a long-term bet that increased adoption will eventually drive greater economic value, even if short-term revenue metrics appear weaker.

How Does Solana's Staking Yield Compare to Ethereum?

Solana's staking yield, which represents the annual return validators and delegators earn for securing the network, significantly outpaces Ethereum's. During the second quarter of 2026, Solana offered an annualized staking yield of 6.25%, compared to Ethereum's 2.84%. However, this apparent advantage comes with an important caveat: the vast majority of both networks' staking rewards are funded through newly issued tokens rather than fees paid by users.

On Ethereum, newly issued tokens account for 93% of staking rewards, while on Solana, they represent more than 90%. This means that stakers are primarily earning returns from token inflation rather than from the economic activity occurring on the network. Holders who choose not to stake face dilution as new tokens are continuously minted to fund these rewards.

Steps to Understanding Solana's Staking Landscape

• Institutional Participation: Ethereum has seen record staking inflows from institutions, corporate treasuries, and exchange-traded funds (ETFs), with 40.2 million ETH (one-third of the total supply) staked by the end of the second quarter. Solana is experiencing similar institutional adoption trends.
• Yield Dilution Risk: As more participants stake their tokens, staking rewards are spread thinner across a larger pool, pushing yields lower over time and creating pressure on returns for existing stakers.
• Liquid Staking Options: Investors can use liquid staking solutions to earn staking yields while maintaining the ability to use their tokens in decentralized finance (DeFi) applications, providing liquidity and collateral for borrowing.

Bitwise's clients are increasingly interested in staking solutions that provide both yield exposure and the ability to participate in on-chain activity. Liquid staking derivatives allow token holders to earn staking rewards while simultaneously using those tokens in DeFi protocols, creating a more flexible approach to network participation.

The divergence between Solana's network health and token price reflects broader market dynamics in cryptocurrency. While the network itself is becoming more efficient, cheaper, and more active, investor sentiment remains influenced by macroeconomic conditions, regulatory developments, and broader crypto market cycles. Bitwise's research suggests that investors focusing solely on token price movements may be overlooking significant improvements in the underlying network's functionality and adoption.