January 2025 kicked off on a high note for cryptocurrency investors, especially those interested in Solana ($SOL). Reports show that Solana's stablecoin supply jumped to $10 billion, doubling its previous amount. This growth comes as the network continues to expand, fueled by the popularity of memecoins like TRUMP and MELANIA.

The increase in stablecoin issuance highlights a growing acceptance of Solana among institutional investors. In fact, Solana's market cap nearly tripled, rising from $47 billion at the start of 2024 to over $110 billion recently, according to CoinMarketCap.

What Are Stablecoins?

Stablecoins are designed to hold a steady value. They use various methods to maintain this stability. The collapse of Terraform Labs’ TerraUSD showed the risks tied to algorithmic stablecoins. It's also important to note that stablecoins can become closely linked to other financial assets during volatile market conditions. For example, in March 2023, USDC “broke the buck” after the failures of SVB and Silvergate Bank.

Today, the total market cap for stablecoins exceeds $223 billion, reflecting a 36% increase since August 2024. While there are claims of over 200 stablecoins, Tether’s USDT and Circle’s USDC account for 86% of the market. USDT alone makes up 62% of that total.

Stablecoins play a key role for cryptocurrency traders. Before anyone can make a transaction on the blockchain, they need to have funds ready for investment. Investors typically convert their fiat currency into a stablecoin while deciding which asset to purchase. When they convert their cryptocurrency back to fiat, that’s called off-ramping.

In both cases, stablecoins act as a middleman, helping traders preserve the value of their investments in a more stable form before they engage with more volatile cryptocurrencies.

Because of their essential role in trading, stablecoin activity can indicate how much trading is happening across different networks. The number of stablecoin projects has soared from 27 in 2021 to 182 by July 2024, according to DeSpread Research. That’s a growth rate of 574% over three years!

Solana had a remarkable month, with the minting of $8.5 billion in USDC in January. This doubled the total stablecoin market value on the network, even surpassing Ethereum during that time.

The total stablecoin supply for January 2025 looks like this:

Blockchain Dec 2024 Jan 2025 Growth (%)
Ethereum $13.5 billion $14.1 billion 4.44%
Solana $5.0 billion $11 billion 120%

Besides stablecoin issuance, Solana set new records for decentralized exchange (DEX) activity, with $28.2 billion on January 18 and $39.2 billion on January 19. This surge coincided with the launch of the TRUMP and MELANIA meme coins.

This rapid growth in stablecoin issuance and trading activity is significant, especially as Solana aims to attract institutional users. More liquidity on the Solana blockchain could lead to lower transaction costs, making it even more appealing to institutional investors.

Solana boasts a throughput of 65,000 transactions per second. A December 2024 upgrade allowed it to process over 5,000 transactions per second across 2,000 globally distributed nodes. For comparison, Visa processed 212.5 billion transactions in 2023 at a rate of 6,741 transactions per second.

When you consider merchant fees that can range from 2% to 3% of transaction value, the importance of an efficient on-chain solution becomes clear. A single transaction on Solana costs about $0.00025.

It’s hard to discuss Solana without mentioning the impact of the TRUMP and MELANIA memecoins. Launched just before President Trump’s second inauguration, these coins sparked a lot of conversation in the crypto community. While some skeptics criticized their appearance, others saw TRUMP as a potential way for more companies to explore cryptocurrency as a viable tool for raising capital and attracting customers. Memecoins have a history of generating significant trading volumes and drawing in new investors.

In just 48 hours after its launch, TRUMP’s market cap hit $14 billion, driven by speculative trading, social media buzz, and the renewed interest in the Trump brand.

The activity around memecoins on Solana has led to a surge in transaction volume and sparked debates within the crypto community. This underscores the broader acceptance of Solana as a serious blockchain and cryptocurrency option. Favorable regulations and tax treatments could accelerate Solana’s growth even further.

Recently, institutional investors like Bitwise, 21Shares, and VanEck have refiled applications for a Solana ETF after being turned down last year. The rising issuance of stablecoins on the network highlights Solana's potential beyond just memecoins. It showcases its capabilities in trading, investment, and payment applications. Solana is establishing itself as a legitimate competitor to major cryptocurrencies like Bitcoin and Ethereum, thanks to its high throughput, low transaction costs, and scalability. This makes it an attractive option for a wide range of financial applications.