Solana Financial Report Discussion: Is it a real loss or a misunderstanding caused by data dimensions?

Original author: Bear Biscuit.eth, Sun Moon Xiaochu, crypto KOL

Editor's note: Recently, crypto KOL Bear Biscuit.eth posted on the X platform that Solana may face major risks and it will be difficult for the price of SOL to return to $200. The article pointed out the continuous quarterly losses exposed in Solana's financial report and the problem of unlimited issuance of SOL. The article caused a lot of retail investors to have FUD about SOL. Last night, crypto KOL Riyuexiaochu refuted the views of Bear Biscuits.eth. He believed that the inflation of SOL was within a reasonable range and would not hinder the rise of the currency price, and the loss was just a data illusion caused by the dollar valuation. This article reproduces the articles of the two KOLs as follows:

This article is for readers' reference only and is not an investment advice. Please DYOR.

Bear Biscuits.eth

$SOL may have a big problem, 90U is not the bottom, don't buy the bottom!!! Jump liquidated Solana's token position when it plummeted yesterday. Did everyone know? The Solana chain is booming and has a bright future. Why would such a powerful high-frequency quantitative institution like Jump choose to liquidate its positions? ? ?

The liquidated $SOL tokens went into the wallets of you and me, and we gave the stablecoins to Jump. At such a low price, when else would we buy the dip? Who is the idiot? Today, I, Xiao Biscuit, will tell you the shocking truth: $SOL will hardly return to 200. The information I judged comes from public data:

· Solana lost 1.8 billion US dollars in the first half of the year alone, and the loss is still accelerating
· Solana has unlimited additional issuance, and has issued 161 million tokens in three years. Institutions are cashing out

Financial data

Solana has been losing money every quarter: from a loss of 160 million, a loss of 370 million, a loss of 840 million, to the second quarter of this year, a loss of 950 million in 3 months! The extent of this loss is still accelerating, and it can't be stopped!

Has anyone told you about these amazing data? Wake up, leeks, be careful when taking over!

Unlimited issuance

Since August 2023, the supply of SOL tokens has increased by 60 million. At the current price of 140U/coin, it is equivalent to selling 8.4 billion US dollars to the market, all of which we took over. In October 2021, the total supply of SOL was only 301 million, and three years later it was 462 million. This is an annual increase of 15%. With such a high inflation rate, do you still dare to take over?

In this bull market in 2024, VCs all went on vacation with a smile and counted money. Only the leeks are still fantasizing that SOL will return to $200. I hope that this article can help everyone have an independent, objective, calm and clear understanding. I wish you all less pitfalls and more money!

Data source:

Solana's financial report released by @Coin98Analytics in July

@MessariCrypto's token issuance data

日月小楚

Another incorrect analysis of data, leading to wrong conclusions.

Many people are optimistic about SOL, and this article has made people panic. So many people chatted privately about this issue. Then I wrote some answers into an article.

First of all, I don't mean to disrespect the author of the original article. On the contrary, the KOL who is willing to selflessly share high-quality products deserves everyone's praise. The error in data analysis here is because the data dimension itself is very easy to be misunderstood.

1 Let me first talk about inflation. In the article, the author quoted data from Messari, pointing out that SOL issued 60 million more coins last year, worth 8.4 billion yuan, and threw them into the market. However, in fact, this newly added circulation is not entirely an increase in the SOL network. First of all, what is written on the Messari screenshot is the new circulation. Secondly, in my red screenshot, you can see a step-by-step increase, and the increase must increase at the same speed. This kind of increase is impossible.

The new circulation includes not only the increase in the network, but also the unlocked part. Since the institutions and teams of SOL have already unlocked all of them, what is unlocked now should be the foundation or the ecological fund. This part of the chips is often only unlocked, but will not be circulated. Because the foundation cannot arbitrarily take this part of SOL.

What we are concerned about is inflation. In fact, it has been given in the official documents. It is now the fifth year since Solana was launched, and the annual inflation is 3.5%, and the inflation will decrease by 15% every year. In comparison, the inflation rate of ETH in 2020 is 4.5%, and the market value of ETH at that time was between 20 billion and 70 billion US dollars.

Therefore, SOL's inflation is not a big problem. Historically, the issuance of additional coins will not have a big impact on the price of the currency in an upward market, because many people will continue to hold the currency. Reasonable inflation will not hinder the rise in the price of the currency. Similarly, deflation cannot trigger a rise in the price of the currency (such as ETH).

2 The second original author proposed that SOL has huge losses and is expanding rapidly. From the financial statements, we can see that the loss started from Q2 of 2023, 160 million, 370 million, 840 million, and 950 million in Q2 of this year.

In fact, this is not an increase in losses. But this is just an illusion of data after being denominated in US dollars. In fact, nothing happened.

Because the expenses here include daily operations and SOL paid to nodes (that is, the increase in the network discussed in the previous section), and the latter accounts for a large proportion.

Let's do a simple calculation. The average price of SOL in Q2 of 2023 was around $25. The price in Q4 was relatively large due to the pull, so we calculated it based on the average price of $50. This year's Q2 is basically calculated at $160. I roughly calculated that SOL will issue 6 million more per quarter. So simply multiplying, in Q2 of 2023 it was $150 million, in Q4 it was $300 million, and in Q2 of this year it was $960 million.

(Of course, if you think the value of inflation in US dollars is expanding, you can refer to the previous discussion on inflation.)

Seeing this, everyone should understand that the financial statements seem to have huge losses that are expanding rapidly, but this is just a data illusion caused by the rise in the SOL coin price. In fact, nothing happened, nothing happened, nothing happened.

Okay, let's continue the music and dance.