Product Keynote: Electric Capital

At Breakpoint 2025, Electric Capital presented a compelling economic analysis that positions Solana at the center of crypto's next major growth phase—one that could deliver the industry's first trillion-dollar decentralized application and bring billions of new users on-chain.

Summary

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Electric Capital's keynote focused on a fundamental question facing the crypto industry: how do we achieve mass adoption with a trillion-dollar decentralized app and billions of users? The answer, according to their analysis, lies in understanding Jevons Paradox—an economic principle that explains why decreasing costs often lead to dramatically increased consumption rather than reduced usage.

The presentation drew direct parallels between crypto's current trajectory and the internet's explosive growth, where costs dropped 99.9% while usage increased 7,000x since the 1990s. Electric Capital argues that Solana is uniquely positioned to drive this same phenomenon in blockchain, processing more transactions at lower costs than all other major chains combined.

Perhaps most significantly, the analysis identified 300 million centralized exchange users—people already comfortable with crypto but not yet active on-chain—as the most accessible target market for decentralized applications. With on-chain application revenue already up 4x since 2021, the firm sees substantial evidence that this transition is already underway.

The keynote concluded by highlighting three major tailwinds: competition among stablecoin providers creating alternative on-chain onboarding paths, OAuth and email-based embedded wallets enabling one-click user experiences, and emerging regulatory clarity giving developers the confidence to commit long-term to crypto building.

Key Points:

Jevons Paradox and Its Application to Crypto

Jevons Paradox is an economic phenomenon where efficiency improvements that lower the cost of a resource actually increase total consumption rather than decrease it. Electric Capital applies this framework to understand crypto's growth potential, noting that several conditions must be met for this paradox to take effect.

First, there must be a technological change that increases efficiency or productivity. Second, this must translate into lower prices for consumers and businesses. Third, the reduced price must drastically increase demand—typically because lower costs unlock use cases that were literally impossible on previous technology. This pattern perfectly describes what's happening on Solana, where reduced transaction costs and increased throughput have enabled entirely new categories of applications.

Solana's Dominance in Transaction Efficiency

Electric Capital presented data showing that Solana processes more transactions at lower costs than all other major blockchain networks combined. This isn't just a technical achievement—it's the foundation for new application categories that couldn't exist elsewhere.

The highest-revenue on-chain applications today, the presentation noted, were specifically made possible by Layer 1 networks like Solana that decreased costs while increasing capabilities. While Tether and Circle's stablecoins still generate the most revenue, a new generation of Solana-native applications has emerged to fill user needs that were previously too challenging or too costly to address on other chains.

The Long-Tail Token Opportunity

One of the most striking data points concerned the long-tail token market. Every week, hundreds of thousands of new tokens launch on Solana—a volume that centralized exchanges simply cannot accommodate given their lengthy listing processes. This structural advantage has allowed on-chain decentralized exchanges to capture 33% of centralized exchange spot trading volume, representing 5x growth over five years.

Electric Capital drew an analogy to social media content: while each individual piece of content or token may have minimal monetizable value, the aggregate creates tremendous fee and revenue opportunity. Billions of social media posts daily translate into massive advertising revenue; similarly, hundreds of thousands of token launches weekly translate into substantial DEX trading fees.

The 300 Million User Opportunity

The presentation identified centralized exchange users as the most promising source of on-chain growth. With 300 million people already holding crypto and transacting at least monthly on centralized platforms, the question becomes whether on-chain applications can offer competitive products to convert them.

Currently, most crypto users onboard through centralized exchanges, but very few actually make it on-chain. This represents both a challenge and a massive opportunity—if decentralized applications can match or exceed the user experience of centralized platforms, this enormous existing user base could migrate on-chain.

Tailwinds for Mass Adoption

Electric Capital identified three key factors that will accelerate on-chain adoption. First, competition between stablecoin rails is creating alternative paths to get users on-chain, breaking the historical gatekeeping role of centralized exchanges. Second, OAuth and email-based embedded wallets are making one-click onboarding possible, dramatically reducing friction.

Third, and perhaps most importantly, draft market structure legislation is creating the regulatory clarity needed for application developers to fully commit to building in crypto. Without clear rules, many talented builders have hesitated to go all-in on decentralized applications—this clarity could unlock a new wave of serious development.

Facts + Figures

• Internet costs have decreased 99.9% while usage has increased 7,000x since the 1990s
• Solana processes more transactions at lower cost than all other major chains combined
• On-chain application revenue has grown 4x since 2021
• 300 million centralized exchange users conduct at least one crypto transaction monthly
• On-chain DEXs have captured 33% of centralized exchange spot trading volume
• DEX market share represents 5x growth over five years
• Hundreds of thousands of new tokens launch on Solana every single week
• Tether and Circle still lead in on-chain application revenue
• Network fee trends suggest the overall pie is growing, not shrinking
• OAuth and email embedded wallets enable one-click onboarding experiences

Top quotes

• "How do we get to the first trillion-dollar dApp and billions of users on chain?"

• "When unit costs decrease and capabilities increase, entirely new applications become possible."

• "Solana does more transactions at a lower cost than all other major chains put together."

• "The highest revenue on-chain apps today were made possible by L1s like Solana that have decreased costs and increased capabilities."

• "There are 300 million centralized exchange users who already hold crypto doing at least one transaction a month. And we believe they're the easiest user base to convert."

• "On-chain DEXs have captured 33% of centralized exchange spot trading volume, which is a 5x growth in five years."

• "The use cases that will emerge on-chain will be doing what off-chain rails cannot."

• "These lower costs unlock new use cases that were literally impossible on the previous technology stack."

Questions Answered

What is Jevons Paradox and why does it matter for crypto?

Jevons Paradox is an economic phenomenon where making something more efficient and cheaper actually increases total consumption rather than reducing it. In crypto, this means that as blockchain transaction costs decrease and capabilities increase, entirely new use cases become possible that drive even more overall activity. Electric Capital argues this is exactly what's happening on Solana, where lower costs haven't led to a "race to the bottom" but rather to explosive growth in new applications that couldn't have existed on more expensive networks.

Why does Solana have an advantage in attracting new applications?

Solana's fundamental advantage is processing more transactions at lower costs than all other major blockchain networks combined. This cost and throughput advantage enables developers to build applications that fulfill user needs that were previously too challenging or too costly to create. The highest-revenue on-chain applications today were specifically enabled by this combination of low costs and high capabilities, making Solana the natural home for the next generation of decentralized apps.

How big is the opportunity to bring centralized exchange users on-chain?

There are 300 million users on centralized exchanges who already hold crypto and conduct at least one transaction monthly. Electric Capital identifies this group as the easiest user base to convert to on-chain applications because they already understand and use cryptocurrency—they just haven't made the leap to decentralized platforms yet. If on-chain applications can offer competitive products and user experiences, this massive existing user base represents the most immediate growth opportunity for the ecosystem.

Why have decentralized exchanges grown so much against centralized competitors?

Decentralized exchanges have captured 33% of centralized exchange spot trading volume—a 5x increase over five years—primarily by serving the long-tail token market. With hundreds of thousands of new tokens launching on Solana every week, centralized exchanges simply cannot keep up with their lengthy listing processes. DEXs can immediately support any new token, capturing trading activity that centralized platforms structurally cannot access. This is a classic example of doing what off-chain rails cannot.

What factors will drive the next wave of crypto adoption?

Three key tailwinds are emerging. First, competition between stablecoin providers is creating new on-chain onboarding paths that bypass the traditional centralized exchange gatekeepers. Second, OAuth and email-based embedded wallets are enabling one-click onboarding that matches web2 simplicity. Third, draft market structure legislation is providing the regulatory clarity that application developers need to fully commit to building in crypto, potentially unlocking a new wave of serious long-term development.

Is the decrease in blockchain fees a sign of value destruction?

No—Electric Capital argues that despite declining per-transaction fees, the overall pie is growing. The long-term trend shows that networks like Solana provide users with applications that were previously impossible, creating entirely new value rather than competing for a fixed pool. On-chain application revenue being up 4x since 2021 provides concrete evidence that lower unit costs are driving higher total value creation, exactly as Jevons Paradox would predict.