Understanding The Sudden Ascendance of Solana

BONK Token Surge Fuels Solana On-Chain Activity

Solana has shown remarkable strength in the last few weeks where it has skyrocketed to cross the $115 at the time of writing this news. To give you an idea, this is a huge 1,065% surge in the price of the token Year to Date.

Some of the experts suggest that the price rise is fuelled by increased demand for SOL transactions due to heightening on-chain activity while others claim that the Total Value Locked (TVL) for Solana, which has spiked by 33%, is taking the charts up. 

Solana gained 1065% in the last 1 year | Image credit: Coinmarketcap.com

However, one of the primary reasons which is being mentioned all across the crypto spectrum is the increased on-chain activity due to the BONK token’s increasing popularity. 

What sparked the Solana rally?

Solana's remarkable surge in 2023 can be attributed to several key factors that have propelled its growth and attracted significant attention within the crypto world. 

Firstly, influential endorsements from prominent figures like Cathie Wood, CEO of Ark Invest, have bolstered investor confidence. Wood's positive remarks about Solana's speed and cost-effectiveness compared to Ethereum have contributed to increased visibility and credibility for the platform. Earlier this year, Vitalik Bueterin stated that he is bullish on the Solana network and the blockchain must be given adequate opportunity to thrive.

In late June, Solana surpassed Ethereum in NFT Volume for the first time ever. In 24 hours, Solana did $25.5M in volume, against Ethereum’s $24.7 million. The main cause for this achievement was the launch of SMBs. 

Moreover, the broader crypto market rally, led initially by Bitcoin and followed by altcoins including Solana, has created a favourable environment for investment and speculation. As traders sought opportunities beyond Bitcoin, Solana's unique features and promising outlook made it an attractive option, resulting in substantial price appreciation. The high demand of the Solana Saga smartphone has already stunned many people, as its price has touched the mark of $5,000. 

What makes Solana special?

Even though many factors are currently contributing to the overall surge in the price of Solana, the fundamental of the token is also one of the biggest reasons behind Solana’s strong community. Solana is driven by innovation and aims to solve the scalability trilemma of the Ethereum mainnet.  Here are some of the reasons that make Solana a special blockchain: 

Scalability: One of the primary features of Solana is its focus on scalability. Through its unique combination of proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms, Solana aims to achieve high throughput without sacrificing decentralization or security. 

This enables it to process a significantly higher number of transactions per second compared to Ethereum and other blockchains. To give you a rough idea, Solana can execute up to 65,000 transactions per second when compared to an average of 15 transactions per second for Ethereum. 

Low Transaction Costs: The architecture of Solana is designed to maintain low transaction costs, making it more efficient for users. By utilizing a high-performance protocol, Solana can facilitate transactions at a fraction of the cost and time associated with some other blockchains. 

Solana has processed more than 2,700 transactions per second (on December 12, 2023), and its average cost per transaction is $0.00025. In contrast, Ethereum can handle fewer than 15 TPS, while average transaction fees are around $2.62.

Ecosystem and Development: Solana has garnered attention for its growing ecosystem and developer community. The platform offers robust tools and infrastructure for building decentralized applications (DApps), which has led to the development of various innovative projects and protocols.

According to Electric Capital's Developer Report as of April 2023, Solana boasts 1,234 active developers. Although there has been a 12% year-on-year decline in active developers, this figure represents a significant 339% increase compared to the number from two years prior.

Interoperability and adoption: Solana is designed with interoperability in mind, allowing it to interact seamlessly with other blockchains and financial systems. This flexibility enhances its utility and expands its potential applications across various sectors, including finance, gaming, and social networking.

Solana has also secured partnerships with numerous organizations and projects across different industries. These collaborations have facilitated the integration of Solana's technology into various platforms. Solana has active partnerships with Chainlink, Serum, Chainsafe, Saber Labs, Bonfida, Raydium, and many others. 

What is the next target price for Solana?

Solana’s DEX trading activity has seen a massive surge during the current bull rally. The next target for the token is to break through a strong resistance at around $136 which is not so far from its current price. If Solana succeeds in breaking through this resistance, it can ever go as high as $200 apiece. 

Recently, Solana has replaced XRP to become the fourth largest crypto token in terms of market capitalization, falling only behind BTC, ETH, and USDT. Some of the market analysts go on to the extent of setting the long-term target for Solana to be as high as $1,000. 

Also Read: Is the Crypto Adoption Index Improving After The G20 Initiatives