Worldsfeed Tech Desk: Solana’s native token, SOL, has surged by an impressive 34.5% in just one week, hitting its highest point in the last 23 months as of March 1. Currently trading at $130, SOL maintains its position as the fourth-largest cryptocurrency, excluding stablecoins, and is narrowing the gap with the third-place competitor, BNB, which is currently valued at $412. The crucial question arises: What fueled SOL’s recent rally, and can this outperformance be sustained against its competitors?
The recent surge in SOL’s price wasn’t evident until after February 23, as it attempted to solidify the $100 support over the previous months. Between December 23, 2023, and February 23, 2024, SOL experienced a modest 2% increase, compared to Ether’s 25.5% uptick and Tron’s 31.5% gains during the same period. The decisive factors leading to SOL’s recent outperformance occurred within the past week.
In addition to SOL’s substantial gains, some Solana SPL memecoins experienced a notable surge in demand. Bonk recorded a 110% increase, and DogWifHat (WIF) saw a significant rally of 250% since February 23. This trend wasn’t confined to Solana network tokens alone, as Dogecoin and Shiba Inu also registered gains of around 51% during the same period. The demand for decentralized exchange (DEX) listings likely contributed to this trend.
A report in The New York Times on February 27 mentioned that Sam “SBF” Bankman-Fried, the convicted former CEO of the failed FTX exchange, had been recommending prison guards to invest in SOL. While it’s uncertain whether SBF’s opinion influenced SOL’s gains, the timing of the article publication raises questions.
To assess the sustainability of SOL’s recent surge, one must analyze Solana network metrics. SOL is integral for DEX trading, staking solutions, NFT marketplaces, and other decentralized applications (DApps).
Solana’s total value locked (TVL) in smart contracts has reached its highest level since November 2022, standing at 40.7 million SOL—a 30% increase year-to-date in 2024. Compared to Ethereum’s 15% TVL increase in ETH terms and BNB Chain’s 12% uptick in deposits since December 31, 2023, Solana’s success in attracting more DApp activity is evident.
Notably, Solana’s TVL growth is driven by its ability to handle substantial volumes and a large user base without requiring significant deposits. The OpenSea NFT marketplace contributed to a weekly volume of $7.8 billion, and other Solana DApps like Jito staking and Saber’s cross-chain liquidity exchange experienced significant volume increases.
Solana’s success also arises from its ability to navigate transaction spikes, unlike competing blockchains. While it faced challenges, including a five-hour outage on February 6, Solana’s network metrics show no evidence of the SOL token reaching a peak, highlighting its scalability amidst industry challenges.
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