Why Solana is Winning in Speed, Users, Adoption

Are we witnessing a major shift in blockchain adoption as Solana’s user base grows rapidly, or will Ethereum’s dominance in high-value applications keep it ahead in the long run?

Solana’s great comeback

Solana (SOL), one of the most promising blockchain networks in the crypto space, has experienced a wild rise in recent years.

The token, which soared to new highs in 2021 with SOL reaching $260.61 in November, has seen its fortunes reverse dramatically following the collapse of FTX in 2022.

FTX founder Sam Bankman-Fried was a strong supporter of Solana and his trading company Alameda had a large amount of SOL. When FTX went under, it sent shockwaves through the crypto market, and Solana was one of the hardest hit.

SOL’s price fell below $10, losing more than 90% of its value due to market-wide panic and selling pressure due to its association with FTX.

Fast forward to 2024 and Solana’s price action tells a new story. Starting the year strong, SOL has steadily gained ground, continuing its upward momentum from 2023 onwards.

However, as of September 6, the price of SOL calmed down and fell to $121, with a bearish trend prevailing for a short time.

However, as of October 23, SOL is trading around $168; This marks a solid recovery from September’s decline and is a far cry from the $10 lows seen in 2022.

SOL 6-month price chart | Source: TradingView

This resurgence is part of a broader recovery in the crypto market, with the bullish trend in major assets starting to return.

With renewed interest in Solana’s technology and increased adoption, is Solana poised for a new bullish run, or will volatility bring new challenges?

Let’s examine the key factors driving the price of SOL, compare them to Ethereum (ETH), and look at expert predictions on where Solana price could go in the coming days.

Solana’s 2024 developments: increased growth, adoption and stability

2024 has been a breakout year for Solana, delivering its best performance in terms of growth, adoption, and stability.

Following disruptions in 2022 and 2023, where its total value crashed and other metrics plummeted, Solana has managed to stage an impressive recovery, showing strong metrics across several areas of decentralized finance and blockchain performance.

Total value locked in — a strong comeback

Total value locked is one of the key metrics used to measure the health and effectiveness of a blockchain’s DeFi ecosystem. It refers to the total amount of assets staked or locked within the platform’s smart contracts.

In simpler terms, it shows how much money is used in a blockchain ecosystem, specifically DeFi protocols.

For Solana, the story of TVL has been one of serious ups and downs. In November 2021, during the peak of the bull market, Solana’s TVL rose to over $10 billion, but it quickly shrank in 2022 as the crypto market crashed and the effects of FTX took a heavy hit.

Solana’s TVL chart (2021-now) | Source: DeFi LIama

Throughout 2022 and 2023, Solana struggled to regain traction with his TVL numbers steadily declining with no end in sight. However, 2024 brought with it a major transformation.

As of October 23, Solana’s TVL stands at an impressive $6.20 billion; It marks a sharp recovery from the $1.4 billion seen at the beginning of the year; This represents a 342% increase in TVL in less than a year.

To put this in perspective, Ethereum’s TVL has remained relatively stagnant throughout 2024 and has actually been on a downward trend since June, when it was around $67 billion. As of October 23, it decreased to approximately 48 billion dollars.

Ethereum’s TVL chart (2021-now) | Source: DeFi LIama

Solana’s explosive rise in TVL, compared to Ethereum’s decline, reflects its growing interest, especially as it attracts more users to its ecosystem.

Solana DEX volume

Another important area where Solana has made significant progress is decentralized exchange volume.

DEXs are platforms where users can trade crypto assets without relying on a central authority, and trading volume on these platforms is an important indicator of how active and engaged a blockchain’s users are.

Solana has not only gained ground in this space, but has also managed to surpass its biggest rival, Ethereum. As of October 23, Solana controls more than 30% of last week’s total DEX volume; This is in stark contrast to Ethereum’s 16% share.

Weekly snapshot of DEX volume by chain | Source: DeFi LIama

Just months ago Ethereum was consistently holding over 30% of the market, making it the dominant force in decentralized commerce. Now, with Solana overtaking Ethereum, we are seeing a shift in user preferences.

Solana’s blockchain can process thousands of transactions per second, making trading on Solana-based DEXs more efficient than on Ethereum, where network congestion and high gas fees can become bottlenecks.

In terms of raw growth, Solana’s share of DEX volume has more than doubled in the last six months while Ethereum’s share has been shrinking. For Ethereum, this marks one of the lowest points in DEX dominance and shows a clear tilt in market dynamics.

Blockchain performance

When it comes to blockchain performance, Solana is again in the lead.

According to DappRadar, Solana has processed over 476 million transactions in the last 30 days as of October 23; that’s a whopping 33% increase in the last 30 days alone.

Meanwhile, the platform’s unique active wallets (UAWs), which represent the number of active users interacting with Solana’s decentralized applications, also increased. Solana now has nearly 95 million UAWs, up 40% in just one month.

By comparison, Ethereum processed only 7 million transactions over the same period, and the UAW count dropped 11% over the last 30 days to 1.66 million.

However, when we shift the focus to total dApp volume, Ethereum remains the dominant player. While Ethereum has traded over $108 billion in Dapp volume in the last 30 days, Solana lags behind with only $4 billion.

This comparison shows that although Solana processes far more transactions and attracts more users, Ethereum still holds the crown when it comes to sheer value flowing through the Dapp ecosystem.

Higher transaction volumes on Ethereum are largely driven by high-value DeFi projects and enterprise-level applications that have long been a part of the Ethereum network.

Decoding the Solana Surge

While several factors contribute to Solana’s upward momentum, one surprising factor behind his rise is the explosive growth in meme coins.

Cryptocurrencies like Dogecoin (DOGE) and Shiba Inu (SHIB) sparked the meme coin trend, but newer tokens are now leading the charge. The meme coin craze on Solana’s blockchain has breathed new life into the network’s volumes, fees, and overall operations.

Platforms like Twitter (now X) are abuzz with discussion and hype about the latest meme coins; This creates a speculative frenzy that often leads to increases in the prices of these tokens and therefore the networks they operate on.

As investors flock to Solana to chase the next big meme coin, overall network activity is skyrocketing, bringing more liquidity and interest to the ecosystem.

Ryan Watkins, co-founder of Syncracy Capital and former Messari researcher, recently highlighted Solana’s unique position in the meme coin market.

He noted that Solana’s role is “a hotbed for all the speculative experiments in this cycle” and touched on the chain’s ability to attract projects.

Look, I don’t care if memecoins are neo-religions or if AI agents are actually starting on-chain cults, all I know is that all roads lead back. $LEFT.

Solana is the home of all speculative experiments in this cycle. pic.twitter.com/CkNpAWDkTC

— Ryan Watkins (@RyanWatkins_) 19 October 2024

In Watkins’ words, “I don’t care if meme coins are neo-religions or if AI agents are actually starting on-chain cults, all I know is that all roads lead to $LEFT.”

Another market analyst, Gumshoe, also noted Solana’s strong performance, adding to the optimism about Solana. “On-chain corruption is occurring in Solana, the market will soon begin to price in the paradigm shift,” Gumshoe said.

$LEFT

The market performed slightly better over the weekend as it began to recover after an 8-month period of consolidation

On-chain corruption occurs in Solana, market will soon start pricing in paradigm shift pic.twitter.com/tGNxnhpyIA

— gumshoe (@0xGumshoe) 19 October 2024

Based on expert analysis, there is a growing consensus that Solana is becoming the preferred platform for high-risk, high-reward speculative trading due to its speed and scalability compared to other chains.

While the meme money craze has undoubtedly contributed to Solana’s recent rise, it raises the question of sustainability.

Meme coins are highly speculative in nature, and their value is often tied to the hype created by social media influencers rather than real-world benefits.

This makes meme coins volatile, and their demand can wane as quickly as it arises. But as long as the hype continues, Solana stands to benefit.

Where could Solana go from here?

Several traders noted that certain bullish patterns were forming on Solana’s price chart, suggesting that the token may be preparing for another rise.

One of the most discussed patterns is the Reverse Head and Shoulders pattern, which is a technical setup that often signals a downtrend reversal and a potential breakout to higher levels.

Crypto analyst MartyParty highlighted that Solana is currently implementing this pattern and is targeting a price of $195, breaking out of the current range.

He described the pattern as a “Bullish Pennant”, which is generally viewed as a continuation pattern suggesting further upward movement.

Similarly, The Moon, a well-known crypto investor and influencer, stated that if Solana successfully breaks out of the Inverse Health and Safety pattern, the potential target could be as high as $202.74.

Meanwhile, according to Crypto Zeinab, Solana must successfully hold above the $171 level for these bullish targets to remain in play. If this level is tested and maintained, the rise could open to $189 and then to $196 as the bulls take control of the market.

$LEFT It broke out of the ascending triangle formation. Price plans to get in line for testing again.

A successful retest of the range would put the bulls in prime spot for an uptrend.

Solana’s strength above the $171 level will initiate a rise towards 189 and then 196 levels. pic.twitter.com/GT6EDPKB6v

— Crypto Zeinab (@CryptoZeinab) 21 October 2024

However, although the short-term outlook seems positive, it should not be forgotten that there are still risks. As always in crypto, caution is key and it’s important to pay attention to both technical indicators and broader market trends. Never invest more than you can afford to lose.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.