- Total value locked on Solana has increased 30% in 2023, indicating growing decentralized app usage and demand for SOL.
- Trading volumes on Solana dApps like OpenSea, Jito and Saber have surged recently without requiring more SOL deposits.
- Solana’s ability to handle transaction spikes gives it an advantage over rivals, suggesting room for further growth if network usage continues rising.
The native token of the Solana blockchain, SOL, has seen impressive gains recently. After hitting a 23-month high on March 1st, the token is up 34.5% over the past week. This rally has fueled speculation about what is driving SOL’s outperformance and whether it can be sustained long-term.
What Triggered the Rally?
Between December and late February, SOL saw only modest gains compared to competitors like Ethereum and Tron. The major price movement occurred in the past week. Alongside SOL, some Solana-based memecoins also saw spikes in demand. Additionally, a New York Times article discussing Sam Bankman-Fried’s endorsement of SOL was published around the start of the rally. However, the direct impact of this on price is unclear.
Evaluating Network Activity
To assess whether increased speculative interest or growing network usage is fueling SOL’s gains, Solana’s network metrics should be analyzed. SOL is required for activities across decentralized apps, trading, staking and NFT marketplaces on Solana. Therefore, metrics like total value locked in smart contracts and volumes across dApps can indicate underlying demand and usage.
Total Value Locked Trends
Solana’s total value locked recently hit a multi-month high of $4.07 billion SOL. This represents a 30% increase in 2023 so far, outpacing competitors like Ethereum and BNB Chain. This points to Solana attracting greater decentralized app activity and usage recently.
Decentralized App Trading Volumes
While total value locked has increased, certain dApps are seeing huge volumes without requiring substantial SOL deposits. For example, top NFT marketplace OpenSea saw $7.8 billion in weekly volume on Solana. Other dApps like staking platform Jito and DEX Saber saw triple digit percentage increases in volume over the past week.
The Road Ahead
Solana’s ability to manage spikes in transactions has given it an edge over rival networks like Avalanche which suffered an outage from surging activity. While Solana has also faced issues like the February outage, its network metrics do not indicate SOL has peaked. Continued growth in usage and activity will likely fuel further upside for the token.
