Buoyed by the bullish market momentum, Solana has recaptured investors’ sentiment, steering attention away from Bitcoin and Ethereum. SOL is on the cusp of breaking new records as the token approaches a 2-year high. From less than $10 a year ago, the leading altcoin exceeded $130, a whopping 500% surge.
Similarly, the trading volume of the 5th largest crypto asset has spiked 120% to $3.2 million. Market experts have drawn parallels between SOL’s price trajectory and that of Ethereum in 2020. If the rest of the cycle plays out similarly, a takeoff is imminent.
SOL still really reminds me of ETH in 2020. Pretty sure the rest of the cycle plays out similarly too, expecting takeoff soon. Bring it on.
While price is one way to look at it, the other perspective is revenue, as gauged by the gas fees of the respective blockchains. And Solana’s gas fees have been soaring, both in absolute terms and as a percentage of Ethereum’s gas fees. In February 2023, Solana’s daily gas fees were less than 0.2% of Ethtereum’s. In January 2024, the table flipped as Solana’s daily gas fees exceeded 8% of Ethereum’s, making a nearly 40-fold increase.
Solana’s DeFi TVL has also scored a new milestone, surpassing $2 billion, a level not seen in the last 20 months. The new feat is a testament to its robust DeFi ecosystem, which has bounced back strongly since the 2022 FTX collapse. Since December, the total value locked has doubled, indicating increased user activity and trust in the platform’s DeFi applications [DApps]. The blockchain’s scalability and affordability make it a cheaper and faster alternative to Ethereum.
Solana: Dynamics of DEX Volume and Notable Sector Gains
What’s more interesting is that while constituting less than 3% of total DeFi TVL, Solana generates over 20% of the overall on-chain DEX volume. Along with SOL, Ethereum, Manta, and Arbitrum also recorded notable gains. This uptrend marks the fourth consecutive month of growth for DeFi since it finally broke its downtrend in October 2023.
Market observers have noted that the liquid staking and lending/borrowing sectors led the surge across key protocols, culminating in a robust DeFi week for Solana.