Solana TVL Reaches New Annual Peak
[TL; DR]
On 22 October Solana attained a new yearly TVL high of $350 million.
Whereas Solana’s TVL increased in October, Ethereum and Binance Smart Chain’s total value locked declined.
By the end of the year the Solana price may be fluctuating between $34 and $38.
Introduction
Many cryptocurrencies have been performing better than before during October as a result of the market’s expectation of the SEC approval of spot Bitcoin exchange traded funds (ETFs). XTZ, ADA, AVAX, TRX and Solana are examples of altcoins that have performed remarkably.
Solana’s recent rally has enabled it to become the seventh largest cryptocurrency by market capitalization, toppling Dogecoin and Cardano in the process.
Today’s post assesses Solana’s price performance and the reasons behind the rally. We will also compare Solana blockchain activity to its major competitors, Ethereum and BSC Chain.
Solana total value locked (TVL) Hits a New Yearly High
The Solana blockchain has attained a new yearly TVL high of $350 million on the backdrop of a strong price performance during the last few weeks. As per the data available on Defillama, the crypto data aggregator, Solana’s TVL reached $350 on 22 October.
Solana’s growth by about $20 million which represents a12.2% increase within the 24-hour period that stretched from 21 to 22 October resulted in that TVL increase. Solana’s impressive price performance enabled it to be one of the top gainers during that period. The following graph summarizes Solana’s growth statistics.
Solana DeFi TVL - DeFillama
The Solana blockchain growth, indicated on the above diagram, has not been an isolated development. It was an extension of its massive expansion which resulted in a 40% TVL increase since 1 January this year. The large influx of investors and the increased demand for its service have resulted in that growth.
Solana Outperforms Ethereum and Binance Smart Chain
In terms of TVL growth, Solana has outperformed both Ethereum and Binance Smart Chain which are ranked number 2 and 3 in the entire crypto market. The blockchain has also done very well in other areas.
As an example, it has maintained a 100% average uptime for the last 6 months. As Messari shows, by the end of Q3 alone, Solana had gone for 234 days without any network outage as the next graph indicates.
Solana Network Performance: Messari
As a fact, Solana’s previous network outage occurred on 25 February 2023.
Therefore, in terms of TVL growth Solana has outperformed several major blockchains including Binance Smart Chain (BSC) and Ethereum. The SOL’s impressive price performance and its network growth are noteworthy considering that the blockchain experienced several downtimes and exploits during 2022.
With a TVL of about $209.25 million at the start of the year Solana has registered a 217% rise to hit $664 million. The surprising thing is that while Solana recorded such a growth in September the other blockchains like Binance Smart Chain, Avalanche and Ethereum recorded significant drops of 6%, 10% and 13%, respectively. The image below shows Solana’s dominance in Q3.
Q3 Crypto Dominance Relative dominance - Coingecko
As the picture shows, Solana was one of the dominant networks during Q3, 2023.
SOL’s Price Performance
SOL’s impressive price performance was not only limited to a few months as it has attained a 95.5% year-to-date gain, something very few cryptocurrencies have achieved.
For the greater part of the year, the Solana price fluctuated between $19.50 and $25. Comparatively, though, Solana price surges have failed to match its all-time-high of $260 attained in November 2021. In fact, it is about 92.5% lower than that high.
Solana Blockchain’s Recent Improvements
Apart from the improvements in price performance and growth, Solana has also achieved much since the beginning of the year. Its revenue also increased during the period. According to Solscan the network fees imposed on the non-vote transactions increased to 53.06 SOL on 2 August. As a result, Solana’s revenue grew by 21% on a year-to-year basis.
The blockchain’s market capitalization has also increased significantly during Q3, 2023. Messari, a Crypto market intelligence platform, reported that Solana’s market capitalization had a 17% quarter-to-quarter growth to close Q3 at $8.4 billion.
The blockchain also recorded an increase in staked SOL tokens during the same period. The amount of staked SOL increased by 2% in Q3 to reach 404.9 million, an amount which was close to the figures it recorded before the FTX implosion a year ago. In terms of total staked tokens, only Ethereum surpasses its staked volume. The next diagram provides the statistics.
Solana Network Statistics - Messari
As the above picture shows, Solana also performed remarkably in other areas. For example, during Q3 the number of validators increased by 5.5% showing an improvement in its security measures. Although 29% of the validators are based in the United States they are spread among 34 countries.
Another factor that has led to SOL price surge was the increase in its adoption marked by several partnerships. For example, in Q3 Shopify integrated Solana Pay in its payment . Currently, its merchants can accept payments in USDC. Since Shopify makes about 10% of the United States e-commerce, its integration of Solana Pay is a great achievement for the crypto sector.
Further, Solana has also partnered with VISA which aims to integrate its payment service as well. The VISA team said that they had selected Solana because of its various key features and attributes like fast transaction and a predictable fee structure.
Also, Solana has emerged as a preferred blockchain for web3 gaming and social media protocols. For example, DSCVR, a Web3 social media and community-building platform, announced that it is launching its products on Solana blockchain.
The Challenges Solana Network is Facing
SOL’s impressive price and network performances do not imply that all is perfect with the blockchain. Like many other networks, Solana has its equal share of problems.
First, in its legal actions against major US based crypto exchanges like Binance and Coinbase the United States SEC Listed Solana’s SOL as crypto security.
The Solana price may be negatively affected in the future since FTX and Alameda Research hold large quantities of SOL. If the court orders them to dispose of them, the SOL price may plummet.
Conclusion
Solana has outperformed both Ethereum and Binance Smart Chain in terms of TVL surge. Whereas Solana has experienced a 40% surge in TVL that of Ethereum and Binance Smart Chain declined in September. During the recent months the Solana crypto price surged remarkably.
FAQs about Solana
Can Solana reach $500?
Based on its current price movements Solana will likely reach $500 by 2025. Its fundamentals are influencing its current price rises. As more investors adopt it its price may keep rising.
Can Solana reach $1,000?
Solana has the potential to attain a price of $1,000. However, we cannot predict with accuracy when it will reach that price as it depends on various factors like the global macroeconomic conditions, regulatory clarity and its prominence in the blockchain space.
Is Solana expected to rise?
The price of Solana is expected to rise in the short and long timeframes. Note that its value has been gradually increasing during 2023 and we expect that momentum to continue in 2024 and beyond.
How much will SOL cost in 2025?
The price of SOL is likely to range between $300 and $500 in 2025. However, many factors like its global adoption, innovations and regulatory clarity will influence its price change over the next two years.
