- Increased DEX volumes and network fees on Solana suggest a growing user base.
- The deployment of Firedancer is expected to improve Solana’s network performance.
- Upcoming airdrops and continuous meme coin activity boost Solana.
Following the near collapse after the FTX bankruptcy in late 2022, Solana saw a remarkable recovery. The token rose 580.44% from $21 last year to $154.25, where it is today, at times taking third place among crypto assets. This is now noted by major analysts, who predict it could rise further.
According to a recent analysis by Franklin Templeton, Solana is positioned to go even beyond, taking third place in Binance Coin (BNB) and USDT for good. The analysis breaks down the key factors behind Solana’s success.
What’s Behind Solana’s Rise?
Research firm Franklin Templeton released a report detailing Solana’s prospects after the recovery from the FTX collapse and its potential trajectory going forward. According to the firm, its rise was ushered by surging volumes on decentralized exchanges (DEX). Notably, these went from $1.1 billion in November 2023 to $35.2 billion by April 2024.
Airdrops within its ecosystem significantly boosted this turnaround. Projects like Jito and Pyth created a billion-dollar wealth effect. In effect, their airdrops rewarded Solaan holders with free tokens that would later be worth billions. The airdrops increased investor interest in these tokens and in Solana as a whole.
The report states Solana was well-positioned to benefit from these drops, thanks to its tech advantage. Unlike Ethereum, its low fees and high speeds enable even less tech-savvy investors to benefit from airdrops without paying exorbitant gas fees.
The introduction of Firedancer, a new validator client by Jump Crypto, will likely boost these advantages. Crucially, the upgrade enhances data throughput and maximizes the utilization of client hardware, leading to lower costs for validators.
Can Solana Overtake BNB and USDT?
Solana has overtaken BNB several times before, particularly during periods of significant market momentum. Most recently, Solana flipped BNB in February and March 2024, driven by strong momentum in memecoin trading. However, once the markets cooled down, BNB was back on top.
However, Franklin Templeton expects future airdrops to cement Solana’s position, potentially even putting it in third place. This would make SOL overtake Tether, only trailing Bitcoin and Ethereum.
These insights could partially explain why Solana investors aren’t as concerned with some of the issues, including the ongoing network congestion. Moreover, the billions of tokens held by FTX could also create a headwind in the long term. However, for now, these tokens are locked up, and investors seem confident in SOL’s prospects, at least in the near future.
On the Flipside
- Memecoins, which have contributed to Solana’s success, are notoriously volatile. A drop in enthusiasm for memecoins could bring down Solana.
- Solana has suffered from several high-profile network outages. The recent congestion issues add to concerns over network stability.
Why This Matters
Solana’s rise is not just important for traders. A higher market cap can also attract more developers to Solana. This could boost the number and quality of decentralized applications (dApps) on Solana, strengthening its ecosystem.
Read more about Solana’s prospects against BNB:
Solana Takes 4th from BNB: What Happened and Will It Stick?
Read more about Solana’s latest technical performance:
Solana Enters Buy Territory On Major Crypto Market Rebound
