Solana's SOL Recoups Losses Following Network Upgrades and Increased DApp Activity
Summary:
Solana's token (SOL) faced strong resistance in its price at $102 on Jan. 17, triggering a 23% fall to a five-week low of $78.60 on Jan. 23. However, it rebounded by 10% in less than 24 hours, halting its bearish trend. The upward swing is partially credited to newly implemented 'token extensions' on the Solana network and the development of Firedancer, a promising new validator client by Jump Crypto. Furthermore, despite the recent dip in SOL price, Solana's decentralized application (DApp) metric remains strong. However, whether the SOL bounceback signifies a long-term trend or is just a fleeting surge due to airdrops and 'token extensions' remains to be seen.
Solana's (SOL) cryptocurrency encountered massive pushback at the $102 mark on Jan. 17, followed by a plunge of 23% to $78.60 within five weeks on Jan. 23 — the lowest in a month and a half. However, it managed a quick 10% resurgence less than 24 hours later, curtailing the bearish trend temporarily, ceding to traders' uncertainty about whether the recovery had sound fundamentals and if it could recapture the $90 mark. The SOL's average USD token value, 12-hour base, was cited from TradingView.
A certain portion of this trajectory can be linked to the introduction of 'token extensions' on the Solana network, facilitating encrypted transfers to obscure balances, gate controlled transfer mechanisms, and a tiered protocol-level fee structure. These updates were rolled out in the Solana Labs validator client's v.1.17 version on Jan. 19, aimed at corporate and regulator-friendly platform compliance.
Another cause for enthusiasm stems from Firedancer, a promising new validator client under development by Jump Crypto, intended to enhance Solana's processing power to accommodate millions of transactions per second and enable parallel processing, also known as 'sharding'.
The social network post from @R89Capital emphasized how Solana network's reliability and performance responded to recurrent failures in 2022. It indicates an impressive improvement in Solana's dependability post its 2022 setbacks, coupled with significant performance in domains where it surpassed its rivals.
Drawing upon 2023, Solana maintained its performance amidst some of its competitors including Ethereum's layer-2 scaling solutions, wrestling with service interruptions due to the blockchain space's increasing demand. Pioneering success in Solana SPL token airdrops reaching centralized exchanges was signaled by Jito's (JTO) staking solution and the BONK memecoin in December 2023. This set off a wave of demand for SOL tokens due to anticipation around multiple airdrops, some confirmed and others speculated.
A deep dive into social networks mentions of Solana airdrops clearly shows the intense investor interest. Although it's impossible to predict the conversion of these leads, speculation alone sparks a demand spike for SOL and enhances the Solana network's activity.
Solana's primary decentralized application (DApp) metric showed promise in January, with the network’s total value locked (TVL) rising to 15.3 million SOL tokens. The fund held in its smart contracts is nearing a 3-month high, notwithstanding SOL token prices declining by 28% over a span of 30 days.
Even though the Solana network showcased substantial escalation in transaction action and volumes, it is still trailing behind competitors like Ethereum and BNB Smart Chain in raw numbers. Crucially, in the previous week, Solana reported a 6% transaction increment along with a 12% rise in active DApp users compared to Ethereum's stable performance or BNB Chain and Polygon's 31% and 19% fall in volume respectively.
Key highlights in Solana's DApp include Jupiter Exchange's notable surge to 387,780 active addresses within 7 days, trailed by Raydium garnering 190,650 users. In comparison, PancakeSwap, the BNB Chain's leading DeFi application, amassed 263,010 active addresses in the same period, as opposed to Ethereum's Uniswap's tally of 64,890.
It's challenging to ascertain if SOL's recent $80 rebound merely reflects the increased demand for airdrops and newly introduced 'token extensions', indicating that the initial hype might subside. However, the robust demand evident in Solana network's DApp activities offers a semblance of confidence that reclaiming the $90 mark and beyond is within reach.
The readers should note that this article does not offer investment guidance or suggestions. Every investment or trading move carries risk, and readers are advised to conduct independent research before making a decision.
Published At
1/24/2024 10:50:00 PM
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