Solana Sees 13% Dip Amidst Lower DApps Volume: Plans Boost with Filecoin Partnership
Summary:
Solana's native token, SOL, has seen a 13% decrease over the past week. While some attribute this to the recent poor performance of Solana’s SPL tokens, others point to Solana's DApps volume of $813 million, which is substantially lower than competitors Polygon’s $2.9 billion and BNB Chain’s $5.2 billion. However, Solana has recently partnered with Filecoin, a decentralized storage solution, which is expected to boost investor optimism. Despite these factors, the surge in the total value locked on Solana’s DApps and a marked rise in staking rate point to increased demand.
Solana's homegrown cryptocurrency, SOL, has experienced a 13% dip over the last week, resulting in a decline to $101, setting it back from the top three markets in terms of capitalization. This steady depreciation in the price of SOL might trigger worries amongst investors that the height of SOL's demand has come and gone, as anticipation around airdrops slows down. Drawing conclusions from the activity on Solana's network in comparison to rival blockchains, it seems the trajectory is favouring a downward momentum.
The correlation between the underperformance of Solana's SPL tokens and the decrease in network activity plays a role in this price correction of SOL. Specifically, Solana SPL tokens such as Jito (JTO), Jupiter (JUP), and Dogewithhat (WIF) have seen respective drops of 17%, 16%, and 18% since the 19th of February. Consequently, investors who were awaiting returns from the potential airdrops have been hit hard, as future listings are often priced relative to the existing options.
However, SOL's demand is not solely dependent on airdrops. There are several decentralized applications (DApps) actively functioning on the network. For example, within the last week, the decentralized exchange Raydium recorded 172,440 active addresses, while the NFT marketplace Magic Eden saw 167,930 addresses during the same period. But when comparing Solana network's recent performance to that of its competitors, the results have been subpar.
In the week leading up to February 21, Solana network's DApps volume totaled only $813 million - a meager figure compared to Polygon’s $2.9 billion and BNB Chain’s $5.2 billion. Moreover, it was the only blockchain among the top 7 not showing volume growth. While the number of active addresses on Solana saw a 5% increase, rivals Ethereum and BNB Chain witnessed jumps of 14% and 27% respectively.
However, the amount of SOL deposited in the network's DApps as indicated by the total value locked (TVL) peaked at 37.7 million on February 17 - its highest since November 2022. Moreover, the current 36.3 million SOL in TVL illustrates a 13.5% rise from the previous month, showing overall SOL demand has improved, irrespective of airdrop expectations. Furthermore, according to StakingRewards, 67.3% of SOL staked in the validating process indicates that holders are not perturbed by the recent price adjustment.
A recent development fueling optimism among Solana investors is the partnership with Filecoin (FIL), a decentralized storage solution. This collaboration addresses the ongoing issue of historical data availability since complete records exceed 250 terabytes of storage. The earlier solution used Google Cloud's BigQuery platform, a move that did not resonate with some DApps users and developers.
Taking a wider view, it becomes challenging to rationalize Solana's $44.6 billion market cap given that it lags behind Polygon and Arbitrum in active users and volumes. To put it in perspective, Polygon's market cap stands at $8.8 billion, while that of Arbitrum is just $2.3 billion. This does not necessarily forecast a further SOL price correction, but it does create less incentive for bullish movements to maintain levels above $100.
This article does not offer investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Published At
2/22/2024 1:23:53 AM
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