Why Solana (SOL) is the blockchain to watch in 2024

Solana (SOL) has outpaced both Tron (TRX) and Ethereum (ETH) in stablecoin transfer volume, registering an astonishing $120 billion in transactions within the past week. That's a remarkable 700% surge when compared to the volumes observed in early December. Back then, the seven-day moving average of transaction volumes hovered around $5 billion. This marks a historic milestone for Solana, underscoring its rapidly expanding adoption and potential impact on the global financial landscape, particularly in economically challenged regions, where cryptocurrency is making inroads as an accessible alternative to traditional banking.

Overtaking rivals

Renowned for its cost-effective transfer options, Tron has traditionally been a preferred choice for stablecoin transactions in developing nations, offering an affordable option for unbanked populations. However, Solana can now offer even more competitive transaction costs, which has boosted its adoption. Thanks to this economic efficiency, stablecoin transactions on Solana have surged to surpass Tron and Ethereum.

Solana's position represents a substantial shift in the blockchain landscape, especially in underserved emerging markets. Long-touted as an 'Ethereum killer', Solana can now claim first place ahead of its older rival, at least in this important metric. In addition, some of the most important stablecoins in the crypto industry, such as Tether (USDT) and USD Coin (USDC), are based on the Solana blockchain. 

Why Solana?

Solana is both a cryptocurrency and a blockchain project known for its high-performance capabilities and efficient consensus mechanism. The SOL cryptocurrency serves as the native token on the Solana blockchain, facilitating various functions within the network, including transaction processing, smart contract execution, and participation in the platform's governance.

As a blockchain project, Solana is designed to address scalability and speed challenges commonly associated with other blockchain networks. One of its key features is the use of a unique consensus algorithm called Proof of History (PoH), which sequences transactions before they are added to a block. The unique PoH mechanism is combined with a proof-of-stake (PoS) system for network validation to significantly enhance the overall throughput and scalability of the Solana network, allowing for fast and low-cost transactions.

Solana aims to provide a secure infrastructure for building decentralised applications (DApps) and supporting various blockchain-based projects such as DeFi systems and non-fungible tokens (NFTs). This functionality positions Solana as a direct rival to Ethereum, which also functions as a decentralised computing platform. Despite Ethereum having a first-mover advantage and a more developed infrastructure, Solana can boast faster processing times and lower transaction fees compared to the Ethereum network.

A blockchain education success story

A pivotal factor contributing to Solana's success has been the Solana Allstars initiative. This programme has played a crucial role in driving adoption, with the team organising regular meetups in countries like Nigeria, Venezuela and Turkey. These gatherings focused on educating attendees on how to set up a Solana wallet and execute transactions. They served to raise awareness about Solana and made it easier for ordinary people in emerging markets to access blockchain finance tools.

Solana's success in 2023 hasn't only been down to educating users but also a more mature developer base. According to The Solana Foundation's report entitled The 2023 State of the Solana Developer Ecosystem, the Solana developer community maintained a robust monthly figure of 2500-3000 developers contributing to public repositories throughout the 'Crypto Winter' of 2023, representing an impressive 50% retention rate while other blockchain projects were shedding developers. The report notes that more than half of the developers joining Solana have over three years of experience, reflecting a seasoned community. The Solana Foundation's educational initiatives, including hackathons, boot camps, and guides, have contributed to the ecosystem's vitality and growth, and the tooling on Solana has seen significant improvements. Looking ahead, this more mature, developer-friendly platform positions Solana as a key player in the evolving blockchain landscape.

Solana's extraordinary growth

Stablecoin transaction volume isn't the only significant growth milestone for Solana. The strength of the blockchain is also demonstrated by:

• DEX activity: In December, decentralised exchanges built on Solana achieved an unprecedented monthly trading volume, reaching a staggering $28 billion. Notably, Jupiter DEX played a significant role in this achievement, contributing a substantial $17 billion to the overall total. 
• NFT sales: SOL also saw between $329 million and $366.6 million in NFT sales, according to different reports. In comparison, NFT sales in ETH clock in at $353.2 million.
• DeFi: Solana has also surged significantly, as the total value locked on SOL DeFi platforms grew 254% to reach $1.42 billion in December 2023.
• Daily transactions: Nansen Research reported a significant uptick in Solana-based transactions, rising from around 20 to 30 million daily transactions to over 50 million currently. 
• Daily active wallets: Daily active wallets on Solana have grown from approximately 120,000 in October 2023 to about 470,000.
• New tokens: Over the past two weeks, the Solana blockchain has experienced an exceptional rise in the creation of new tokens, with a remarkable 72,202 tokens minted using the SPL token standard. The daily statistics for token creation on Solana have now reached levels approximately four times higher than any previous period since the network's launch in 2020. 
• Search interest: According to Google Trends, worldwide searches for "Solana" surpassed those for "Ethereum" in December 2023.

Rise of the memecoins

Whether you find their particular brand of internet humour funny or not, there's no denying the influence of memecoins on the crypto market, and Solana's success has certainly been influenced by a few new tongue-in-cheek tokens. 

Amidst the cryptocurrency market rally in December, numerous Solana-based memecoins witnessed a substantial surge in value. For instance, as of January, a memecoin on Solana called BONK has seen a remarkable increase of over 7000% compared to its price a year ago. Amusingly, the recent surge in BONK prices actually drove sales of the not-too-popular Solana phone as traders realised that the handheld device could be used to receive exclusive airdrops of tokens much more valuable than the phone itself.

What does this mean for SOL prices?

Examining Solana's performance in 2023 underscores its significant achievements. The price of the SOL token surged 936% from $9.97 at the start of 2023 to an all-time high of $121.40 in late December 2023. At the time of writing, on 10 January 2024, SOL's price has pulled back to around $94, but many analysts point to the Solana network's robust health and predict that the SOL token could reach $120 by 2025.

With Solana gaining momentum, both the network and SOL are anticipated to surpass competitors significantly in 2024. The ongoing trend suggests a positive outlook for Solana's continued success in the coming year. Interested traders should not only track the performance of Solana but keep an eye on related memecoins based on the Solana blockchain, as huge profits can be made when a new memecoin takes off.

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