Solana Emerges Strong in 2023 Despite Ties to FTX
Solana saw a rebound in the year’s first quarter after four months of declines following FTX’s collapse in November last year. On-chain data shows that wallet activity on Solana was the second-highest among all blockchains in April, topping popular blockchains like Polygon and Ethereum.
Solana Starts 2023 on a High Note
Messari’s “State of Solana Q1 2023” report shows that the blockchain has started this year on a high note. The network’s native token, SOL, saw its market cap increase by 118.1% quarter-on-quarter. The token is currently up more than 127% YTD.
Furthermore, the total transaction fees paid in SOL increased by 68.7% in the quarter, suggesting an uptick in network activity. The average number of validators on the network also increased by 18.9% QoQ, indicating movement towards a more decentralized state.
Despite an outage following the release of version 1.14 in February, the adoption of priority fees increased in the first quarter of 2023. Several ecosystem developments contributed to fee-payer and transaction activity on Solana, including the BONK airdrop, NFT collections, and DePIN (Decentralized Physical Infrastructure Networks) applications.
Furthermore, liquid staking derivatives grew significantly in the quarter, led by Marinade Finance, Lido, Jito, and JPool. “Marinade Finance, Lido, Jito, and JPool grew TVL by 100% or more during the quarter and finished in the top 20 by TVL,” Messari said, adding that they finished Q1 with around $205 million in TVL.
Likewise, Solana’s NFT ecosystem experienced an upturn, with the total number of daily new NFTs increasing by 11.8%. In DeFi, TVL denominated in USD increased by 23.5% QoQ. The network’s GameFi and other use cases also continued to improve, Messari noted.
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Solana Remains Confident Despite Growing Competition
Despite stiff competition in the blockchain space, Solana remains confident in its technical strengths and ability to attract developers to its platform. According to Solana Labs founder Anatoly Yakovenko, the blockchain remains ahead of the game on the technology front.
“None of them are as fast as Solana, do as many transactions as Solana, or run as many nodes as Solana. I think we’re still quite ahead on the technology front,” Yakovenko said in a recent interview, adding that despite the growing competition, Solana is still the fastest, most scalable, and most secure blockchain out there.
Yakovenko also pointed out that other blockchain projects, such as Helium and Render, are migrating to Solana, citing its technical superiority. Helium abandoned its infrastructure in favor of Solana, while Render moved from Polygon to Solana last week.
One challenge Solana had to overcome was its close relationship with the now-defunct cryptocurrency exchange FTX and its disgraced CEO Sam Bankman-Fried. SBF’s crypto hedge firm Alameda Research was heavily invested in SOL, which lost more than half of its value after the platform’s implosion.
Despite FTX’s fall, Solana’s ecosystem remains resilient, with developers continuing to build on the platform. Yakovenko said that developers submitted over 800 projects during a hackathon shortly after the collapse of FTX.
“The rest of the developers that are building on Solana really had nothing to do with FTX. And you saw that in the last hackathon. We had over 800 projects submitted during that hackathon. That was our largest hackathon ever. So and that happened, basically, two months after the FTX collapse.”
On-chain data also supports the strength of the Solana blockchain and its continued growth. In April, wallet activity on Solana was the second-highest among all blockchains, exceeding Ethereum and Polygon and trailing only BNB Chain.
Meanwhile, SOL is trading at $22.28, up by 3.1% over the past 24 hours. The token is up by 9% over the past month but down by more than 91% compared to its all-time high of $259 in November 2021.
Do you think Solana is still considered a decent competitor to Ethereum and other smart contract platforms? Let us know in the comments below.