Solana (SOL) made waves in the cryptocurrency industry at the start of this month by surpassing both Polygon (MATIC) and Optimism (OP) in on-chain trading volume. This achievement served as a reminder to the crypto community that Solana’s dominance is a growing force. Solana also outperformed Avalanche (AVAX) in total value locked (TVL) within decentralized applications (dApps).
The project’s latest successes are believed to be the result of rising interest in Solana-based projects, liquid staking protocols, decentralized exchanges, and the leadership of Solana's co-founder, Anatoly Yakovenko. Renowned trader Raoul Pal praised Solana for its speed and user-friendly experience, positioning it favorably against Ethereum. The very strong momentum and resilience that Solana is currently showcasing is a stark reminder that the project does, in fact, have the potential to challenge some of the big players in the blockchain industry.
Solana Transaction Volume Beats Polygon and Optimism
At the beginning of this month, the Solana blockchain turned quite a few heads in the cryptocurrency industry by surpassing both MATIC and OP, two prominent Ethereum-based Layer 2 solutions, in terms of aggregated on-chain trading volume. The daily trading volume on Solana surged to above $240 million per day, while Polygon and Optimism recorded $137 million and $40 million per day, respectively, during the same period. This achievement highlights Solana's growing dominance as it recorded more on-chain transactions than both of its Ethereum-based competitors combined.
It is also worth noting that on Saturday, the network’s native token SOL outperformed its rival AVAX in terms of TVL within its dApp ecosystem. Solana's dApp ecosystem boasted a TVL of $688 million, surpassing Avalanche's $660 million. With this kind of momentum, Solana could soon challenge the TVLs of Polygon and Optimism. Additionally, in just the past month, Solana’s TVL surged by more than 60% while its price was able to climb by about 45% during that time.
However, Solana is still trying to catch up to Arbitrum, a very dominant Ethereum Layer 2 solution. Arbitrum boasts a massive TVL of nearly $2.2 billion and a daily trading volume exceeding $363 million.
There are many people in the community guessing what could be behind Solana’s latest successes. Some believe it can be linked to the rising interest in Solana-based projects like "SolScriptions'' and meme coins, which have spurred the creation of SPL tokens on the Solana blockchain. Solana's liquid staking protocols like Jito and Marinade Finance have also been successful in attracting both new users and liquidity. Moreover, decentralized exchanges like Raydium and Orca are also gaining some traction within the Solana ecosystem.
Solana is Bouncing Back
Although Solana has not yet achieved its goal of becoming the “Nasdaq on the blockchain” after the FTX collapse, the SOL token was still able to see its price rise by about 500% in the past year, and there are still major developments on the horizon for the project. Solana co-founder, Anatoly Yakovenko, and its dedicated group of developers are also working hard to expand the project’s global presence through new innovations like the Sage phone.
While Ethereum enthusiasts remain cautious about Solana due to its tradeoffs, there's growing sentiment among influential Ethereum advocates and developers that "monolithic" chains like Solana could potentially dominate, given the challenges of scaling Ethereum while maintaining a seamless user experience.
Yakovenko has also been earning increasing respect within the broader crypto developer community, partly because of his willingness to engage in critical and constructive discussions on social media and podcasts. This year, the co-founder took a significant step in his role as a prominent industry figure by writing an op-ed in Fortune. In the article, he advocated for sensible regulation of digital assets. He also voiced his concerns that a reactive approach to cryptocurrency regulation in the U.S. could lead to a talent drain. Additionally, he emphasized that he regularly encounters aspiring entrepreneurs eager to innovate in the U.S. tech sector but are uncertain about how to establish a compliant blockchain company, highlighting the need for clear regulation.
Solana vs Ethereum
Renowned crypto trader and investor Raoul Pal has entered the ongoing debate surrounding the dominance competition between Ethereum and Solana . In his analysis of the two blockchains, Pal draws an analogy, likening Solana to the "Apple" of the blockchain ecosystem and characterizing Ethereum as the "Android." This analogy is rooted in the observation that Solana's exceptional speed positions it as a strong performer, akin to Apple's reputation for performance. Meanwhile, Ethereum's extensive array of hosted dApps aligns more with the comparison to Android, considering the platform's vast and diverse ecosystem.
When it comes to which of the two blockchains the trader prefers, it seems like Solana stepped out as the winner. According to Pal, almost everything Ethereum can do, Solana can do as well. When asked about Solana’s user experience, he stated that it "feels super fast, slick, inviting and easy for the user.” He also gushed about the ingenious designs of Phantom Wallet, the most unhosted Solana wallet, stating that he loves it and it is super easy to use.
This praise for Solana highlights the consensus among many industry leaders regarding the leading cryptocurrency, especially considering its remarkable price recovery following the FTX incident. In fact, Solana has left a lasting impression on its investors, including Raoul Pal, as SOL was able to reach its highest price of 2023 in early November.