Solana has entered the top 5 largest projects by capitalization, becoming one of the fastest growing blockchain networks in 2024
In 2024, the Solana blockchain network has become one of the most popular and used platforms in the crypto market, showing growth of thousands of percent over the past two years. This year, it has attracted the attention of not only regular users but also financial organizations.
The price of native blockchain token Solana (SOL) crossed the $263 mark, which was a new price record that has been maintained since November 6, 2021. Since the last peak, the total capitalization of the project has grown by about 50%, to nearly $125 billion, making SOL the fourth largest cryptocurrency by capitalization, following bitcoin, Ethereum, and Tether's USDT stablecoin. Since the beginning of this year, the price of SOL has risen 155%, overtaking bitcoin over the same period.
Solana gained prominence during the growth of the crypto market in 2021 as a competing project with Ethereum. By the end of 2022, the SOL price experienced a drop of more than 95% from its 2021 peak to around $8. Solana's rapid decline coincided with the collapse of the FTX exchange and investment firm Alameda Research, which was actively promoting the project's ecosystem.
Despite competing with Ethereum, at the end of 2022, Vitalik Buterin, founder of the second most capitalized cryptocurrency, supported the Solana community, noting the project's high potential: “Some smart people tell me that Solana has a serious community of smart developers, and now that the terrible opportunists with money are gone, the network has a bright future. It's hard for me to judge from the outside, but I hope the community has a chance to thrive.”
Buterin's announcement coincided with SOL's price floor for the past three years at around $8.
Solana interest
In 2024, the Solana ecosystem has become one of the fastest growing blockchain networks, attracting huge interest from users. The growth of interest in Solana coincided with the explosive growth of activity in the memcoin sector, as well as projects involving artificial intelligence technologies.
One of the largest platforms in the ecosystem is the Pump.fun project, where for a few dollars any user can launch a memcoin. Since the launch of the platform in early 2024, the project has earned over $230 million in commissions, and the total number of tokens created has exceeded 3.6 million, according to the Dune service at the end of October.
For example, since the end of October, decentralized exchanges on the Solana blockchain have significantly outperformed competitors on the Ethereum blockchain in terms of trading volume. According to Defillama data as of Nov. 22, aggregate volume on exchanges on ethereum was half that on Solana, exceeding $100 billion.
“While Ethereum is dealing with rising fees and competition from second-tier solutions, Solana has emerged as an alternative that is attracting users and solidifying its market dominance,” BTCMarkets crypto analyst Rachel Lucas noted for The Block.
The interest from users is confirmed by the popularity of Solana-based applications. For example, the Phantom cryptocurrency wallet, originally based on Solana, has taken top positions in mobile app stores. Phantom took the ninth place in the ranking of the best free applications for iPhone, according to the data of Sensortower service as of November 22.
Interest of organizations to Solana
Analysts also note the interest in the Solana ecosystem from institutional investors and financial organizations. As Coindesk writes, after the election of Donald Trump as president of the United States, the chances of approval of exchange-traded funds (ETFs) based on the SOL cryptocurrency in the United States have increased significantly. Although back in the summer, analysts called the approval of Solana-based ETFs unlikely.
As of late November, ETFs in the U.S. have only been approved for bitcoin and Ethereum. The lack of ETFs for other cryptocurrencies limits investment opportunities for institutional investors in the US. Most do not have the infrastructure to directly hold crypto assets and are not authorized to trade them on existing exchanges, so they can invest either through futures ETFs or private funds.
The way spot ETFs work is that management companies buy cryptocurrency to back fund shares or sell it when they are redeemed, and the fund shares track its market (spot) price. These shares are traded on the major exchanges - NYSE, NASDAQ and CBOE.
VanEck, 21 Shares and Canary have already applied to launch the Solana-ETF, and Bitwise is also preparing an application. All of these companies, with the exception of Canary, already have spot ETFs for BTC and ETH in operation. At the same time, “progress is being made” in the process of launching Solana-based spot exchange-traded funds (ETFs), Fox Business reporter Eleanor Terrett reported. According to her sources, there is noticeable initiative from exchanges, which are preparing to file documents with the U.S. Securities and Exchange Commission (SEC) for the future listing of shares of such ETFs.
