Solana’s native token, SOL (SOL), rose 12.1% from October 11 to October 18, with data showing that the upward momentum was driven in part by demand for memecoins. Increased demand leads to increased network size, fees, and total value lock (TVL).
Traders are now debating whether the memecoin craze is sustainable and how the price of SOL can continue to benefit from the surge in network activity.
Although there is no fundamental reason for the surge in demand for memecoins, it is clear that influential social media accounts are driving trader interest towards the token. Let’s take pwnlord69’s post from October 12th as an example.
source: phone road 69
Memecoin Goateus Maximus (GOAT) soared to a market value of $400 million in a week, fueled by rumors of the launch of an artificial intelligence bot. In reality, the bot simply promoted the GOAT token, which was launched using Pump.fun, a decentralized application that manages the technical aspects and liquidity provision of Solana tokens on the Raydium exchange.
Several other memecoins on the Solana network saw their prices surge in October. SPX6900 (SPX) is up 379%, Apu Apustaja (APU) is up 170%, and FWOG is up 134%. PUPS and MAGA (TRUMP) have also recorded notable gains of over 90%, according to Cryptorank.io data. As these memecoins gain value, they attract more attention from social networks and media, creating a positive feedback loop.
Solana network activity supports higher SOL prices
But the key question is whether this move will have a significant impact on SOL’s pricing and how the network has performed compared to its competitors. An important metric in this analysis is Total Value Locked (TVL), which measures the total funds deposited in smart contracts on the network.
Solana TVL in SOL terms. Source: DefiLlama
Solana’s total deposits recently surged to a two-year high, reaching nearly 41 million SOL, a 13% increase from the previous month. In comparison, Ethereum’s TVL was stagnant at 17.7 million ETH, while the BNB chain’s TVL was also stagnant at 7.9 million BNB. Highlights of the Solana network include Raydium, which saw a 70% increase in deposits over the past 30 days, and Sanctum, which saw a 32% increase in deposits on TVL.
Measuring deposits is important, but truly measuring demand for SOL requires analyzing on-chain activity. For example, a decentralized exchange (DEX) can record high trading volume without having a significant TVL. In this context, Solana’s impressive network activity recently solidified its lead, overtaking Ethereum last week.
Blockchains ranked by weekly DEX trading volume. Source: DefiLlama
Solana’s DEX trading volume increased 43% week over week, which stands out even among its direct competitors. Notably, even Ethereum’s Layer 2 solutions, which benefit from low transaction fees, could not match Solana’s performance. For example, Arbitrum’s weekly trading volume hit $3.74 billion, which is still 64% lower than Solana’s $11.16 billion.
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Although it is difficult to predict whether the memecoin surge will continue, the data suggests that it is plausible for SOL to reach $180, given the network’s competitive advantage due to high validator capacity. Ultimately, Solana appears to be well-positioned to capture growth in areas such as artificial intelligence infrastructure, Web3 applications, gaming, prediction markets, and more.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.