Solana’s native token, SOL (SOL), peaked at $161.80 on September 29 and then fell 9% over the next two days to its highest in seven weeks. This adjustment reflected the broader altcoin market capitalization (excluding stablecoins), which reached around $800 billion in late September before falling to $739 billion on October 1.
SOL prices are trending upward with strong TVL and low fees
Despite this downturn, Solana network usage surged last week, leading traders to question whether SOL has the potential to outperform its rivals.
Solana/USD (blue, left) versus altcoin market cap (green). Source: TradingView
Notably, despite the recent correction, SOL’s price is up 10.4% over the past 30 days, suggesting that overall market sentiment remains positive. Additionally, SOL continues to rank as the fourth-largest cryptocurrency by market capitalization and ranks third in Total Value Locked (TVL), which measures the amount deposited in smart contracts on the network.
Solana’s network stands out for its low latency and extremely low transaction fees, especially when compared to major competitors such as Ethereum (ETH) and BNB Chain (BNB). According to GasFeesNow, the average transaction cost on Solana is just $0.02, while the average transaction cost on Ethereum is $2.50 and the average transaction cost on the BNB chain is around $0.08. In this respect, Solana’s strategy of strengthening network robustness through validators has proven effective.
However, low fees alone do not guarantee increased inflows or increased network activity. Nonetheless, this provides a competitive advantage for users who prefer not to rely on layer 2 scaling solutions that can add complexity and additional cost. For example, the Pump.fun memecoin launchpad achieved significant success among traders, reaching 65,000 daily active addresses in late July.
SOL potential comes from games and mobile applications.
Experienced asset managers like VanEck believe the price of SOL could increase 120% from current levels due to scalability, which is important for stablecoin and remittance adoption. VanEck’s September 25 report cited the potential for institutional adoption and value extraction of Ethereum layer-2 solutions as key drivers of improved investor awareness of Solana.
Additionally, the September 24 announcement of Gameshift, a game development API leveraging Google Cloud architecture and supported by Solana Labs, was highlighted as a potential catalyst for increased network demand. Gameshift aims to provide a comprehensive suite of Web3 services for traditional game developers, including integration of non-fungible tokens (NFTs) and digital assets.
Additionally, investors are pinning high hopes on the release of a Solana-powered smartphone named Seeker priced under $499. In addition to the highly anticipated token airdrop targeting these users, the device will feature an upgraded decentralized application (DApps) store to better capture new use cases, according to Solana Labs.
Given this positive outlook, investors believe that the recent increase in Solana network activity will eventually lead to increased demand for SOL. The network’s total TVL (value locked) increased to 36.1 million SOL on September 30, essentially flat compared to the previous two weeks but 3% below its highest level in two years. According to DefiLlama data, deposits of $5.5 billion in USD terms exceed the BNB chain’s TVL of $4.6 billion.
But what’s most significant about Solana’s activity, according to DappRadar data, is DApp volume, which is up 46% compared to the previous seven-day period. In comparison, Ethereum DApps grew by 12% over the same period, while BNB Chain’s numbers remained flat. Ethereum’s gains were heavily dependent on Balancer, especially since Uniswap, Ethereum’s main DApp, saw its trading volume drop by 6% over a 7-day period.
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We ranked the top Solana DApps by 7-day trading volume (USD). Source: DappRadar
Meanwhile, the past seven days have seen Solana rise across the board, with Marinade Finance up 66%, Pump.fun up 93%, and Solend up 143%. Likewise, the number of active addresses associated with smart contracts increased by 13% over the past week, driven by gains from Jupiter Exchange, which has amassed over 2.77 million unique addresses.
Based on current news flow and network activity, the price of SOL looks set to outperform the altcoin market, potentially paving the way for a rise above $180.
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.