Solana’s native token, SOL (SOL), soared 35% from October 5 to October 11, reaching $222, its highest since December 2021. The move has left traders speculating whether Bitcoin (BTC) could reach its all-time high of $260, especially after it crossed $84,500 on the back of steady institutional inflows and expected regulatory clarity in the United States.
SOL outperformed the broader altcoin market in the six days ending October 11, up 33% over the same period. Investors’ optimism about SOL is fueled in part by Solana’s expanding smart contract activity, as evidenced by the total value locked. (TVL).
The total value of Solana is pegged to USD. Source: DefiLlama
Solana’s TVL increased to $7.6 billion by October 10, the highest since December 2021. Major decentralized applications (DApps) such as Jito, Raydium, Drift, and Binance’s liquid staking contributed significantly to the 36% increase in deposits.
Solana’s increased activity is not limited to memecoin trading
There are some valid criticisms of Solana’s heavy reliance on memecoins, including Dogwifhat (WIF), Bonk (BONK), and Popcat (POPCAT). All of them exceeded $1.5 billion in market capitalization. Decentralized token launch platforms such as Pump.fun have been a key driver of increased trading volume on the Solana decentralized exchange (DEX).
Solana Weekly DEX Volume, USD. Source: DefiLlama
Solana’s weekly DEX trading volume surged to $17.1 billion in the week ending November 2. This is a figure not seen since March 2024 and corresponds to a 26% market share, surpassing even Ethereum, the leading DApp-focused blockchain. Solana also secured $88.2 million in monthly fees essential for addressing network security issues.
In comparison, the Ethereum network, which has a TVL more than seven times higher than Solana, earned $131.6 million in monthly fees. Similarly, Tron, another blockchain that emphasizes base layer scalability, collected $49.1 million in fees over 30 days. This figure does not include broader ecosystem revenues, which include notable contributions such as Jito’s $100.2 million and Raydium’s $83 million.
Evaluating a platform based solely on TVL and fees can be misleading, as not all DApps require large volumes to become significant. However, this is critical for adoption and attracting new users, setting the stage for sustainable growth and increasing demand for SOL accumulation and utilization.
For example, Magic Eden, Solana’s leading non-fungible token (NFT) marketplace, has recorded 77,160 active addresses in the past 30 days, as reported by DappRadar. In contrast, OpenSea, a similar service on the Ethereum network, saw 37,940 active addresses during the same period.
This data provides solid evidence of how the Solana network is attracting users beyond the memecoin frenzy, and suggests that the price of SOL could benefit further. However, SOL perpetual futures should be analyzed to determine if traders are overleveraging their positions.
relevant: Since listing on Binance in 2024, 80% of MEMCOINs have been pumped.
SOL futures 8-hour funding rate, %. Source: Laevitas.ch
A positive funding ratio indicates that long positions (buyers) are paying for leverage. Leverage typically fluctuates between 0% and 2% per month in neutral markets. The recent jump to 5% on November 10th suggested temporary over-enthusiasm, but the latest data from November 11th shows neutral leverage costs at 1.8% per month.
In terms of on-chain and derivatives metrics, SOL appears to be on track to hit all-time highs, driven by increased network activity and no signs of excessive leverage.
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.